Productivity Falls, Unit Labor Costs Rise

- Final 4Q Non-farm Productivity fell .5% versus estimates of a .1% decline and a prior estimate of a .6% fall.
- Final 4Q Unit Labor Costs rose 3.3% versus estimates of a 3.0% increase and a prior estimate of a 3.5% gain.

BOTTOM LINE: The productivity of US workers fell last quarter for the first time in almost five years, Bloomberg reported. Productivity rose 2.9% for all of 2005, still higher than the 2.0% average of the 90s. I expect unit labor cost and productivity readings to return back to very healthy levels in 1Q as GDP growth comes in at a brisk 4-4.5%.