US labor productivity slows in Q4 2024

The pace of growth in US labor productivity slowed more than expected in Q4 2024, as wage costs rose and output fell.

Labor productivity rose 1.2% in the fourth quarter, compared with 2.3% in the previous quarter and compared with expectations for a 1.4% increase, according to data released Thursday by the Labor Department.

At the level of the full year, productivity increased 2.3% in 2024 compared with just 1.6% growth in the previous year.

The data also showed that unit labor costs — a key indicator of wage growth — rose 3% in Q4, accelerating sharply from just 0.5% growth in Q3 2024.

In addition, the annual increase in unit labor costs accelerated to 2.6% in 2024, from 2.2% a year earlier, which indicate mounting inflationary pressures from wages.