Labor costs increased at a 2.8 percent rate in the fourth quarter. That’s lower than the 3.9 percent rise in the third quarter, but much higher than the initial fourth-quarter estimate of 1.2%.
The Labor Department said Wednesday that productivity rose at an annual rate of 0.9 percent in the October-December quarter. While that’s a slight upward revision from last month’s preliminary estimate, it’s half the pace from the July-September quarter.
Productivity is the amount of output per hour of work. Worker productivity grew last year at the slowest pace in nearly a quarter of a century.
A slowdown in productivity is bad for corporate profits. But it can be a good sign for future hiring. It may mean that companies are unable to squeeze more work out of their existing work force and must add more workers if they want to grow.