U.S. fourth quarter business productivity was revised fractionally lower, government data showed on Thursday, but unit labor costs shrank by a lot less than expected as hourly compensation was marked higher.

Non-farm business productivity (search), or worker output per hour, increased at a 2.6 percent annual rate in the final three months of last year, versus an initially reported 2.7 percent increase, the Labor Department (search) said. Wall Street had forecast the 2.6 percent gain.

Productivity growth was the lowest reading in a year. Economists said before the data was released that they expected the pace of prcosts were unexpectedly revised to show only a 0.4 percent annualized decline in the fourth quarter, versus an initially reported 1.3 percent fall, possibly signaling that companies' recent ability to keep a lid on labor costs was slipping as demand picked up. Wall Street (search) had expected the measure to be only slightly revised to a 1.2 percent decline.

Fourth quarter hourly compensation was also revised higher to an annualized 2.2 percent increase from an initially reported 1.3 percent hike.