Strong U.S. Worker Productivity Keeps Labour Costs in Check in The Fourth Quarter

• U.S. worker productivity grew faster than expected in the fourth quarter, keeping unit labour costs contained and giving the Federal Reserve another boost in the fight against inflation.
• Labor market momentum is also fading, though gradually, which could further help to curb wage inflation. First-time applications for unemployment benefits rose to a two-month high last week, other data from the Labor Department showed on Thursday. The number of people on unemployment rolls was also the highest in two months.
• The reports followed news on Wednesday that compensation costs rose in the fourth quarter at the slowest pace since 2021.
• The U.S. central bank left interest rates unchanged on Wednesday. Fed Chair Jerome Powell offered a sweeping endorsement of the economy's strength, telling reporters that interest rates had peaked and would move lower in coming months.
• "Inflation is increasingly coming back under control as the economy is more productive, keeping labour costs in check, and the labour market is rebalancing," said Christopher Rupkey, chief economist at FWDBONDS in New York. "This is what Fed officials are looking for to deliver the interest rate cuts the market is clamouring for later on this year."

(Source: Reuters)