Photo: Productivity, or non-farm business employee output per hour, rose at a 2.2 percent annualized rate in the July-to-September period.

U.S. labor costs grew at a surprisingly strong pace in the third quarter, and was much stronger than previously thought earlier this year, which risks fanning inflationary pressures. Unit labor costs, or what a business pays employees to produce one unit of output, increased at a 1.9 percent annualized rate, following significant upward revisions to prior quarters, data from the Bureau of Labor Statistics (BLS) showed Thursday.

The BLS said that the release incorporated revised historical data for the past five years, which informs the statistics. The revisions point to much stronger pay gains for Americans in recent quarters, underscoring why consumers have been able to power the economy forward at a robust clip.

Price-adjusted hourly compensation picked up to a 3 percent pace in the July-to-September period, marking a seventh straight quarter where pay has outpaced inflation.

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Molly Smith

Molly joined Law.com International as a reporter in July 2024 after a couple of years working in business development and following the completion of a degree in journalism at Goldsmiths, University of London. [email protected]

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