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U.S. productivity falls 3% in Q4, more than expected

Staff writer |
Labor productivity in the U.S. fell by more than anticipated in the fourth quarter, according to the Labor Department.

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The report said labor productivity dropped by 3 percent in the fourth quarter after climbing by 2.1 percent in the third quarter. Economists had expected productivity to decline by 1.8 percent.

The bigger than expected decrease in productivity, a reading on output per hour, came as hours worked increased by 3.3 percent and output ticked up just 0.1 percent. In the previous quarter, hours worked edged down by 0.3 percent, while output increased by 1.8 percent.

Meanwhile, the Labor Department also said unit labor costs jumped by 4.5 percent in the fourth quarter following a 1.9 percent increase in the third quarter. Costs had been expected to rise by 4.4 percent.

The sharp increase in labor costs reflected the drop in productivity as well as a 1.3 percent increase in hourly compensation. Real hourly compensation, which takes changes in consumer prices into account, climbed by 1.1 percent during the quarter.

Compared to the same quarter a year ago, productivity edged up by 0.3 percent in the fourth quarter, as output rose by 1.9 percent and hours worked increased by 1.5 percent.

Unit labor costs were up by 2.8 percent year-over-year in the fourth quarter amid a 3.1 percent jump in hourly compensation.


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