As of March 6, 2025, the U.S. Department of Labor’s Bureau of Labor Statistics reported an upward revision in nonfarm business sector labor productivity for the fourth quarter of 2024. The annualized growth rate was adjusted to 1.5%, up from the previously estimated 1.2%, reflecting stronger-than-expected efficiency gains in the workforce.
Key Highlights
- Quarterly Performance: The revised 1.5% increase in productivity suggests that workers produced more output per hour than initially estimated, which helps control labor costs and supports inflation management.
- Annual Trends: Year-over-year, productivity rose by 2.0%, up from the prior estimate of 1.6%. For the full year 2024, productivity growth was revised to 2.7%, an increase of 0.4 percentage points from earlier projections.
- Unit Labor Costs: Labor costs per unit of output increased at a 2.2% rate in the fourth quarter, down from the previously estimated 3.0%. This follows a 1.5% decline in the third quarter. On an annual basis, labor costs grew by 2.0%, revised down from the earlier 2.7% estimate.
Implications
The upward revision in productivity and the downward adjustment in labor costs are positive signs for policymakers aiming to meet the Federal Reserve’s 2% inflation target. Higher productivity contributes to economic growth without increasing inflationary pressures, as more goods and services are produced efficiently.
Conclusion
The latest data underscores a strengthening in U.S. labor productivity, reflecting improved production efficiency and moderated labor costs. These trends are favorable for sustaining economic growth while keeping inflation in check, providing a stable foundation for long-term economic stability.