According to Tuesday’s Labor Department report, labor productivity dropped at its fastest pace in over 60 years during the third quarter.

Nonfarm sector productivity, which measures output against energy, fell 5.2% over the three-month period. This is worse than the Dow Jones forecast of a drop in output of 5%, and it has been the lowest since the second quarter 1960. This was because output rose 1.8% and hours worked rose 7.4%.

Year-over-year, productivity declined 0.6%. This was the largest decline in productivity since 1993’s second quarter.

It was also evident that inflation occurred in the report.

The unit labor cost, also known as the amount businesses pay per unit of input or how much they charge, increased 9.6% in the second quarter. This was due to a 3.9% rise in compensation and a decline in productivity. This was much higher than the 8.4% Dow Jones estimate.

When determining the unit labor cost, wage increases are offset by productivity gains. However, lower productivity levels can increase that number.

Federal Reserve officials closely monitor productivity data to determine its effect on inflation. As companies have to pay more for labor, and profits are under threat, low productivity tends to drive up inflation.

The current state of the economy is its fastest inflation spurt in more than 30 yearsFed officials and officials can be expected to begin tightening monetary policyTo counter rising prices