US productivity fell sharply in Q4 while labour costs rose

U.S. productivity fell sharply in the October-December quarter while labor costs rose.

The Labor Department reported Thursday that productivity dropped at a 4.8 per cent rate in the fourth quarter after having risen strongly in the two previous quarters.

Productivity, the amount of work per hour of output, has produced some major swings since the pandemic hit early last year, pushing the country into a recession.

After falling 0.3 per cent in the first quarter, productivity shot up at a 10.6 per cent rate in the second quarter as millions of people lost their jobs. With employment falling faster than output, productivity increased.

Labour costs jumped at a 6.8 per cent rate in the fourth quarter after having fallen at a 7 per cent rate in the first third quarter.