U.S. productivity falls at 0.4% pace in 4th quarter

Special Report:Global Financial Crisis

WASHINGTON, March 5 (Chinese media) -- Productivity in the U.S. non-farm business

sector fell at an annual rate of 0.4 percent in the fourth quarter of 2008,

instead of a 3.2 percent gain estimated a month ago, according to revised data

released on Thursday by the Labor Department.

The fourth-quarter reading for productivity, the amount of output per hour

of work, was far weaker than the 1.5 percent increase that economists had

expected and the 2.2 percent gain in the third quarter.

While productivity declined, labor costs were surging in the

October-to-December period at a faster pace than in the third quarter.

Employers' unit labor costs, or costs of wages and benefits for each unit

of output, jumped at an annual rate of 5.7 percent, compared with the 3.5

percent rate in the third quarter, marking the biggest quarterly gain since the

final quarter of 2006.

The sharp downward revision for the fourth-quarter productivity reflected

the fact that the U.S. economy contracted at a much faster rate in the final

three months than initially reported.

The Commerce Department reported last week that the gross domestic product,

the economy's overall output of goods and services, shrank at a 6.2 percent pace

in the fourth quarter, much worse than the 3.8 percent drop originally

estimated, marking the worst showing in a quarter century.

For all of last year, productivity rose by 2.8 percent, double the 1.4

percent gain in 2007. Unit labor costs edged up by 0.9 percent, down from a 2.7

percent rise in 2007.

Productivity is considered the key ingredient needed for rising living

standards because it allows companies to pay their workers more without having

to raise the price of their products, which fuels inflation.