ECONOMY

US productivity grew at 2.3 percent rate in third quarter while labor costs fell

In this Sept. 4, 2014 photo, Family Dollar assistant manager Robin Swint arranges merchandise at her store in Wilmington, N.C. The Commerce Department revises its estimate of U.S. company productivity and costs for the July-September quarter on Wednesday, Dec. 3, 2014. (AP Photo/The Star-News, Matt Born)

In this Sept. 4, 2014 photo, Family Dollar assistant manager Robin Swint arranges merchandise at her store in Wilmington, N.C. The Commerce Department revises its estimate of U.S. company productivity and costs for the July-September quarter on Wednesday, Dec. 3, 2014. (AP Photo/The Star-News, Matt Born)  (The Associated Press)

U.S. workers' productivity increased in the July-September quarter at a slightly faster pace than previously estimated while labor costs declined for a second straight quarter.

The Labor Department says productivity, the amount of output per hour of work, increased at an annual rate of 2.3 percent in the third quarter while labor costs fell at a rate of 1 percent.

In its first estimate, the government had put productivity growth at a slightly slower 2 percent and said labor costs had risen a tiny 0.2 percent. The strengthening of productivity growth combined with a faster drop in labor costs should reassure the Federal Reserve that there is little threat of unwanted inflation pressures harming economic growth any time soon.

Greater productivity is the key factor determining rising living standards.