U.S. worker productivity fell in the final three months of the year, while labor costs increased, both developments reflecting a slowdown in overall output in the quarter, the government reported Thursday. Productivity - the amount of output per hour of work - fell at a 1.8 percent annual rate in the fourth quarter after rising at a 3.7 percent rate in the third quarter, the Labor Department said. Labor costs rose at a 2.7 percent rate in the October-December period after having fallen at a 2.3 percent rate in the third quarter. Still, economists believe labor costs are rising at slow levels that do not present a threat of higher inflation. The government reported last week that gross domestic product (GDP) grew at an annual rate of 2.6 percent in the fourth quarter, a sharp deceleration from a 5 percent growth rate in the July-September period. With less output in the fourth quarter, productivity weakened. For all of 2014, productivity rose 0.8 percent, little changed from the modest 0.9 percent productivity gain seen in 2013. Labor costs rose only 1.5 percent in 2014, up from a tiny 0.2 percent gain in 2013 but still in a range that economists view as modest. Since the Great Recession ended in mid-2009, labor costs have been contained as millions of people who lost their jobs during the downturn have struggled to find new employment.
