Productivity Data Shows No Inflationary Pressure from Labor Market

Bloomberg details and defines unit labor costs:

Unit labor costs in nonfarm businesses increased 1.2 percent in the fourth quarter of 2011, as productivity grew at a slower rate (0.7 percent) than hourly compensation (1.9 percent). Unit labor costs rose 1.3 percent over the last four quarters. Annual average unit labor costs increased 1.2 percent from 2010 to 2011.

BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.

The good news... there is no inflationary pressure whatsoever at the moment in labor. The bad... this is because the labor market is soft (though hopefully we see some more positive signs tomorrow morning).