March 5, 2009 / 1:38 PM / 11 years ago

US Q4 business productivity revised sharply down

WASHINGTON, March 5 (Reuters) - U.S. non-farm productivity was much weaker than initially estimated in the fourth quarter as output contracted at its steepest pace since 1982, according to a government report on Thursday that underscored the deteriorating economic climate.

The Labor Department said non-farm productivity fell at a revised 0.4 percent annual rate, sharply below initial estimates of a 3.2 percent advance published last month and 2.2 percent rise in the third quarter.

Analysts polled by Reuters had forecast productivity increasing at a 1.5 percent rate.

Output was revised to show a steep 8.7 percent decline in the fourth quarter, the sharpest decline since the first quarter of 1982. It was initially estimated as a 5.5 percent fall.

For 2008, productivity rose 2.8 percent, unchanged from last month’s estimate.

Unit labor costs, a gauge of inflation and profit pressures closely watched by the Federal Reserve, were revised up to a 5.7 percent increase in the fourth quarter, above Wall Street’s estimates for a 3.4 percent increase.

The number of hours worked dropped at an 8.3 percent annual rate during the fourth quarter, the biggest decline since the first quarter of 1975. (Reporting by Lucia Mutikani, Editing by Andrea Ricci)

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