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Worker Productivity Higher-Than-Expected in 4Q

Worker Productivity advanced in the 4Q at a much faster pace than what economists expected, while labor costs slowed significantly, indicating that the recession has removed any threat of inflation. The Labor Department said Thursday that productivity rose at an annual rate of 3.2% in the final three months of last year, double the 1.5% gain in productivity in the 3Q. Meanwhile, unit labor costs edged up at a 1.8% annual rate in the 4Q, after a 2.6% increase in the 3Q. However, productivity showed a big increase because the number of hours worked during the period plunged at a faster rate than output declined. So, in large part, it reflected the huge number of layoffs in the quarter. Nevertheless, for the 2008 year, productivity rose 2.8%, double the 1.4% increase in 2007 and the best showing since a similar 2.8% rise in 2004.

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Date Last Updated: 02/17/2009