Fourth Quarter US worker productivity up, Labor costs up

workers were more efficient at the end of last year, although their gains in productivity have slowed from this summer, the Labor Department reported on Wednesday. The department said productivity rose at an annual rate of 0.9 percent in the October through December quarter. The second and final estimate was slightly up from preliminary estimate of 0.7 percent issued last month. Labor costs increased at a 2.8 percent rate in the fourth quarter, slower than the 3.9 percent rise in the third quarter. With millions of people still out of work, economists say there is little danger that wage pressures will push inflation higher. Separately, the Labor Department said wages rose much faster than initially thought in the fourth-quarter amid modest gains in productivity. Unit labor costs rose at annual rate of 2.8 percent, up from the 1.2 percent pace it reported last month. Economists had expected unit labor costs, which are closely watched by the Federal Reserve for signs of inflation, would be unrevised. Wages rose at an upwardly revised 3.9 percent pace in the third quarter, which was previously reported as a 2.1 percent drop.