Fourth-Quarter Productivity Falls

Fourth-quarter U.S. worker productivity fell at a 0.4% annual rate, the Labor Department said Thursday.

Economists had forecast a 1% increase, Bloomberg reported. Productivity is a measure of how much an employee produces for every hour of work.

A previous estimate last month showed a 3.2% gain for the quarter.

Labor costs jumped at a rate of 5.7%, greater than the 3.8% increase forecast by economists, Bloomberg said.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.