WASHINGTON — U.S. third-quarter nonfarm productivity report was better than expected but still shows rising compensation in a declining economy.

Productivity printed up 1.1% but unit labor costs posted a 3.6% gain, partly a bounce from a 0.1% decline in the second quarter. Hours fell 2.7% but output also fell 1.7%, in line with the drop in real gross domestic product.

Compensation, which lags due to contracts and prior hiring, continued to gain at plus-4.7%, which should soon decelerate as the labor market’s weakness becomes more apparent.

The drop in manufacturing productivity was centered in nondurables — a 7.3% loss — while the second-quarter drop was due to durables. One explanation is that the auto sector probably adjusted to lower sales.

— Market News International

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