Nonfarm productivity slipped at a 2.2% annual rate last quarter, revised from -1.8%. The decline followed a 3.9% 3Q rise. For all of last year, worker productivity rose 0.7% on average. Real output increased at a downwardly revised 2.6% rate last quarter (2.9% y/y) while hours worked gained 4.9% (3.0% y/y). Compensation per hour increased a 1.9% rate (2.5% y/y) but when adjusted for lower prices, it improved 3.1% (1.3% y/y). The decline in productivity caused unit labor costs to jump at an upwardly-revised 4.1% rate (2.6% y/y) after declines during the prior two quarters. The Q4 productivity decline compared to expectations for a 2.4% drop in the Action Economics Forecast Survey. A 3.3% rise in unit labor costs was expected.

Manufacturing sector worker productivity slipped at a 0.1% rate (+2.4% y/y), revised from +1.3%, after a 3.5% rise. For all of last year, productivity grew 2.2% after a 1.9% increase in 2013. Output grew 4.3% last quarter (4.5% y/y) after a 4.9% gain, while hours worked improved 4.4% (2.0% y/y) following a 1.4% Q3 increase. Worker compensation per hour increased at a 1.4% rate (2.4% y/y). Adjusted for price inflation, compensation gained 2.7% (1.2% y/y). Unit labor costs increased an upwardly-revised 1.5% (0.0% y/y) following two quarters of sharp decline.

The productivity & cost figures are available in Haver's USECON database. The expectations figure is from Action Economics and is the AS1REPNA database.