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US labor productivity posts worst drop since 1960
Revisions to data originally released a month ago show that the decline in productivity has been even worse than expected, down 5.2% on a seasonally adjusted basis. This was the largest drop in the quarterly rate since the second quarter of 1960, when productivity fell 6.1%.

The initial reading of the data had shown the worst drop since 1981.

Unit labor costs, meanwhile, rose at an annual rate of 9.6% in the third quarter, reflecting a 3% increase in hourly compensation and a 5.2% decline in productivity.

The rapid recovery in employment leads to more hours worked and competition for workers pushes up wages. But production is not increasing as quickly.

Economists warn not to read too much into this single data point. Not only was the third quarter plagued by supply chain issues that still aren’t fully resolved, but it’s also when the Delta variant of the coronavirus threw a wrench into the recovery, causing an increase in cases and a slowdown in economic activity compared to the second quarter.

This is a developing story. it will be updated


cnn

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