NEW YORK, Nov 1 (Reuters) - Yields on longer-dated Treasury bonds rose modestly on Thursday morning after a report that unit labor costs rebounded in the third quarter after dropping the most in nearly four years in the prior period.
The Labor Department said on Thursday that unit labor costs, the price of labor per single unit of output, rebounded at a 1.2 percent pace in the third quarter. Unit labor costs in the April-June period declined at a 1.0 percent rate, which was the largest drop since the third quarter of 2014. Labor costs increased at a 1.5 percent rate from the third quarter of 2017.
A report that U.S. productivity growth slowed in the third quarter restrained yields, although the figure was slightly above expectations. Nonfarm productivity, which measures hourly output per worker, increased at a 2.2 percent annualized rate in the last quarter, slower than the 3.0 percent growth in the second quarter. The previous quarter’s number was the strongest since the first quarter of 2015.
“The slowdown in productivity growth has received significant attention as a troubling aspect of the U.S. economy, and there can be no debate that productivity – as measured — has been anemic,” said Ward McCarthy, chief financial economist at Jefferies LLC.
Yields on the five-, seven- and 10-year notes were up about a basis point, while the yield on the 30-year was up 2 basis points. Yields at the short end of the curve were little changed.
Later Thursday morning reports for two manufacturing indexes come in, with the Markit PMI Manufacturing Index at 9:45 a.m. ET and the ISM Manufacturing Index at 10:00 a.m. ET.
Reporting by Kate Duguid