Worker productivity was boosted at its highest level in four years during Q3 2013, indicating improved economic growth. According to the U.S. Department of Labor, productivity increased at an annual rate of 3 percent, up from the 1.9 percent estimate and the 1.8 percent rate recorded during Q2. The rise in productivity was due to increased economic growth that was much stronger than estimated. Inflation is also expected to remain low as labor costs fell during the third quarter.
Increased productivity allows companies to increase pay without causing inflation, however it can also slow hiring if companies do not see a need for more workers in order to improve output. Gains measured over the past six months were largely offset by declines experienced during the previous six months, leading to relatively flat productivity growth over the past year.
Productivity has been on a steady incline as the economy has grown and hiring has accelerated since the summer. Wages have also gradually risen as the economy grew at a 3.6 percent annual rate in Q3, much faster than the predicted 2.8 percent rate. Even as productivity gains have slowed since the end of the recession, they appear to be accelerating. In 2009, worker productivity grew at a rate of 3.2 percent, followed by rates of 3.3 percent in 2010, 0.5 percent in 2011, and 1.5 percent in 2012.