12/10/2024

Sharp Downgrades to U.S. Unit Labor Costs Bode Well for Inflation Outlook

Productivity growth was unrevised at a 2.2 percent pace

U.S. unit labor costs grew far less than initially thought in the third quarter, pointing to a still favorable inflation outlook even though price increases have not moderated much in recent months.

The report from the Labor Department on Tuesday also showed labor costs actually declined in the second quarter instead of rising as had been estimated last month. Moderate labor costs growth is likely to be welcomed by Federal Reserve officials when they hold their last meeting of year next week.

The U.S. central bank is expected to cut interest rates by 25 basis points, the third reduction in borrowing costs since it started its monetary policy easing cycle in September.

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