Labor Productivity Revised Upward to 6.9%; Unit Labor Costs Fall 5.9%

Labor productivity growth was revised upwards for the fourth quarter to 6.9% at a seasonally adjusted annualized rate. This compares to 6.2% growth previously reported. This was the third consecutive quarter where labor productivity grew at rates near or in excess of 7%. The gains occurred due to increasing output as firms also reduced their payrolls. Output rose 7.6% on an annualized basis compared to 7.2% previously reported. Before widespread hiring occurs, firms are seeking to increase output from their existing workforce. Though these past quarters of productivity growth are a positive for long term income growth, for the time being its reducing firms need to hire new workers and is helping to keep the unemployment rate up in the short run.

Labor cost per unit of output fell 5.9%. As productivity increases, there is no inflationary pressure occurring from the labor markets at this time.

(SAAR) %	Q4 2009	Q3 2009	Q2 2009	Q1 2009	Q4 2008	Q3 2008
Output Per Hour	6.9	7.8	7.6	0.9	2.2	1.1
Compensation Per Hour	0.6	-0.4	7.7	-4.2	4.5	6.0
Unit Labor Costs	-5.9	-7.6	0.1	-5.0	2.2	4.9

10.03.04 (Source: Bureau of Labor Statistics)