Washington, DC, March 7, 2006--Productivity fell at a revised annual rate of 0.5% in the fourth quarter, a slight improvement from the negative 0.6% estimate made a month ago, the Labor Department said Tuesday.
It was the first decline in productivity since the first quarter of 2001, the quarter the recession began.
Unit labor costs--a key gauge of inflationary pressures - increased 3.3%, revised down from 3.5% earlier. It was the biggest increase in unit labor costs in a year.
Economists were expecting a larger upward revision in productivity to negative 0.2% and expected a larger downward revision in unit labor costs to rise 3.1%.
In the past four quarters, productivity has increased 2.5% while unit labor costs have increased 1.3%.
In all of 2005 compared to 2004, productivity increased 2.9%, the slowest growth since 2001. Unit labor costs rose 2.6% in 2005, the fastest gain since 2000.
Unit labor costs increased 3.3%. Real hourly compensation fell 0.4% in the quarter.
On a year-over-year basis labor costs are up 1.3%, the slowest growth in six quarters.
In the manufacturing sector, productivity increased 4.7% in the fourth quarter, with unit labor costs falling 2.8%. Output in manufacturing rose 9.3%, the most in eight years.
