US labor productivity increased at an annual rate of 1.2% in Q4 2024, slightly below expectations of a 1.4% YoY increase, and 1.6% YoY, down from 2.1% YoY in Q3.

• Output increased at a 2.3% rate in Q4 while hours worked were up just 1.0%.
• With hourly compensation increasing at a 4.2% rate in Q4, unit labor costs saw a sizeable increase of 3.0%, though this was slower than the 3.4% expected.
• Manufacturing productivity saw a smaller gain of 0.8% as the decline in output of -1.0% was offset by a larger -1.8% decline in hours worked.

• On an annual basis, unit labor cost growth accelerated to 2.7% YoY in Q4 from a more moderate expansion of 2.2% YoY in Q3.

• For the full year 2024, labor productivity increased 2.3% and unit labor costs were up 2.6%. Both are faster than the rates for 2023.
• Manufacturing productivity grew for the first time since 2021 at 0.3% but both output and hours worked were negative. Manufacturing unit labor cost growth moderated to the slowest since 2023 at 3.1%.