U.S. labor productivity declines less than initially estimated in the fourth quarter of 2020

The revised data from the U.S. Labour Department showed on Tuesday that nonfarm business sector labor productivity in the United States decreased 4.2 percent q-o-q in the fourth quarter of 2020, as output rose 5.5 percent q-o-q and hours worked surged 10.1 percent q-o-q (seasonally adjusted). That was better than the initial estimate of a drop of 4.8 percent q-o-q and economists’ forecast for a decline of 4.7 percent q-o-q. In the third quarter, labor productivity surged 4.2 percent q-o-q (revised from initially reported +4.6 percent q-o-q).

In y-o-y terms, the labor productivity increased 2.4 percent, reflecting a 2.6-percent fall in output and a 4.9-percent drop in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the fourth quarter rose 6.0 percent q-o-q compared to an initial estimate of a 6.8 percent q-o-q advance and a revised 9.7 percent q-o-q plunge in the prior quarter (originally a 7.0 percent q-o-q decrease). Economists had forecast a 6.6 percent q-o-q jump in fourth-quarter unit labor costs.

Unit labor costs quarterly gain reflected a 1.5-percent q-o-q climb in compensation and a 4.2-percent q-o-q fall in productivity.

Compared to the corresponding period of 2019, unit labor costs rose 4.2 percent.