Productivity Gain Highest In Five Years

American workers registered the fastest increase in productivity in nearly five years, strengthening prospects for more robust economic growth with low inflation.

Big retailers, meanwhile, reported mediocre November sales, and the number of workers filing for unemployment fell last week.

Non-farm business productivity - output per hour worked - grew at a seasonally adjusted annual rate of 4.1 percent in the third quarter, the Labor Department said Thursday.

That was revised down from an estimate of 4.5 percent last month. Still, it was the largest gain since the final three months of 1992.

Analysts say such robust productivity is unusual so late in an economic expansion - the current one is nearly seven years old - and is a sign businesses finally are reaping the rewards of decades of investing in computers and high-tech equipment.

“A lot of that is paying off, not just in the third quarter, but in the past year. It’s a function of the fact that people are better trained and they’re working with better machinery,” said economist Stuart G. Hoffman of PNC Bank Corp. in Pittsburgh.

Productivity had increased a healthy 2.4 percent in the second quarter and a more moderate 1.4 percent in the first.

It looks like productivity for the year will be up somewhere around 2.5 percent. That’s approaching the 2.8 percent average that prevailed during the post-World War II years from 1947 through 1973 and significantly better than the 1.2 percent average during most of the 1990s.

Improved productivity helps explain how inflation sank to a three-decade low this year even as economic growth has been strong, allowing the Federal Reserve to refrain from increasing interest rates since March.