"The rise in labor costs — while welcome to workers — was faster than the 2.8 percent pace economists were forecasting."

This figure always conflicts me, but we might as well digest it. From the NY Times:

"WASHINGTON (AP) — The efficiency of American workers slowed sharply in the summer as a huge pullback by consumers threw the national economy into reverse.

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The New York Times

The Labor Department reported Thursday that productivity — the amount an employee produces for every hour on the job — grew at an annual pace of 1.1 percent in the third quarter, down from a 3.6 percent growth rate in the second quarter.

With productivity growth slowing, labor costs picked up. Unit labor costs — a measure of how much companies pay workers for every unit of output they produce — increased at a 3.6 percent pace in the third quarter, compared with a 0.1 percent rate of decline in the previous period.

Worker productivity growth slowed as overall production declined, reflecting the hit to consumers and the economy as a whole from the housing, credit and financial turmoil."