Labor productivity increased by 2.8% in the fourth quarter, surpassing forecasts and marking the strongest growth in five years, according to the Bureau of Labor Statistics. The rise in productivity, which reflects nonfarm employee output per hour, is attributed to companies investing in technology to enhance efficiency and manage labor costs. “The labor market is no longer a source of inflation,” said Federal Reserve officials, as wage pressures remain contained. Despite a slowdown in economic growth due to the longest U.S. government shutdown, business investment continued to rise. Economists expect efficiency gains to persist, driven by ongoing investments in artificial intelligence. The report also indicated that unit labor costs rose by 2.8% in the fourth quarter, while worker compensation adjusted for inflation increased at the fastest rate in over a year.
