US third-quarter productivity rises at fastest pace in two years

WASHINGTON, Jan 8 (Reuters) - ⁠U.S. worker productivity ⁠grew ‍at its fastest pace in two years in the third quarter as businesses invested heavily ‍in artificial intelligence, depressing labor costs.

Nonfarm productivity, which ​measures hourly output per worker, accelerated at a 4.9% annualized rate, ​the Labor Department's Bureau of Labor Statistics said on Thursday.

That was the quickest pace since the third quarter of 2023 and followed ​an upwardly revised 4.1% growth rate in the second quarter. Economists polled by Reuters had forecast productivity ​would grow at a 3.0% rate after a previously reported 3.3% pace ‌of expansion in the April-June quarter.

The report was delayed by the 43-day federal government shutdown.

Productivity ​grew at a 1.9% rate from ⁠a year ago. Businesses are spending on AI, which economists said could further boost ‌productivity. The jump in productivity helps to explain the gap between strong gross domestic product growth and a lackluster labor ‌market. The economy grew at a robust 4.3% rate in the ‌third quarter. In contrast, private job gains averaged 55,000 per month in the three months through October.

Unit labor costs - the price ‍of labor per single unit of output - decreased at a 1.9% rate in the third ⁠quarter. That followed a 2.9% pace of decline in the April-June quarter. Labor costs increased at a 1.2% rate from a year ago.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

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