Fourth quarter unit labour costs undershoot forecasts

(Sharecast News) - Improved productivity at the end of 2023 helped dampen labour cost growth. According to the U.S. Department of Labor, in seasonally adjusted terms labour productivity rose at a quarterly annualised pace of 3.2% in the fourth quarter just ended (consensus: 2.5%).

Nominal hourly compensation meanwhile was up by 3.7%, such that so-called unit labour costs increased by only 0.5% (consensus: 1.7%).

"The solid increase in Q4 productivity growth takes the year-over-year rate to 2.7%, above even our bullish view that the medium-term trend is 1.5-to-2%," said Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics.

"That said, these numbers are wild in the short-term, and are subject to endless revisions, which can be large."