—WASHINGTON The decline in fourth quarter U.S. nonfarm productivity was revised up slightly to a 1.9% drop from the 2.0% decline initially reported, as output growth slowed dramatically and the growth in hours worked was stronger than in the previous quarter, data released by the Bureau of Labor Statistics Thursday showed.
As a result of the sharp drop in productivity growth and a solid increase in compensation, unit labor costs rose 4.6%, essentially unchanged from the previous estimate, and after an upwardly revised 1.9% decline in the previous quarter. Analysts in an MNI survey had expected unit labor costs to rise 4.5%.
The productivity decline was larger than the 1.6% drop expected in an MNI survey of forecasts, and followed a downward revision in the previous quarter to a 3.1% rise from the previously reported 3.2% gain.
The change in Q4 productivity was the lowest since the fourth quarter of 2008, when it fell by 3.4%. The jump in unit labor costs was the highest change since the first quarter of 2012, when it rose by 6.4%.
Output rose only 0.5% in the fourth quarter, revised up from a 0.1% gain and as expected due to the weak hurricane-impacted reading for GDP in the quarter. This compared with the 4.7% rise in the previous quarter. Hours worked rose 2.5% in the fourth quarter, a larger rise than the 1.6% rate in the third quarter.
Hourly compensation jumped 2.6% in the quarter, a much stronger pace than the 1.2% increase in the previous quarter. Real compensation rose 0.4% in the fourth quarter following a decline of 0.9% in the previous quarter.
On a year-over-year basis, productivity growth now stands at a 0.5% rate, down from 1.6% in the third quarter and the slowest since the fourth quarter of 2011. The year/year rate for unit labor costs rose to 2.1% in the fourth quarter from an increase of just 0.1% in the third quarter.
For 2012 as a whole, nonfarm productivity rose 0.7%, slightly stronger than the 0.6% rise in 2011. Unit labor costs were also up 0.7% in 2012, but down sharply from the 2.0% rise in 2011.
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