The Labor Department reported Tuesday that labor productivity fell in the third quarter at the fastest rate in more than 60 years.
The productivity measure of the nonfarm business sector fell 5.2% from the previous three-month period, worse than the estimate of a 5% decline and the worst since the second quarter of 1960. The hours worked increased as output increased.
The biggest decline in productivity since 1993 happened in the second quarter.
The report showed inflation.
Unit labor costs, the measure of how much businesses pay their per unit of input, rose 9.6% from the second quarter, which reflected a 3.9% increase in compensation combined with the decline in productivity. The 8.4% estimate was above the actual number.
When determining labor costs, higher levels of productivity can offset wage increases.
The productivity data is closely watched by the Federal Reserve. As companies are forced to raise prices as unit labor costs rise, low productivity levels tend to boost inflation.
The economy is in the midst of its fastest inflation spurt in more than 30 years, and Fed officials are expected to begin tightening monetary policy to combat rising prices.
