By David Lawder
U.S. non-farm productivity, or hourly output per worker, rose at a 1.8 percent annual rate in the fourth-quarter, news that may help comfort a Federal Reserve that has shifted its focus away from inflation to slash interest rates in recent weeks to curb slowing growth.
Economists polled by Reuters expected fourth-quarter nonfarm worker productivity to rise just 0.4 percent, with unit labor costs up 3.5 percent.
Treasury bond prices retreated after the data, pushing the yield on the benchmark 10-year note up past 3.61 percent from 3.59 percent earlier. U.S. stocks ticked higher at the opening.
The Fed has cut benchmark interest rates sharply since mid-September because of a slowing economy. Despite the rate cuts, fears of recession have heightened after recent economic data.
In addition, the government reported on Friday and payroll employment fell 17,000 in January, the first decline in 4-1/2 years.
The total number of hours worked in the fourth quarter shrank 1.5 percent, the largest decline since a 2.1 percent drop in the first quarter of 2003. This compared with a revised 0.3 percent decline in the third quarter.
Weaker productivity amid tight labor markets can spell wage-push inflation, but faster productivity growth may help the economy expand without sparking wage-push inflation, or signal that cautious firms are producing more with less staff.
Long-term productivity trends shape the economy's growth potential, which policy-makers estimate for a sense of how fast the economy can grow without sparking price pressures.
