Third quarter productivity grows at 9.5%

The Bureau of Labor Statistics released third quarter statistics last week. Getting a lot of press was the eye-popping 10.2% unemployment rate. But the real eye-popper is the fact that Nonfarm business sector labor productivity increased at a 9.5 percent annual rate. You have to go all the way back to the third quarter of 2003 to find a better rate of growth (9.7%). I'm no economist, but productivity normally does not increase during a recession. Employers tend to be slow to "downsize" their most valuable employees rendering certain built in inefficiencies of production. But not this time. Over the last year, output increased 4% while hours worked decreased 5% and unit labor costs declined 3.6%. Historical data provided here, and third quarter details and charts here.