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U.S. worker productivity rebounds in fourth quarter; labor costs tepid -Breaking

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© Reuters. FILEPHOTO: A line of construction workers waits to conduct a temperature testing to get back to work after lunch. The test was performed amid the COVID-19 (coronavirus) epidemic in Manhattan Borough, New York City. REUTERS/Carlo All

WASHINGTON (Reuters] – U.S. worker productivity rebounded faster than expected during the fourth quarter. However, the coronavirus outbreak has distorted data, preventing a clear trend.

On Thursday, the Labor Department reported that nonfarm productivity (which measures hourly output per employee) increased by 6.6% annually last quarter. According to revised data, productivity declined at a rate of 5.0% instead the 5.2% previously reported.

Reuters polled economists to find that 3.2% of them expected the productivity rate to rise. Since the United States pandemic began three years ago, productivity has fluctuated.

Productivity grew by 2.0% in the fourth quarter 2020 compared to the previous quarter. The 2.4% increase in productivity in 2020 was slowed by a 1.9% rise in productivity in 2021.

Last quarter’s hourly rate for workers rose by 2.4%, which is down from the 7.3% pace of growth in the October-December period.

Unified labor costs (the price paid for labor to produce a unit) increased at 0.3%. In the third quarter, they grew at 9.3%. The annual increase in unit labor costs was 3.1%. After increasing by 4.5% in 2020 they rose 3.3% to 2021.

The tepid increase in labor costs last quarter is unlikely to give a true picture of business labor costs.

Last week, the government announced that the Employment Cost Index (the broadest measure of labor cost) increased 1.0% in fourth quarter, after rising 1.3% in July-September. On a year to-year basis, labor costs rose 4.0%. This is the biggest increase since the fourth quarter 2001.

The productivity report on Thursday also revealed that hourly compensation increased at 6.9% last quarter. It follows 3.9% growth in the third quarter. Comparable to 2020’s fourth quarter, compensation increased by 5.1%. After rising 7.0% from 2020, it rose 5.2% to 2021.

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