The preliminary data from the U.S. Labour Department showed on Thursday that nonfarm business sector labor productivity in the United States fell 4.8 percent q-o-q in the fourth quarter of 2020, as output surged 5.3 percent q-o-q and hours worked jumped 10.7 percent q-o-q (seasonally adjusted). This was the largest decrease in productivity since the second quarter of 1981 and was worse than economists’ forecast for a 2.8 percent q-o-q drop after a revised 5.1 percent q-o-q climb in the third quarter (originally a 4.6 percent q-o-q gain).

In y-o-y terms, the labor productivity rose 2.5 percent in the third quarter, reflecting a 2.7-percent decline in output and a 5.0-percent fall in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the fourth quarter rose 6.8 percent q-o-q compared to a revised 7.0 percent q-o-q fall in the prior quarter (originally a 6.6 percent q-o-q decline). 

Economists had forecast a 3.5 percent advance in fourth-quarter unit labor costs.

Unit labor costs quarterly decline reflected a 1.7-percent q-o-q increase in hourly compensation and a 4.8-percent drop in productivity.

Compared to the corresponding period of 2019, unit labor costs rose 5.2 percent.