U.S. Productivity Drop Exceeds Projections

U.S. productivity for the third quarter fell 0.2%, according to figures released Tuesday by the U.S. Labor Department. The figure was expected to slip by 0.1%, after dropping 0.3% in the previous quarter.

It proved to be the biggest drop since the fourth quarter of 2015.

Productivity was previously reported to have decreased at a 0.3% pace in the July-September quarter. A rebound in hours, driven by a surge in the volatile self-employed and unpaid family workers component, outpaced output in the third quarter.

Productivity grew at an unrevised 2.5% rate in the second quarter. Economists had expected third-quarter productivity would be revised up to show it falling at a 0.1% rate.

Washington last month revised up third-quarter gross domestic product growth to a 2.1% rate from a 1.9% pace.

Compared to the third quarter of 2018, productivity increased at a 1.5% rate, instead of the previously reported 1.4% pace. Tepid productivity suggests the economy is unlikely to achieve the Trump administration’s goal of 3% annual growth.