WASHINGTON: U.S. worker productivity fell at its steepest pace since 1981 in the fourth quarter, but the trend remains solid as the COVID-19 pandemic weighs heavily on the less productive industries like leisure and hospitality.
The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, dropped at a 4.8per cent annualized rate last quarter. That was the deepest pace of contraction since the second quarter of 1981.
Data for the third quarter was revised higher to show productivity growing at a 5.1per cent pace instead of the previously reported 4.6per cent rate. Productivity rose 2.6per cent in 2020 compared to 1.7per cent in 2019.
Economists polled by Reuters had forecast productivity declining at a 2.8per cent rate in the fourth quarter. Compared to the fourth quarter of 2019, productivity increased at a 2.5per cent rate.
The coronavirus pandemic has decimated lower-wage industries, like leisure and hospitality, which economists say tend to be less productive.
Hours worked rose at a 10.7per cent rate last quarter. That followed a 37.1per cent pace in the third quarter.
Unit labor costs - the price of labor per single unit of output - rebounded at a 6.8per cent rate after plunging at a 7.0per cent rate in the third quarter. Unit labor costs increased at a 5.2per cent rate from a year ago. They rose 4.3per cent in 2020 after gaining 1.9per cent in 2019.
Though labor costs have been distorted by the pandemic's disproportionate impact on lower-wage industries, the rebound supports expectations of higher inflation this year.
Hourly compensation increased at a 1.7per cent rate last quarter. That followed a 2.2per cent pace of decline in the July-September quarter. Compensation increased at a 7.8per cent rate compared to the fourth quarter of 2019. It grew 7.0per cent in 2020 after rising 3.6per cent in 2019.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)