US productivity falls in Q4; labour costs rise

[WASHINGTON] US nonfarm productivity braked more sharply than expected in the fourth quarter, while unit labour costs rebounded after falling in the prior three months.

The Labour Department said on Thursday productivity fell at a 1.8 per cent annual rate after rising at a revised 3.7 per cent pace in the third quarter.

Economists had forecast productivity, which measures hourly output per worker, rising at a 0.5 per cent pace.

Productivity was relatively weak for much of last year, increasing 0.8 per cent compared to 0.9 per cent in 2013.

Unit labour costs, a key gauge of inflation and profit pressures that measures the price of labour for any given unit of output, increased at a 2.7 per cent rate in the fourth quarter after falling at a 2.3 per cent rate in the third quarter.

For all of 2014, unit labour costs rose 1.5 per cent compared to a gain of 0.2 per cent in 2013. Hourly compensation rose at a 0.9 per cent rate in the fourth quarter. It had risen at a 1.3 per cent pace in the July-September quarter.

REUTERS