US labour costs soared to a much higher level than previously estimated while efficiency at work sank to almost half the initially reported figure in the final quarter of last year, raising the threat of inflationary pressures.

The Labor Department said that revised data on non-farm workers showed that productivity had actually grown by 1.6 per cent between October and December, at an annualised rate, rather than the 3 per cent which it first reported. This was largely in line with predictions for the revised figures by Wall Street economists.