US fourth-quarter productivity growth revised sharply lower

WASHINGTON, March 24 (Reuters) – U.S. worker productivity growth slowed more than initially thought in the fourth quarter, government data showed, boosting growth in unit labor costs.

Nonfarm productivity, which measures hourly output per worker, increased at a downwardly revised 1.8% annualized rate last quarter, the Labor Department‘s Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had expected productivity growth would be revised down to a 2.0% rate from the previously reported 2.8% pace.

Productivity grew at a 2.5% rate from a year ago. Third-quarter productivity grew at an unrevised 5.2% rate. Productivity increased 2.1% in 2025. The report was delayed by last year’s government shutdown.

The downward revisions to quarterly productivity were telegraphed by a sharp downgrade to gross domestic product growth in the fourth quarter, to a 0.7% rate from the initially estimated 1.4% pace.

Economists believe the adoption of artificial intelligence will boost productivity and rein in labor costs.

Unit labor costs – the price of labor per single unit of output – increased at a 4.4% rate last quarter. That figure was revised up from the initially estimated 2.8% pace. Economists had forecast growth in unit labor costs would be revised up to a 3.5% rate.

They grew at a 2.4% rate from a year ago. Growth in unit labor costs for the third quarter was revised down to a 1.0% pace from a 1.8% rate. Unit labor costs increased 2.3% in 2025.

(Reporting by Lucia Mutikani; Editing by Paul Simao)