US productivity grew in Q4 by the most in over a year, signaling a sharp acceleration in economic output as labor costs growth eased.
- Q4 nonfarm business employee output per hour rose at a 6.6% annual rate from the prior three months, the largest increase since the second quarter of 2020. In Q3, productivity fell 5%, the sharpest drop since 1981.
- Productivity rates can be highly volatile. On a yearly basis, output per house grew by 2%.
- Lydia Boussour and Kathy Bostjancic stated that positive productivity worked as a buffer against surging compensation growth in the fourth quarter.
- In Q4, economic output expanded at a 9.2% rate, as hours worked expanded by 2.4%. A number of factors, like early retirements, reduced the pool of available workers, leaving companies struggling to fight a record number of vacancies.
Unit labor costs expanded at a 0.3% rate in Q4 after a 9.3% increase in the prior three months. Compared with Q4 of 2020, labor costs grew by 3.1%.
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Source: US Bureau of Labor Statistics