Worker productivity grew at the fastest rate last quarter since Q1'10. The 3.1% gain followed two quarterly declines. Nevertheless, the y/y increase held low at 1.1%, about where it's been all year. That compares to 4.1% growth during 2010. The Q3 increase exceeded Consensus expectations for 2.5% growth. Output rose at a 3.8% rate (2.5% y/y) and hours worked grew at a 0.6% rate (1.4% y/y), the weakest since Q1 of last year.

Compensation growth decelerated to 0.6%, the weakest since Q4 of last year. That weakness, with improved productivity, pushed down unit labor costs at a 2.4% rate (+1.2% y/y), the first decline since Q4'10. The moderate 1.2% y/y increase followed declines in both 2009 and 2010.

Factory sector productivity also bounced back last quarter. The 5.4% increase (3.0% y/y) was its greatest since Q4 2009. It resulted from a 4.7% gain (4.1% y/y) in real output and a 0.8% decline (+1.1% y/y) in hours worked. Compensation ticked up at just a 0.6% rate (2.5% y/y) so factory sector unit labor costs fell 4.6% (-0.5% y/y).

The productivity & cost figures are available in Haver's USECON database.

How Do Businesses Recruit? from the Federal Reserve Bank of Philadelphia is available here.