U.S. productivity rose faster in the fourth quarter as labor costs slowed, the U.S. Department of Labor’s Bureau of Labor Statistics today reported.
Productivity rose 3 percent, reversing the third-quarter decline of 0.1 percent, and exceeding the 2-percent median forecast from a survey of 70 economists by Bloomberg News. Labor costs rose 1.7 percent in the fourth quarter, after surging 3.2 percent in the previous quarter.
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For the full year, productivity rose 2.1 percent, slowing from 2005’s 2.3-percent gain but continuing a string of annual gains that stretches back to 2003. Labor costs were up 3.2 percent, after rising only 2.0 percent the year before; the 2006 increase was the biggest rise since 2000.
“This report certainly gives the Fed a sense of relief,” Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, N.C., told Bloomberg . “They’ll stay on hold through all of 2007 and a good part of 2008.”
Additional information – including fourth-quarter and full-year data for the business and manufacturing sectors – is available at www.bls.gov.
