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Productivity lift for US economy | |
(about 2 hours later) | |
US worker productivity was at its strongest in four years in the three months to October, official data shows. | US worker productivity was at its strongest in four years in the three months to October, official data shows. |
The US Labor Department said that productivity, or output per hour of work, rose at an annualised pace of 6.3% in the third quarter. | The US Labor Department said that productivity, or output per hour of work, rose at an annualised pace of 6.3% in the third quarter. |
Unit labour costs, a gauge of wage inflation, fell 2% in the period, the largest decline in four years. | Unit labour costs, a gauge of wage inflation, fell 2% in the period, the largest decline in four years. |
Productivity growth and less wage pressure should ease Federal Reserve concerns about inflation. | Productivity growth and less wage pressure should ease Federal Reserve concerns about inflation. |
The jump in productivity was higher than economists were expecting. | The jump in productivity was higher than economists were expecting. |
There was more upbeat news for the US economy when figures from the Commerce Department showed that new orders at US factories unexpectedly rose by 0.5% in October, helped by more demand for defence and transportation equipment. | There was more upbeat news for the US economy when figures from the Commerce Department showed that new orders at US factories unexpectedly rose by 0.5% in October, helped by more demand for defence and transportation equipment. |
Encouraging | |
The encouraging reports on the health of the US economy helped boost US stocks. | |
"Today the market went up because people think the Fed won't need to ease as much," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis. | |
But another survey from the Institute of Supply Management showed the US service sector expanded at a slower pace in November than the previous month and below economists' expectations. | |
The US central bank is expected to cut interest rates by a quarter percentage point next week to 4.25% when Federal Reserve officials hold their last meeting of the year on Tuesday. | The US central bank is expected to cut interest rates by a quarter percentage point next week to 4.25% when Federal Reserve officials hold their last meeting of the year on Tuesday. |
While the US economy grew by a healthy annualised rate of 4.9% in the third quarter, growth is expected to slow sharply in coming months as a slump in the housing market and financial market turmoil stemming from the credit crunch takes its toll. | While the US economy grew by a healthy annualised rate of 4.9% in the third quarter, growth is expected to slow sharply in coming months as a slump in the housing market and financial market turmoil stemming from the credit crunch takes its toll. |
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