Productivity Slows to a Standstill

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The productivity of American workers slowed to a standstill in the summer, while wages were rising at the fastest clip in more than two decades – a combination likely to raise inflation concerns at the Federal Reserve, the Associated Press reports.


The Labor Department reported Thursday that productivity, the amount of output per hour of work, showed no change in the July-September quarter, while labor costs rose by 3.8 percent. For the past year, wages and other labor costs are up by 5.3 percent, the fastest increase since 1982.


While rising wages and benefits are good news for workers, they raise concerns about inflation especially at a time when productivity is slowing. If companies decide to pass on their higher payroll costs by boosting the price of their products, that could translate into increased inflation.


In other economic news, orders to factories for manufactured products rose by 2.1 percent in September, the biggest increase in six months, but virtually all of the strength came in a surge in orders for commercial aircraft. The Commerce Department said that orders for long-lasting durable goods were up 8.3 percent, offsetting a 4.6 percent drop in demand for food, gasoline and other nondurable products.


Read the full Associated Press story

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