US productivity fell sharply in Q4 while labor costs rose

WASHINGTON — U.S. productivity fell sharply in the October-December quarter while labor costs rose.

The Labor Department reported today that productivity dropped at a 4.8% rate in the fourth quarter after having risen strongly in the two previous quarters.

Productivity, the amount of work per hour of output, has produced some major swings since the pandemic hit early last year, pushing the country into a recession.

After falling 0.3% in the first quarter, productivity shot up at a 10.6% rate in the second quarter as millions of people lost their jobs. With employment falling faster than output, productivity increased.

Labor costs jumped at a 6.8% rate in the fourth quarter after having fallen at a 7% rate in the first third quarter.