/U.S. fourth-quarter productivity weakest since 1981
U.S. fourth-quarter productivity weakest since 1981

U.S. fourth-quarter productivity weakest since 1981


U.S. fourth-quarter productivity weakest since 1981

By Reuters Staff

U.S. worker productivity fell at its sharpest pace in nearly 40 years in the fourth quarter, the government confirmed, though the trend remained solid.
Nonfarm productivity, which measures hourly output per worker, dropped at a 4.2% annualized rate last quarter, instead of the previously reported 4.8% pace, the Labor Department said.
It was the deepest rate of contraction since the second quarter of 1981.

U.S. worker productivity fell at its sharpest pace in nearly 40 years in the fourth quarter, the government confirmed on Thursday, though the trend remained solid.
The Labor Department said nonfarm productivity, which measures hourly output per worker, dropped at a 4.2% annualized rate last quarter, instead of the previously reported 4.8% pace. That was still the deepest rate of contraction since the second quarter of 1981.
Economists polled by Reuters had expected productivity would be revised slightly to show it contracting at a 4.7% rate.
Compared to the fourth quarter of 2019, productivity increased at a 2.4% pace, instead of the 2.5% rate reported last month. The Covid-19 pandemic has hollowed out lower-wage industries, like leisure and hospitality, which economists say tend to be less productive.
Hours worked rose at a 10.1% rate last quarter, revised down from the 10.7% pace estimated in February.
Unit labor costs — the price of labor per single unit of output — rebounded at a downwardly revised 6.0% rate. They were previously reported to have increased at a 6.8% pace. Unit labor costs increased at a 4.2% rate from a year ago, rather than at the 5.2% pace that was initially estimated.
Labor costs have been distorted by the pandemic’s disproportionate impact on lower-wage industries.
Hourly compensation increased at a 1.5% rate last quarter. That was revised down from the 1.7% pace reported in February. Compensation increased at a 6.7% rate compared to the fourth quarter of 2019, instead of the 7.8% pace estimated last month.
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