US WORKER productivity grew solidly in the fourth quarter, the government confirmed on Thursday (Mar 7), putting a lid on labour costs.

Nonfarm productivity, which measures hourly output per worker, increased at an unrevised 3.2 per cent annualised rate last quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday. Productivity increased at a 4.7 per cent rate in the July-to-September quarter, revised down the previously reported 4.9 per cent pace. It advanced at a 2.6 per cent rate from a year ago rather than the previously reported 2.7 per cent pace.

Some economists have credited rising productivity for the labour market’s resilience. Productivity increased 1.3 per cent in 2023, revised up from 1.2 per cent.

Unit labour costs – the price of labour per single unit of output – rebounded at a 0.4 per cent rate in the fourth quarter. These costs were previously estimated to have risen at a 0.5 per cent rate. Labour costs increased 2.5 per cent pace from a year ago, revised up from the initially estimated 2.3 per cent rate.

Labour costs increased 3 per cent in 2023, revised up from 2.9 per cent.

Federal Reserve chair Jerome Powell told lawmakers on Wednesday that the US central bank expected “inflation to come down, the economy to keep growing,” but shied away from committing to any timetable for interest rate cuts. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25 to 5.50 per cent range. REUTERS

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