New U.S. figures show labour troubles ahead

New U.S. figures released Thursday point to growing labour pains as Christmas looms.

The U.S. Labor Department said American productivity, the amount of output per employee per hour, rose faster than expected in the July-to-September period, up 1.1 per cent compared to analysts' forecast of 0.3 per cent.

Usually, rising productivity is sign of a strengthening economy.

In this case, however, American industrial output actually fell in the period 1.9 per cent. In response, employers cut the number of hours their workers were on the job by 2.7 per cent.

That meant employees were working a lot less to produce fewer goods and services.

In addition, unit labour costs — a measure of potential inflation — rose by 3.6 per cent in the three months, less than what economists had predicted. But real hourly compensation, pay once inflation was subtracted, fell by 1.9 per cent in the quarter and has dropped by 0.9 per cent so far in 2008.

Taken together, these measures indicated that companies are cutting back on workers' hours and what they pay for this labour. Thus, already-worried workers are bound to feel the pinch in their wallets in the coming months from constricted credit markets.

Jobless claims indicate slowdown

The U.S. Labor Department also said the number of people making their first claim for unemployment insurance in the United States dropped slightly, down 4,000 to 481,000, but remained in the range indicating an economic slowdown.

More troubling, however, was the 25 year-high reached in the number of men and women who are made continuing claims for government employment cash in the latest one-week period.

Slightly more than 3.8 million Americans were in the long-term unemployment category for this period, up more than one million compared to the same time in 2007.

That meant that the number of people who were unemployed and were having problems securing new work has risen almost 50 per cent in 12 months.