U.S. worker productivity soared in the spring while labor costs declined - two welcome results that may relieve concerns about growing inflation - but jobless claims jumped and the private sector cut jobs last month, reflecting a weakening labor market. The Commerce Department said Thursday that productivity - the amount of output for every hour of work - rose at a 4.3 percent annual rate in the April-June quarter, a full percentage point higher than analysts had expected, while labor costs fell at an annual rate of 0.5 percent in the quarter, slightly better than expected. Rising wages are good for workers, but if those rises outpace productivity increases, they cause inflation to rise as companies charge more for their products. But Thursday's productivity report should be welcomed by the Federal Reserve (Fed), which has been concerned that surging energy and commodity prices could increase overall inflation. The second quarter's 4.3 percent increase in productivity followed a more moderate 2.6 percent rise in the first quarter and was the biggest gain since a 5.8 percent spike in the third quarter of 2007. The second quarter's result also was far better than the growth of 1.4 percent recorded for all of last year. The 0.5 percent decline in unit-labor costs followed a 1.2 percent increase in the first quarter and was the first drop since a 2.4 percent decline in the third quarter of 2007. Meanwhile, the Labor Department reported Thursday that the number of newly unemployed Americans seeking jobless benefits jumped unexpectedly last week, reversing three weeks of declines. Jobless claims rose to 444,000 last week, up 15,000 from the previous week. Analysts had expected jobless claims to decline to 420,000. The four-week moving average of jobless claims - considered a better gauge of labor conditions because it smoothes out weekly fluctuations - fell slightly to 438,000, down 3,250 from the previous week. The increase in weekly jobless claims indicates that the slowing U.S. economy is affecting the job market. Economists consider jobless claims above 400,000 to be a sign of a weak economy. Initial jobless claims were 320,000 in the same week a year ago. The poor condition of the labor market was supported by another report Thursday that said U.S. private employers cut 33,000 jobs in August. According to ADP Employer Services, job cuts in manufacturing and construction outweighed hiring by service-sector employers.
