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Financial News: U.S. Labor Productivity Rebounds Amid Jump In Output

U.S. Labor Productivity Rebounds Amid Jump In Output

02/06/2020 - 09:23:00 (RTTNews)

(RTTNews) - After reporting a modest decrease in U.S. labor productivity in the previous quarter, the Labor Department released a report on Thursday showing a notable rebound in productivity in the fourth quarter.

The Labor Department said labor productivity jumped by 1.4 percent in the fourth quarter after edging down by 0.2 percent in the third quarter. Economists had expected productivity to surge up by about 1.5 percent.

The rebound in productivity, a measure of output per hour, came as output spiked by 2.5 percent compared to the 1.1 percent increase in hours worked.

In the third quarter, output and hours worked both showed significant increases, jumping by 2.3 percent and 2.5 percent, respectively.

The report said unit labor costs also shot up by 1.4 percent in the fourth quarter after spiking by 2.5 percent in the previous quarter. The continued increase in labor costs matched economist estimates.

Hourly compensation surged up by 2.8 percent in the fourth quarter following a 2.3 percent advance in the third quarter.

However, taking changes in consumer prices into account, real hourly compensation crept up by just 0.3 percent in the fourth quarter after rising by 0.5 percent in the third quarter.

Compared to the same quarter a year ago, productivity in the fourth quarter was up by 1.8 percent, as output spiked by 2.7 percent and hours worked rose by 0.9 percent.

Unit labor costs were up by 2.4 percent year-over-year, with hourly compensation surging up by 4.2 percent and real hourly compensation climbing by 2.1 percent.

"Productivity growth reached its fastest pace since 2010 last year, but we do not believe such performance will be sustained given lower domestic and global growth prospects," said a note from economists at Oxford Economics.

They added, "Meanwhile, labor cost pressures continue to build amid limited companies' pricing power, suggesting that profit margins will remain under pressure and continue to deter business investment and hiring in 2020."

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