Productivity Increases at Faster Pace

U.S. workers’ productivity rose at a 2.6% annual rate in the fourth quarter of 2010, the Labor Department said Wednesday.

The level followed a 2.4% gain in the third quarter, which was higher than first estimated.

Productivity is a measure of how much an employee produces for every hour of work.

The reading beat economists’ forecasts of 2% growth, Bloomberg reported. Labor costs fell at a 0.6% rate, the fifth decrease in six months.

Among manufacturers, productivity rose 5.8%, the most in a year, after a 1.4% gain in the third quarter.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.