WASHINGTON (Reuters) - U.S. productivity grew at a slightly faster-than-expected revised pace in the fourth quarter, government data showed on Wednesday, but an increase in hourly compensation pushed unit labor costs higher.þþU.S. non-farm productivity, or hourly output per worker, rose at a 1.9 percent annualized clip in the last three months of the year. Economists polled by Reuters expected non-farm worker productivity to show an unrevised rate of 1.8 percent.þþUnit labor costs, a gauge of inflation and profit pressures under close scrutiny by the Federal Reserve, was revised to show a 2.6 percent rise in the fourth quarter compared with forecasts for an unchanged reading of 2.1 percent.þþThe Labor Department said that compensation per hour was revised higher to a 4.6 percent rate from 3.9 percent previously estimated. But adjusted for inflation, hourly compensation fell 0.5 percent.þþThe number of hours worked fell by 1.6 percent at an annual rate, its lowest reading since the first quarter of 2003.þþThe Fed monitors productivity, a measure of how much any given worker can produce in an hour, for clues on whether cyclical swings in the business cycle are pressuring inflation, as well as for signals on longer term structural trends.þþFed policymakers have already slashed interest rates 2.25 percentage points to shield the economy from the collapse of subprime mortgages and tightening credit conditions.þþThe central bank has argued inflation currently poses less of a threat than slowing growth and is expected to lower rates again by 50 basis points at its next meeting, on March 18.þþWeaker productivity amid tight labor markets can spell wage-driven inflation. But faster productivity growth may help the economy expand without sparking wage-push inflation.þþFor last year as a whole, productivity growth was revised up to 1.8 percent compared with 1.6 percent initially thought. Yearly unit labor cost growth was unrevised at 3.1 percent, notching the quickest pace since 2000.þþUnderlying productivity performance over a period of years shapes the economy's long-term growth potential, which policymakers estimate for a sense of how fast the economy can grow without sparking price pressures.þþ(Reporting by Alister Bull, editing by Joanne Morrison)þþ
Source: NY Times
