Labor costs dropped at an annual rate of 2.4 percent in the third quarter, the first decline since late 2010.
U.S. workers increased their productivity this summer by the largest amount in a year and half, and they cost their employers less. The trend is good for corporate profits but not necessarily for job growth.
The Labor Department says productivity rose at an annual rate of 3.1 percent in the July-September quarter after two straight quarterly declines. Labor costs dropped at an annual rate of 2.4 percent in the third quarter, the first decline since late 2010.
Productivity is the amount of output per hour of work. The big jump in productivity in the third quarter was largely because the economy had its best quarterly growth in a year while hours worked were little changed.
Higher productivity is generally a good thing because it can raise standards of living by enabling companies to pay workers more without raising their prices and increasing inflation.