3Q Productivity Revised Up to 3%

U.S. workers’ productivity rose at a 3% annual rate in the third quarter, up from a previously estimated 1.9%, the Labor Department reported.

The revised increase, which followed a 1.8% second-quarter upturn, was the biggest gain since the fourth quarter of 2009.

The increase in productivity reflects increases of 4.7% in employee output and 1.7% in hours worked, Labor said.

Unit labor costs decreased 1.4% in the third quarter, and hourly compensation increased 1.6%. Unit labor costs rose 2.1% over the past four quarters.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.