4th-quarter unit labor costs revised up sharply

WASHINGTON (Reuters) - Wages rose much faster than initially thought in the fourth-quarter amid modest gains in productivity, but labor market slack will keep inflation pressures contained.

Unit labor costs rose at annual rate of 2.8 percent, the Labor Department said on Wednesday, revised up from the 1.2 percent pace it reported last month.

Economists had expected unit labor costs, which are closely watched by the Federal Reserve for signs of inflation, would be unrevised. Wages rose at an upwardly revised 3.9 percent pace in the third quarter, which was previously reported as a 2.1 percent drop.

The relatively firmer pace of wage growth was flagged in last week's revised fourth-quarter gross domestic product report. The economy grew at a 3 percent rate in the final three months of 2011 rather than 2.8 percent.

Non-farm productivity increased at a 0.9 percent pace, the Labor Department said on Wednesday, an upward revision to its previous estimate of 0.7 percent.

Economists polled by Reuters had forecast productivity, which measures hourly output per worker, being revised up to a 0.8 percent growth rate. Productivity rose at a 1.8 percent pace in the third quarter.

Productivity has slowed after growing rapidly as the economy emerged from the 2007-09 recession, suggesting that business will have to hire more workers to increase output.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

Source: http://news.yahoo.com/4th-quarter-unit-labor-costs-revised-sharply-133230037.html

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