US labour costs rose more quickly than expected in the fourth quarter
Labour costs Stateside rose sharply at the end of last year as worker´s productivity slipped, new government statistics revealed.
The productivity of US workers declined at an annualised 3.0% quarter-on-quarter clip (consensus: -1.5%) over the three months to the end of December, after an increase of 2.1% in the third quarter, according to the Bureau of Labour Statistics.
That was the result of slump in output to just an 0.1% clip even as hours worked accelerated from -0.3% to 3.0%.
In parallel, hourly compensation retreated from a 4.1% pace to 1.3%.
As a result, unit labour costs jumped by 4.5% (consensus: 3.9%) following an increase of 1.9% in the previous quarter.
In one line: Terrible; unit labor costs are rising too quickly for a super-easy Fed, analyst says
"A favorable base effect kept the y/y rate of unit labor costs down to 2.8%, from 3.0% in Q3, but the underlying trend is accelerating and is already at pace which must be disturbing to a central bank obsessed with cost-push inflation risk. When unit labor costs growth was sustained above 2% in the previous economic cycle, the fed funds rate was heading towards 5.25%," wrote Pantheon Macroeconomics´s chief economist Ian Sheperdson.