Ahead Of The Bell: Productivity, Labor Costs

WASHINGTON (AP) — Economists expect productivity posted another sizzling advance in the July-September period while labor pressures plunged, a combination that will bolster companies' profits but continue to squeeze workers whose incomes stagnated during the recession.

Economists surveyed by Thomson Reuters expect productivity rose at a 6.4 percent annual rate in the third quarter, nearly matching the 6.6 percent increase in the second quarter. That was the biggest quarterly gain in six years.

Unit labor costs likely dropped at an annual rate of 4 percent, after a 5.9 percent plunge in the second quarter.

The Labor Department is scheduled to release the report at 8:30 a.m. EST Thursday.

It's typical for productivity to surge at the end of a recession as businesses continue to aggressively cut costs even as output starts to rebound.

Productivity, the amount of output per hour of work, is the key ingredient to rising living standards. It allows companies to pay their workers higher wages with the increases financed by the increased output rather than higher costs for products.