Labor costs in U. S. growing due to shortage of personnel
2023.03.02 11:54
Labor costs in U. S. growing due to shortage of personnel
By Ray Johnson
Budrigannews.com – In the fourth quarter, labor costs in the United States increased faster than anticipated, albeit at a slower rate than in previous quarters.
The Labor Department reported on Thursday that unit labor costs, or the cost of labor per unit of output, increased at an annualized rate of 3.2% in the most recent quarter. That was revised up from the previous month’s rate of 1.1%.
In the third quarter, labor costs increased at a rate of 6.9%, following substantial increases in the previous two quarters. Reuters polled economists and predicted that labor costs would rise by up to 1.6%. From the previously reported 4.5% rate, unit labor costs increased by 6.3% from a year earlier.
They grew at a rate of 6.5 percent in 2022, rather than the 5.7 percent reported last month, which was too fast to meet the Federal Reserve’s 2% inflation target. Concerns that the Federal Reserve may continue to raise interest rates into the summer have been fueled by labor market tightness and persistently high inflation.
Financial markets are betting on another rate increase in June, despite the fact that the U.S. central bank is expected to make two additional rate increases of 25 basis points in March and May. Since March, the Fed has moved its policy rate from close to zero to a range of 4.50 percent-4.75 percent.
Instead of the previously reported rate of 4.1%, hourly compensation increased at a rate of 4.9 percent. It grew by 4.4% in comparison to the fourth quarter of 2021 and by 8.2% in the third quarter.
Nonfarm productivity, which measures hourly output per worker, was downgraded from the previously reported 3.0% rate in the fourth quarter to a 1.7% rate as a result of revised higher labor costs. According to economists, productivity growth will slow to 2.6%.
Last week’s data showed that gross domestic product growth for the fourth quarter was cut to 2.7 percent from the previous estimate of 2.9 percent, indicating a downward revision to productivity.
In the third quarter, productivity grew at a rate of 1.2 percent. From a year ago, productivity decreased at a rate of 1.8%. Productivity decreased by 1.7% throughout 2022. That was revised down from the previous month’s 1.3%.
As a result of the pandemic, there have been significant shifts in the workforce’s composition, making it more difficult to accurately measure productivity.
