Productivity Drops by Most in Four Years

U.S. workers’ fourth-quarter productivity fell by 1.9%, the most in four years as labor costs rose, the Labor Department said Thursday.

The level, which was a slight improvement from a previously reported 2% downturn, followed a 3.1% third-quarter gain.

Economists had forecast a 1.6% drop, Bloomberg News reported.

Productivity is a measure of how much an employee produces for every hour of work.

Expenses per worker rose at a 4.6% rate, slightly more than originally reported. Economists had forecast a 4.3% gain, 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.