The productivity of American workers in the third quarter fell for the first time in almost four years as the US economy slows, the Labor Department has reported.
Nonfarm business sector labour productivity, a measure of economic output for each work hour, fell 0.3 per cent in the third quarter of 2019, as output increased 2.1 per cent and work hours increased 2.4 per cent. That marked the first contraction of labour productivity since the fourth quarter of 2015.
Meanwhile, labour productivity for the manufacturing sector declined 0.1 per cent in the third quarter of the year, as output increased 1.1 per cent and work hours increased 1.3 per cent, the department reported on Wednesday.
The decline in labour productivity came as US economic growth slowed to an annual rate of 1.9 per cent in the third quarter. That was lower than the 2-per cent growth rate in the second quarter and 3.1-per cent growth rate in the first quarter.
Gregory Daco, chief US economist of Oxford Economics, said Wednesday that he had warned a year ago that "sudden productivity revival was likely a mirage amid a temporarily fiscally-stimulated economy."
"With economic momentum cooling, productivity will follow suit," he said, adding that higher unit labor costs, amid squeezed corporate profit margins, will keep a lid on business investment in 2020.
Unit labour costs increased 3.6 per cent in the third quarter and 3.1 per cent over the past year, the largest annual gain in more than five years, according to the Labor Department.