U.S. worker productivity rose more than expected in the fourth quarter as the world's largest economy expanded, helping to restrain labor costs, which pointed to subdued wage inflation, the government reported Thursday. Productivity—the amount of output per hour worked—increased at a 3.2 percent annual rate in the October-December period, following a 3.6 percent pace in the third quarter. Economists expected a fourth-quarter advance between 2.5 and 2.8 percent. Despite the better-than-expected performance, the underlying trend remained weak, with productivity increasing 1.7 percent compared to the same period in 2012. For all of last year, productivity increased only 0.6 percent, the smallest gain since 2011 and far weaker than the 1.5 percent increase in 2012. Unit labor costs—a measure of the labor-related cost for any given unit of output—fell at a 1.6 percent rate in the fourth quarter, showing weak wage-related inflation pressures in the economy. Unit labor costs fell at a 2 percent rate in the third quarter. For all of 2013, unit labor costs rose 1 percent, the weakest annual performance since 2010.
