The productivity of U.S. workers probably rose in the third quarter as companies redoubled efforts to rein in costs amid signs the recovery was cooling, economists said before a report today. A measure of employee output per hour rose at a 1 percent annual rate after dropping at a 1.8 percent pace in the previous three months, according to the median estimate of 65 economists surveyed by Bloomberg News. The report may also show labor costs climbed at a 0.6 percent pace after increasing 1.1 percent in the second quarter. Employers sought to protect profits last quarter by curbing payrolls and squeezing more output from existing staff. Waning labor expenses, which account for about two-thirds of the cost of producing a good or service, may help keep inflation below the Federal Reserve’s long-term forecast, one reason why central bankers yesterday announced a new round of asset purchases. “Aggressive labor-market adjustment has delivered striking gains in productivity,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Restrained costs are “contributing to continued strength in profits.” The Labor Department’s report is to be issued at 8:30 a.m. in Washington. Economists’ estimates ranged from no change to a 2.6 percent increase. Another report at the same time may show the number of Americans seeking jobless benefits rose last week while holding in a range that indicates the labor market is on the mend. Initial jobless claims rose by 8,000 to 442,000 in the week ended Oct. 30, according to economists surveyed by Bloomberg. Profit Outlook Corporate profits climbed 37 percent in the second quarter from the same time a year earlier, according to figures from the Commerce Department. Analysts surveyed by Bloomberg predict an average 28 percent gain in third-quarter profit from a year earlier for all Standard & Poor’s 500 companies, and a 36 percent advance for all of 2010. The S&P 500 Index has gained 14 percent since Aug. 31 on anticipation of further Fed easing. The Fed yesterday said it would buy an additional $600 billion of Treasuries through June, expanding its record stimulus of $1.7 trillion in asset purchases while promising to “adjust the program as needed” to boost job growth and foster price stability. Newell Rubbermaid Inc., which makes and markets a range of products including housewares and tools, is among companies focusing on improving efficiency rather than raising prices to make up for increasing material expenses. Boosting Efficiency “We’re looking to productivity to offset most of the inflation in raw materials and input costs,” Juan Figuereo, chief financial officer at the Atlanta-based company said on an Oct. 29 teleconference. “We haven’t really had to rely on pricing.” Others, like United Technologies Corp., the maker of Pratt & Whitney jet engines and Carrier air conditioners, are cutting jobs while trying to sustain output. The Hartford, Connecticut- based company plans to cut about 3,300 jobs through 2011 as part of cost-reduction efforts previously announced. Republicans on Nov. 2 gained at least 60 seats in the House of Representatives, capitalizing on concern about unemployment and government spending and delivering a rebuke to President Barack Obama’s domestic agenda. Democrats retained control of the Senate. The Labor Department may report tomorrow that the unemployment rate was 9.6 percent in October for a third month, according to the median forecast of economists surveyed by Bloomberg. Private payrolls, which exclude government agencies, rose by 80,000, the survey showed.

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