Productivty Revised Upwards, But Still Slowing

Productivity has been a big factor in this expansion (even though pay increases have not kept up with productivity). However, productivity growth is slowing. From the Bureau of Labor Statistics:

Business sector productivity grew at an annual rate of 0.4 percent
during the third quarter of 2006, as output increased 2.2 percent and hours of all persons engaged in the sector rose 1.8 percent (tables A and 1). When the third quarter of 2006 is compared to the third quarter of 2005, labor productivity rose 1.5 percent. This is the smallest four-quarter increase since a similar rise in the second quarter of 1997. In the second quarter of 2006, output per hour increased 1.1 percent.

Output per hour of all persons in the nonfarm business sector rose 0.2 percent during the third quarter of 2006, reflecting increases in output and hours of 2.3 percent and 2.1 percent, respectively (tables A and 2). The 1.4-percent increase from the third quarter of 2005 to the third quarter of 2006 was the smallest four-quarter gain in nonfarm business productivity since the second quarter of 1997 (1.3 percent). In the second quarter of 2006, productivity in nonfarm businesses had increased 1.2 percent as output grew 2.7 percent and hours increased 1.5 percent.