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Productivity Picks Up as U.S. Companies Cut Labor Costs

Bloomberg - Dec 5, 2012

The productivity of U.S. workers expanded more than previously estimated in the third quarter as companies cut labor expenses to preserve profits.

The measure of employee output per hour climbed at a 2.9 percent annual rate, the biggest gain in two years and up from 1.9 percent in the prior three months, revised Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey of 58 economists called for a 2.8 percent rise. Costs per worker fell at a 1.9 percent rate, more than previously estimated.

Concern about slowing global demand and the looming fiscal tightening signals companies may restrain hiring and keep a lid on wages until sales accelerate. The decline in labor costs indicates inflation will remain subdued, giving Federal Reserve policy makers room to keep pumping money into the economy to spur growth.

“The productivity gains should help companies’ profit margins,” said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut, who accurately forecast the decline in labor costs. “There’s going to be continued downward pressure on labor costs given the high rate of unemployment.”

Read Full Article from Bloomberg

- Posted: 2012-12-05 11:49:45


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