Ahead of the Bell: US productivity

Productivity likely slowed sharply in third quarter while labor costs rose

Associated Press
US productivity slows in 3rd quarter

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FILE - In this June 24, 2015, file photo, a worker washes a car at Bob's Car Wash in Roseville, Calif. The Labor Department releases third-quarter productivity data on Thursday, Nov. 5, 2015. (AP Photo/Rich Pedroncelli, File)

WASHINGTON (AP) -- The Labor Department issues preliminary data on productivity in the third quarter at 8:30 a.m. Eastern.

PRODUCTIVITY DOWN: Economists believe that productivity will weaken to show a 0.2 percent rate of decline in the third quarter, according to a survey by data firm FactSet.

PRODUCTIVITY SWINGS: In the second quarter, U.S. productivity rose at the fastest pace since late 2013 while labor costs declined. However, that rebound is expected to be short-lived given the fact that overall economic growth slowed sharply in the third quarter.

Productivity is the amount of output per hour of work.

In the third quarter, the economy's total output, as measured by the gross domestic product, slowed to an annual rate of just 1.5 percent, less than half the 3.9 percent increase turned in during the April-June quarter.

Because of that slowdown, economists are expecting productivity will weaken after a 3.3 percent growth rate in the second quarter.

Analysts are looking for labor costs to rise at a 2.3 percent rate in the third quarter after having fallen at a 1.4 percent rate in the second quarter.

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