Worker productivity roared ahead at the fastest pace in four years in the summer while wage pressures dropped sharply. The Labor Department reported today that productivity, the amount of output per hour of work, was up at an annual rate of 6.3 percent in the third quarter, the best showing since the summer of 2003, and far bigger than had been expected. Meanwhile, wage pressures slowed with unit labor costs dropping at a rate of 2 percent in the third quarter, the biggest decline in four years. The combination of stronger productivity growth and fewer wage pressures should ease concerns about inflation at the Federal Reserve and help clear the way for another cut in interest rates next week to guard against the threat the economy could tumble into a recession.
See "Worker productivity grows at highest rate in 4 years", Associated Press, Los Angeles Times, December 4, 2007