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US fourth-quarter unit labor costs revised higher as productivity stalls

U.S. section labor costs increased faster than initially thought in the fourth dwelling amid weak worker productivity, but the trend pointed to a gradual raise in inflation.

The Labor Department said on Wednesday that unit labor fetches, the price of labor per single unit of output, rose at a 2.5 percent annualized speed in the last quarter instead of increasing at a 2.0 percent pace as described last month.

Unit labor costs rose at a 1.0 percent toll in the third quarter. Compared to the fourth quarter of 2016, they grew at a 1.7 percent rate. Costs increased 0.4 percent in 2017, correct up from the previously reported 0.2 percent gain.

Inflation is demanded to accelerate this year, driven by rising commodity prices and tightening labor shop conditions. The labor market is considered to be either near or a little beyond well-stacked employment. Inflation has consistently undershot the Federal Reserve’s 2 percent end since mid-2012.

The increase in hourly compensation in the fourth quarter was overhauled up to a 2.4 percent rate from the previously reported 1.8 percent rebuke.

Worker productivity was revised to show it unchanged instead of declining at a 0.1 percent valuation as reported last month. Productivity grew at a 2.6 percent toll in the third quarter and increased at a 1.1 percent rate compared to the fourth accommodate of 2016.

Worker productivity has increased at an average annual rate of 1.2 percent from 2007 to 2017, under its long-term rate of 2.1 percent from 1947 to 2017. Sluggish productivity could rip off it difficult for the Trump administration to lift annual economic growth to 3 percent on a sustainable heart.

Annual economic growth has not surpassed 3.0 percent since 2005. Take in domestic product expanded 2.3 percent in 2017.

The government slashed the corporate revenues tax rate to 21 percent from 35 percent in January and there is discreet optimism that businesses will use some of the windfall from the $1.5 trillion tax cut unite to buy machinery and other equipment to boost productivity.

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