The productivity of U.S. workers rose less than projected in the third quarter, showing employers are finding it difficult to boost efficiency.
The measure of employee output per hour increased at a 1.9 percent annualized rate, after a revised 1.8 percent gain in the prior three months that was smaller than previously estimated, a Labor Department report showed today in Washington. The median forecast in a Bloomberg survey of 59 economists called for a 2.2 percent gain. Expenses per worker dropped at a 0.6 percent rate.
Employers will need to boost efficiency in a bid to bolster profits as consumer spending and business investment are having trouble gaining momentum. Nonetheless, businesses are finding it difficult to squeeze more from existing staff indicating hiring will need to pick up along with sales.
“Companies can’t count on productivity growth to meet increased demand -- they’re going to need to hire as well,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “Particularly given the fact that the October jobs number was quite good, we might see slowing in productivity growth in the fourth quarter.”
The estimates of economists surveyed ranged from productivity gains of 0.1 percent to 3 percent. Second-quarter productivity was previously reported as a 2.3 percent increase. In the six months ended in March, the back-to-back quarterly declines in efficiency were the biggest over a similar period since 1993.
Other reports today showed more Americans than forecast filed applications for unemployment benefits last week, and the trade deficit widened more than forecast in September.
Jobless claims in the week ended Nov. 9 declined 2,000 to 339,000 from a revised 341,000 the week before that was higher than initially reported, the Labor Department said. The median forecast of 51 economists surveyed by Bloomberg called for a drop to 330,000. Applications for five states were estimated because of the Veterans Day holiday-shortened week, the Labor Department said.
The gap between exports and imports increased 8 percent to $41.8 billion, a four-month high, from $38.7 billion in August, the Commerce Department reported. The median forecast in a Bloomberg survey of 72 economists called for a $39 billion deficit.
In the third-quarter, productivity was little changed from the same three months in 2013.
Unit labor costs, which are adjusted for efficiency gains, were forecast to fall 0.1 percent, the Bloomberg survey median showed.
Employee expenses were up 1.9 percent in the third quarter compared to the same time last year, today’s report showed.
“Wage growth is very weak right now,” Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, said before the report. “We’re seeing slow but positive gains in productivity. So labor is relatively cheap -- that’s another factor behind businesses’ decisions to hire, as well as profitability is good. Given that credit is still tight, that’s an important consideration as well.”
The job market has picked up in the fourth quarter. Employers added 204,000 workers in October even as the 16-day government shutdown weighed on growth. Payroll gains have averaged 186,300 so far in 2013, compared with 182,750 last year, according to Labor Department data.
The U.S. economy expanded at a 2.8 percent annualized rate in the third quarter, a faster pace than forecast and a pickup from the 2.5 percent gain in the prior three months, Commerce Department figures showed last week. The partial government shutdown at the start of the fourth quarter may weigh on growth at the end of the year, according to economists surveyed by Bloomberg.
Of the S&P 500 companies that have announced so far, about 75 percent have beaten analysts’ income forecasts, data compiled by Bloomberg showed yesterday. Profits for the gauge will rise 4.7 percent in the third quarter and 6.2 percent in the final three months of the year, estimates compiled by Bloomberg show.
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