U.S. labor productivity increased by slightly less than expected in the fourth quarter of 2011, with a notable increase in hours worked partly offsetting a jump in output.
According to statistics released Thursday by the Labor Department, fourth quarter worker productivity increased by 0.7 percent in the fourth quarter compared to a revised 1.9 percent increase in the third quarter.
The relatively modest increase in productivity, which is a measure of output per hour, came as a 3.6 percent increase in output was partly offset by a 2.9 percent increase in hours worked.
The overall productivity growth fell slightly short of the 0.8 percent increase predicted by most economists.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The first quarter of this year could be even more disappointing as far as productivity is concerned, at least if we are right and GDP growth slows to below 2.0% while employment growth continues to match its fourth-quarter pace."
Despite the increase in productivity, unit labor costs increased by 1.2 percent in the fourth quarter, as productivity grew slower than the 1.9 percent increase in hourly compensation.
Factoring both the increases in compensation and hours worked, real worker hourly compensation was up 1 percent in the fourth quarter after tumbling by 3.2 percent in the third quarter.
In the closely-watched manufacturing sector, worker productivity slowed by 0.4 percent, as output increases failed to keep pace with a large increase in hours worked.
According to the Labor Department, manufacturing output for the quarter rose 3.8 percent, while hours worked jumped 4.2 percent - the largest quarterly increase in manufacturing hours worked since the final quarter of 2005.
Despite the contraction in the fourth quarter, manufacturing productivity remained up 2.8 percent for the year.
Unit labor costs in manufacturing increased 1.6 percent in the fourth quarter of 2011 but remain 1.1 percent below the levels in the last quarter of 2010.
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