US productivity slows in fourth quarter

[WASHINGTON] US worker productivity slowed in the fourth quarter, but the trend remained solid, keeping growth in labour costs in check.

Nonfarm productivity, which measures hourly output per worker, increased at a 2.8 per cent annualised rate last quarter after rising at an upwardly revised 5.2 per cent pace in the third quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday (Mar 5). Economists polled by Reuters had forecast productivity increasing at a 1.9 per cent rate after advancing at a previously reported 4.9 per cent pace in the July-September quarter.

Productivity growth in the second quarter was slightly revised up to a 4.2 per cent rate from the previously reported 4.1 per cent pace. Productivity grew at a 2.8 per cent rate from a year ago. It increased 2.2 per cent in 2025.

The report was delayed by last year’s government shutdown.

The slowdown in quarterly productivity was flagged by a sharp moderation in gross domestic product growth in the fourth quarter to a 1.4 per cent rate from a 4.4 per cent pace in the July-September quarter. Economists expect the rapid adoption of artificial intelligence will boost productivity and rein in labour costs.

Unit labour costs – the price of labour per single unit of output – increased at a 2.8 per cent rate last quarter after declining at a revised 1.8 per cent pace in the third quarter. Economists had forecast labour costs rebounding at a 2.0 per cent pace after contracting at a previously reported 1.9 per cent rate.

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They fell at an unrevised 2.9 per cent rate in the second quarter.

Labour costs grew at a 1.3 per cent rate from a year ago. They increased 1.9 per cent in 2025. REUTERS