Labor Costs and Productivity Escalate in Q406

February 7, 2007 ( - US workforce productivity went up in the fourth quarter by 3%, following a third quarter that showed no change and labor costs rose by 1.7%, the Labor Department announced Wednesday.

Average productivity for 2006 rose by 2.1%,down slightly from a 2.3% increase in 2005, and labor costs rose by 1.7%.

According to Bloomberg, that U.S. worker productivity grew at the fastest rate in almost a year in in the fourth quarter and labor costs rose at a slower pace, suggests wages may pose less of an inflation threat.

Output grew 4.2%, up from 1.9% in the third quarter and hours rose 1.2%, a slip from the 2% rise in the previous quarter.

Hourly compensation climbed 4.8% in the fourth quarter, following a 3.1% increase in the third quarter. When the 2.2% decrease in consumer prices was taken into account, real hourly compensation grew 7.1% during the fourth quarter of 2006.

For a full report of the Department of Labor productivity data go here .