U.S. Worker Productivity Climbs
WASHINGTON--More productive U.S. workers supported faster economic growth in the third quarter, but slower business investment might limit future gains.</br></br>Labor productivity, or output per hours worked, increased at a 1.9% annual rate from July through September, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast a gain of 2.4%.</br></br>Second-quarter productivity growth was revised down to a 1.8% pace from a previous reading of 2.3%. Productivity held flat from a year ago because the increase in output was matched by an increase in hours worked.</br></br>"Firms cannot count on productivity gains to meet gradually improving demand," PNC Chief Economist Stuart Hoffman said. Businesses will need to hire to keep up, "and the labor market recovery will continue throughout 2014."</br></br>Productivity improved rapidly in the early part of the recession but gains have eased in recent years. That roughly coincides with business-investment trends. Companies spent more on equipment and technology in 2010 and 2011, investments that helped improve workforce productivity. Such investments began to slow last year and spending on equipment shrank in the third quarter, according to Commerce Department data.