US productivity falls at 1.8 percent rate in Q4 while labor costs rise

Economic Indicators Associated Press

U.S. worker productivity went into reverse in the final three months of the year, while labor costs increased.

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The Labor Department says productivity, the amount of output per hour of work, fell at 1.8 percent rate in the fourth quarter after rising at a 3.7 percent rate in the third quarter.

Labor costs increased at a 2.7 percent rate in the fourth quarter after having fallen at a 2.3 percent rate in the third quarter.

The drop in productivity and rise in labor costs reflected the fact that the growth in overall output slowed in the fourth quarter.

Economists say quarterly changes in productivity and labor costs can swing sharply. They believe labor costs are still rising at slow levels that do not present a threat of higher inflation.