WASHINGTON – Nonfarm productivity fell 0.1% in the preliminary estimate for the fourth quarter, compared with expectations for a 0.7% gain, a surprise decline that boosted unit labor costs. Productivity rose 2.7% in the previous quarter.
Outlays still rose 3.2% in the fourth quarter after a 4.0% gain in the previous quarter, but hours worked surged by 3.3%, the strongest gain since the fourth quarter of 2014. This followed a 1.2% rise in the third quarter, accounting for the dip in nonfarm productivity.
Unit labor costs rose 2.0% in the most recent quarter, twice the size of the 1.0% gain expected and following a 0.1% decline in the previous quarter.
On a year/year basis, nonfarm productivity rose by 1.1% in the fourth quarter, down from a 1.4% pace in the previous quarter. Unit labor costs were up 1.3% year/year, much stronger than the 0.6% year/year declines seen in the previous two quarters.
For the full year of 2017, productivity rose 1.2%, a solid improvement from the 0.1% decline in 2016. At the same time, unit labor costs rose 0.2% in all of 2017, a slowdown from the 1.1% rise in 2016.
