Word Label merges output the records using an across-then-down arrangement. If you need a down-then-across arrangement:
1. In the Labels dialog, click New Document to create a new document based on the label definition you have chosen.
2. Display table gridlines (Table Tools | Layout | Table | View Gridlines) and nonprinting characters (Ctrl+* or Home | Paragraph | Show/Hide ¶) so you can see what you're doing.
3. Delete all cells except the first. If there is a spacer column, note its width beforehand.
4. On the Page Layout tab, in the Page Setup group, click Columns and choose More Columns...
5. In the Columns dialog, select however many labels across your label stationery had
6. In the Spacing box, set the width to the original spacer column width or, if it had none, 0
7. If necessary, set the column width to your label width.
8. Change the mailmerge type to 'Directory'.
9. Run the mailmerge.

__________________
Cheers,
Paul Edstein
[Fmr MS MVP - Word]