US labour productivity continued to languish in the fourth quarter

The cost of employing a worker in the United States increased at the end of last year after output growth came off the boil much more quickly than workers’ hourly compensation, revised government figures revealed on Thursday.

The cost of employing a worker in the States increased at the end of last year after output growth came off the boil much more quickly than workers’ hourly compensation, revised government figures revealed on Thursday.

Unit labour costs (ULC), which measure the difference between the rates at which worker’s salaries and productivity are growing, accelerated to reach an annualised quarterly rate of growth of 4.1% (versus a preliminary estimate of 2.7%), bouncing back from the 1% contraction seen over the previous quarter, the Bureau of Labor Statistics reported.

Labour productivity contracted at a 2.2% clip, more than the 1.8% drop initially estimated, after rising by 3.9% in the previous three months.

On the other hand, hourly compensation only slowed to a 1.9% pace, better than the 0.9% initially thought, from the 2.8% seen in the third quarter.

In terms of year-on-year rates of change ULCs were up by 2.6% while productivity slipped 0.1%.

Commenting on the above data, Blerina Uruci, at Barclays, said: “Compensation per hour rose 2.5% y/y (from 2.4%) and is consistent with only a modest pickup in wage growth. This was a mixed report and suggests that subdued productivity growth and fast rising ULC may limit the ability of wages to rebound strongly.”