- Productivity rose at an annualized rate of 6.6% in the fourth quarter of 2021, the government said Thursday.
- That trounced the median estimate of a 3.2% jump from economists surveyed by Bloomberg.
- The report shows output-per-hour surging as economic growth similarly accelerated into 2022.
Worker productivity boomed through the last three months of 2021 as the economic rebound accelerated and the Omicron wave started to swell.
The productivity of nonfarm business employees rose at a 6.6% annualized rate in the fourth quarter, the Bureau of Labor Statistics announced Thursday. Economists surveyed by Bloomberg expected a 3.2% gain. The increase follows a 5.2% contraction through the third quarter that marked the largest slump since 1981.
The report shows productivity – measured by output per hour – rebounding as the economic recovery similarly accelerated. US gross domestic product grew at an annualized rate of 6.9% through the fourth quarter, according to data out last week. That beat the median forecast of a 5.5% jump and marked the fastest growth since the third quarter of 2020.
To be sure, quarterly productivity data can be highly volatile, and pandemic-era business practices have added to the choppiness. The shift to innovations like QR code menus and telework helped boost productivity during lockdowns, but shifts back to pre-pandemic practices likely muddied quarterly readings.
Still, the return to productivity growth offers an encouraging sign that soaring wages won’t worsen inflation. Pay growth through 2021 was the strongest in at least two decades as the labor shortage forced firms to issue larger wages than usual. Yet the increases have raised concerns of a wage-price spiral, in which soaring pay leads to even higher inflation.
The strong wage growth “has not been a major contributor” to inflation so far,
Chair Jerome Powell said in December. Since productivity has risen in kind, the raises have been a healthy boon for workers without raising fresh risks, he added.
“We don’t see this yet, but if you had something where real wages were persistently above productivity growth, that puts upward pressure on firms and they raise prices.”
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