Productivity boost for US economy

US worker productivity was at its strongest in four years in the three months to October, official data shows, reported The BBC.

The US Labor Department said that productivity, or output per hour of work, rose at an annualised pace of 6.3% in the third quarter.

Unit labour costs, a gauge of wage inflation, fell 2% in the period, the largest decline in four years.

Productivity growth and less wage pressure should ease Federal Reserve concerns about inflation.

The jump in productivity was higher than economists were expecting.

There was more upbeat news for the US economy when figures from the Commerce Department showed that new orders at US factories unexpectedly rose by 0.5% in October, helped by more demand for defence and transportation equipment.

The US central bank is expected to cut interest rates by a quarter percentage point next week to 4.25% when Federal Reserve officials hold their last meeting of the year on Tuesday.

While the US economy grew by a healthy annualised rate of 4.9% in the third quarter, growth is expected to slow sharply in coming months as a slump in the housing market and financial market turmoil stemming from the credit crunch takes its toll.