US unit labour costs rise by a tad less than expected in Q4

Inflationary pressures in the U.S. from salaries and compensation eased at the end of 2023.

According to revised figures from the Department of Labor, in seasonally adjusted terms labour productivity increased at a quarterly annualised pace of 3.2% over the three months to December (consensus: 3.1%).

In parallel, unit labour costs were up by 0.4% (consensus: 0.6%).

"Despite the uptick in Q4, the trend in unit labor cost growth continues to moderate, pointing to further declines in services inflation outside of housing, the final key piece for the Fed to achieve its goal of returning inflation to 2%," said Nancy Vanden Houten, lead US economist at Oxford Economics.

"Our baseline assumes the Fed will begin lowering rates in May, although strong data may cause a delay in the first cut. We will reassess our forecast for the timing of the first cut after the release of the February employment data on March 8 and the February CPI report on March 12."