WASHINGTON (Reuters) – U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week, indicating the decline in labor market may be hitting bottom.
The Labor Department said on Thursday productivity surged at a 9.5 percent annual rate, the quickest pace since the third quarter of 2003, as companies squeezed more output from a smaller pool of labor to cut costs.
Analysts polled by Reuters had forecast productivity, which measures the hourly output per worker, rising at a 6.4 percent rate in the third quarter. Productivity grew at a 6.9 percent pace in the April-June period.
In another report, the department said initial claims for state unemployment benefits dropped 20,000 to 512,000 last week, the lowest since early January. Analysts polled by Reuters had forecast new claims slipping to 523,000 last week from a previously reported 530,000.
Productivity data "has indicated resilience and growth, though it also has a negative connotation of more being done with fewer workers," said Peter Kenny, managing director, Knight Equity Markets in Jersey City, New Jersey.
"As we go to a more efficient model, it'll take longer for us to reach full employment. Expect unemployment to creep up as productivity does."
U.S. stock index futures added to gains after the economic data, while the dollar pared losses against the yen.
Productivity in manufacturing rose at a record 13.6 percent rate in the third quarter. Total non-farm output rebounded, growing at a 4 percent rate in the July-September quarter after dropping 1.1 percent in the previous period.
Productivity has increased sharply over the past two quarters, largely driven by aggressive cost cutting by businesses.
Analysts see little room for more cuts and believe that this, coupled with the economy's resumption of growth in the third quarter, may cause companies to start increasing payrolls.
The Labor Department said on Thursday productivity surged at a 9.5 percent annual rate, the quickest pace since the third quarter of 2003, as companies squeezed more output from a smaller pool of labor to cut costs.
Analysts polled by Reuters had forecast productivity, which measures the hourly output per worker, rising at a 6.4 percent rate in the third quarter. Productivity grew at a 6.9 percent pace in the April-June period.
In another report, the department said initial claims for state unemployment benefits dropped 20,000 to 512,000 last week, the lowest since early January. Analysts polled by Reuters had forecast new claims slipping to 523,000 last week from a previously reported 530,000.
Productivity data "has indicated resilience and growth, though it also has a negative connotation of more being done with fewer workers," said Peter Kenny, managing director, Knight Equity Markets in Jersey City, New Jersey.
"As we go to a more efficient model, it'll take longer for us to reach full employment. Expect unemployment to creep up as productivity does."
U.S. stock index futures added to gains after the economic data, while the dollar pared losses against the yen.
Productivity in manufacturing rose at a record 13.6 percent rate in the third quarter. Total non-farm output rebounded, growing at a 4 percent rate in the July-September quarter after dropping 1.1 percent in the previous period.
Productivity has increased sharply over the past two quarters, largely driven by aggressive cost cutting by businesses.
Analysts see little room for more cuts and believe that this, coupled with the economy's resumption of growth in the third quarter, may cause companies to start increasing payrolls.
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