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Productivity rises in fourth quarter

Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009, the U.S. Bureau of Labor Statistics.

This gain in productivity reflects increases of 7.2 percent in output and 1.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.)

This was the first quarterly increase in hours worked since the second quarter of 2007 (0.9 percent). Productivity increased 5.1 percent over the last four quarters — more than during any similar period since output per hour rose 6.1 percent from the first quarter of 2001 to the first quarter of 2002.

Unit labor costs in nonfarm businesses fell 4.4 percent in the fourth quarter of 2009, a result of the increase in productivity (6.2 percent) outpacing the increase in hourly compensation (1.5 percent). Over the last four quarters, unit labor costs declined 2.8 percent, as hourly compensation and productivity increased 2.2 percent and 5.1 percent, respectively.

This decline in unit labor costs was the largest since unit labor costs fell 3.2 percent over the four quarters ending with the first quarter of 2002.

Manufacturing sector productivity grew 7.8 percent in the fourth quarter of 2009, as output rose 6.1 percent and hours worked declined 1.6 percent.

Productivity grew 6.2 percent in durable goods industries and 9.8 percent in nondurable goods industries in the fourth quarter. Over the last four quarters, manufacturing productivity increased 6.5 percent as output decreased 4.4 percent and hours fell 10.2 percent.

Unit labor costs in manufacturing declined 7.4 percent in the fourth quarter of 2009 and decreased 3.2 percent from the same quarter a year earlier.

In the third quarter of 2009, nonfarm business productivity growth was revised down from 8.1 percent to 7.2 percent compared to the estimate published Dec. 3, reflecting a downward revision to output and a slight upward revision to hours. Unit labor costs for nonfarm business fell 1.5 percent, a smaller decline than previously reported. In both the manufacturing and nonfinancial corporate sectors productivity was revised upward due to upward revisions in output.

In the nonfarm business sector, productivity increased 2.9 percent in 2009, and reflected the largest annual declines in output and hours (-3.6 percent and -6.4 percent, respectively) for these measures, which begin in 1948.

Manufacturing sector productivity grew 1.3 percent in 2009, due to a decline in both output (-11.0 percent) and hours (-12.1 percent)–the largest annual declines recorded in these series, which begin in 1988. Over the long run, from 2000 to 2009, nonfarm business productivity increased at an average annual rate of 2.6 percent, and manufacturing productivity increased at a rate of 3.1 percent.

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