Productivity declines most in nearly two years

WASHINGTON Thu Feb 7, 2013 8:33am EST

WASHINGTON (Reuters) - U.S. nonfarm productivity fell in the fourth quarter by the most in nearly two years as output increased marginally despite steady gains in employment, the Labor Department said on Thursday.

Productivity declined at a 2 percent annual rate, the sharpest drop since the first quarter of 2011 and a larger fall than the 1.3 percent forecast in a Reuters poll.

Output rose 0.1 percent outside the farm sector, while hours worked rose by 2.2 percent.

Productivity is expected to rebound in the current period because analysts believe weak output during the fourth quarter was partially due to temporary factors like an unusually sharp decline in government spending on the military.

Data last week showed output in the overall economy contracted 0.1 percent in the fourth quarter, and analysts expect gross domestic product to return to growth early this year.

Unit labor costs - a gauge of the labor-related cost for any given unit of output - jumped at 4.5 percent rate in the fourth quarter, beating analysts' expectations of a 3 percent gain.

(Reporting by Jason Lange; Editing by Andrea Ricci)

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Comments (3)
brotherkenny4 wrote:
There is a limit to how cruel you can be to the mule and then it will stop hauling your load.

Feb 07, 2013 11:25am EST  --  Report as abuse
MikeBarnett wrote:
The US economy went into recession in the 4th quarter of 2012, and it will not recover for a while. The upper 1% cannot drive the US or any other economy. They won’t eat more eggs for breakfast, drive 2 or more cars to work each day, or spend enough money in enough shops and other businesses to drive the economy. The US should move some tax revenues from increases on the 1% to the Small Business Administration, so the US can have more entrepreneurs with new ideas for new products to hire new workers with new paychecks to become customers and tax payers.

Current US workers aren’t paid enough to drive the US economy the way they did before, and that won’t change because the US 1% remains too greedy and short-sighted. The US 1% only sees one quarter at a time and doesn’t think ahead. The recession squeezed out the middle class, so the US slowly becomes a “banana republic” with a few rich people on top while everyone else stays poor.

China announced some changes in taxes that my partners and I, who are solid members of the 1% in China, support because we can make more profits with more customers than if we hoard everything for ourselves. It spurs us to develop new ideas for making new and better products to improve the lives of our customers. We don’t cut wages and raise hours that our workers don’t want because our workers are loyal customers who give us guaranteed sales in tough times. Henry Ford did the same for his workers and created a loyal customer base, but he died long ago, and the current US 1% is too short-sighted to learn strategies for long-term success.

We left the US in 1999 and avoided the greedy crimes of US technology, corporate, and financial leaders. We have no plans to return at this time. We cannot recommend the US as a safe place for investment.

Feb 07, 2013 12:27pm EST  --  Report as abuse
jrj906202 wrote:
I think this is a short term negative.As companies replace workers with robots and other labor saving machinery,productivity should soar.That is the best way to compete with China and other low wage countries.

Feb 07, 2013 12:37pm EST  --  Report as abuse
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