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The numbers: The productivity of American workers rose by a revised 1.7% annual rate in the fourth quarter, the Labor Department said Thursday.
The increase was originally put at 3% in the government’s preliminary report last month.
Economists polled by the Wall Street Journal has expected a reading of 2.5% annual rate.
Productivity increased a revised 1.7% at an annual rate in the fourth quarter, revised from the prior reading of a 1.5% rise.
Annual average productivity fell 1.7% in 2022. That’s the largest decline since 1974. The average rose 2.2% in the prior year.
Key details: Unit labor costs climbed by a 3.2% annual pace in the fourth quarter, compared to the preliminary 1.1% increase.
Economists were expecting a 1.4% gain.
Output was revised down to 3.1% from 3.5%. Hours worked rose a revised 1.4% compared with the initial estimate of 0.5%.
Big picture: Productivity is the secret sauce of the economy. It allowed the economy to grow strongly with no inflation in the 1990s, but lately has been weak.
At the same time, unit labor costs are rising too quickly to get inflation to fall back to the Federal Reserve’s 2% target.
“It is difficult to tell an upbeat story about productivity. but some people are trying,” said Robert Brusca, chief economist at FAO Economics, ahead of the report.
Market reaction: Stocks
DJIA,
SPX,
were expected open mixed on Thursday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 4.07% in early trading.
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