According to a new report published by the US department of labour, US labour productivity growth has been at a standstill for the three months ending September 2006, the latest indication that the American economy is slowing.

The labour department''s figures were released a day after separate data showing that the US manufacturing sector grew at its slowest pace for three years in October.

The labour department measures productivity as the amount of output per hour of work.

At the same time unit labour costs increased 5.3 per cent from the same period in 2005, increasing fears of inflation at the US Federal Reserve.

Both sets of numbers reflect a weakness in the economy adding to growing concerns of an economic slowdown, with some analysts voicing fears of stagflation.

The US Fed will have to take these sets of data in to account when it meets in December to decide on interest rates for the coming quarter.

Economists say the increased labour cost suggest an increase in rates might be necessary to control inflation, while the weakening manufacturing sector data indicates that the manufacturing sector would benefit from a cut.