WASHINGTON – U.S. nonfarm productivity increased at a 6.2% annual rate in the fourth quarter ended Dec. 31, as hours worked increased for the first time in more than two years, the Labor Department reported today.
Unit labor costs fell 4.4%, a steeper decline than economists estimated.
For all of 2009, productivity increased 5.1%, the largest annual increase since 2002.
For all of 2009, unit labor costs declined 2.8%, the largest since 2002.
Economists polled by Thomson Reuters expected productivity to increase 6.0% for the quarter and for unit labor costs to fall 2.5%, according to the median estimate.
Productivity for the third quarter was revised lower to a 7.2% increase from a reported 8.1% rise. Unit labor costs were revised to a 1.5% decline from a 2.5% decline.
Hourly compensation increased 1.5%.
Unit labor costs record the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in output per hour then to reduce them.
Output increased 7.2% in the quarter, the largest increase since the third quarter of 2003. Hours worked increased 1.0%, the first increase since the second quarter of 2007 and the largest gain since 2006. Labor productivity is measured as a worker's output per hour.
Output and hours decreased 3.6% and 6.4% respectively in 2009, the largest year-over-year drop on records dating back to 1948.
Manufacturing productivity increased 7.8% in the fourth quarter as unit labor costs dropped 7.4%.
