WASHINGTON, March 6 (UPI) -- The Labor Department said Thursday that the productivity of American workers, a key measure of worker output for every hour on the job, jumped a revised 0.8 percent during the final quarter of last year.
Economists on Wall Street were expecting productivity to grow 0.4 percent during the quarter after growing at a robust 5.5-percent annual rate in the third quarter of 2002.
The government agency on Feb. 6 reported productivity declined at a 0.2-percent annual pace, which was the first decline since a 0.1-percent drop posted during the April-through-June quarter of 2001.
For all of 2002, productivity grew a revised 4.8 percent, the highest since 1950, the government said.
Productivity gauges how much output a worker produces in an hour on the job. Typically when it declines, employers are forced to offset increased wages by raising prices for consumers or accepting smaller profits.
Productivity gains boost corporate profits and reduce the risk of
inflation. Because workers produce more goods and services per hour,
employers can afford to pay them higher wages without having to pass on
additional costs to consumers. That allows U.S. monetary policymakers to
keep interest rates low.
The Federal Reserve, for example, has opted to leave its key interest
rate at a 40-year low of 1.25 percent despite weakness in U.S. economic
growth this year.
The report showed that unit labor costs, or the amount paid for each unit of production, rose at a revised 3.8-percent rate in the fourth quarter after a 0.1-percent rate of decline in the third quarter.
For all of 2002, unit labor costs declined 1.9 percent -- its largest decline on record, the government said.
The Labor Department said hours worked increased at a 0.9-percent annual rate, the first gain since the first quarter of 2001.
Output rose at a 1.7-percent rate in the fourth quarter from a 5.2-percent pace in the third quarter.
Compensation per hour rose at a 4.6-percent annual rate in the fourth quarter after increasing at a 5.4-percent pace in the third quarter.
The government updates its productivity estimate twice each quarter after separate releases on gross domestic product are issued.
Last week the Commerce Department reported the U.S. economy, as measured by the gross domestic product, expanded twice as fast as originally reported during the final quarter of last year as Corporate America added to its inventories and consumers spent their cash.
The government reported the nation's economy expanded at a revised 1.4-annual clip during the fourth quarter after expanding a much faster 4 percent in the third quarter of last year.
The Commerce Department on Jan. 30 reported the GDP expanded at an 0.7-percent annual pace in the final quarter of last year, which was the slowest pace since the third quarter of 2001.
The GDP expanded at a 1.3-percent annual pace during the second quarter of 2002 and expanded 5 percent in the first quarter of last year.
For all of 2002, gross domestic product, or the total output of goods and services produced in the United States expanded 2.4 percent, after growing a scant 0.3 percent in 2001 and growing at a 3.8 percent annual rate in all of 2000.
The gross domestic product is the broadest measure of aggregate economic activity and encompasses every sector of the economy.