US Productivity Rises 3% in 4th Quarter
US productivity rose at a 3% annual rate, much stronger than anticipated, in the 4th quarter of 2006. The Fed has been wary of inflation and has received the good news that labor costs have moderated.
The Labor Department reported that nonfarm business productivity advanced 1.8%, which is a gauge of worker productivity per hour. This was compared to a .1% decline in the third quarter.
The rise in productivity helped moderate unit labor cost growth to a 1.7% annual rate, as compared to an expected gain of 2.1%. This was despite a jump in the compensation rate per hour and is up from 3.1% in the third quarter.
Unit labor costs are a gauge of inflation and profit pressures watched closely by the U.S. central bank.
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