Productivity slows to 1.2 percent rate in Q4

The productivity of American workers rose in the October-December period but at a slower pace than the previous quarter. Growth in labor costs increased.

The Labor Department says productivity rose at an annual rate of 1.3 percent in the fourth quarter, a slowdown from 3.5 percent productivity growth in the July-September period. Labor costs rose at a 1.7 percent rate, up from a tiny 0.2 percent gain in the third quarter.

For the year, productivity rose a tiny 0.2 percent. It was the weakest showing in five years. Productivity has slowed significantly in recent years for reasons that are unclear. It represents a worrisome trend given that growth in productivity is a key factor needed to boost living standards.