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Productivity surged in the third quarter by the largest amount in six years while labor costs fell. While that indicates inflation is remaining under control, it also signals that workers’ wages are getting squeezed, raising doubts about the durability of the economic recovery.
The Labor Department said Thursday productivity was rising at an annual rate of 8.1 percent in the July-September period, the biggest jump since 2003, while unit labor costs were falling at a 2.5 percent rate.
The productivity gain was revised down from an initial estimate of 9.5 percent made a month ago while the drop in unit labor costs was less than the 5.2 percent plunge first reported. The revisions were larger than economists had expected.
The tally of newly laid-off workers seeking unemployment benefits fell unexpectedly for the fifth straight week, a hopeful sign the job market is slowly improving.
Still, claims remain above the levels that most analysts say would be consistent with an economy that is adding jobs. The unemployment rate is at 10.2 percent and expected to keep climbing into next year.
First-time claims for unemployment insurance dropped by 5,000 to a seasonally adjusted 457,000, the lowest total since the week of Sept. 6, 2008, the Labor Department said Thursday. Wall Street economists expected an increase, according to a survey by Thomson Reuters.
FedEx Corp. said Thursday it will raise shipping rates for its Ground and Home Delivery units by an average of 4.9 percent in 2010 – 1 percentage point less than this year’s rate hike.
FedEx announced in September it will increase shipping rates for Express packages shipped within or from the U.S. by an average of 5.9 percent in 2010, also 1 percentage point lower than FedEx’s rate increase this year. That rate is partially offset by a lower fuel surcharge.
All of the rate increases will take effect Jan. 4.
FedEx’s larger rival UPS Inc. also is hiking 2010 ground rates by an average of 4.9 percent.
American Airlines upped the ante in the tug-of-war over Japan Airlines, vowing Thursday to lead a $1.1 billion investment in the struggling carrier to prevent it from falling into the orbit of rival Delta.
American’s chief financial officer, Tom Horton, told reporters that the offer is “far superior” to the $1 billion rival proposal from Delta Air Lines and its SkyTeam partners.
He refused to describe the composition of the offer, or say how much of the money would come from American. But he said the proposal by American, its oneworld partners and private equity firm TPG Inc. is part of a larger restructuring plan to get JAL back on solid footing.
Wal-Mart Stores Inc. has agreed to pay $40 million to 87,500 Massachusetts employees who claimed the retailer denied them rest and meal breaks, manipulated time cards and refused to pay overtime, according to court documents filed Wednesday.
The settlement – believed to be one of the largest of its kind in the state – seeks to resolve a class-action lawsuit filed in 2001.
