Gauge of Worker Output Declines

U.S. worker productivity abruptly reversed course in the final quarter of last year as the economy slowed, the government said Thursday, though output per hour worked still grew in 2002 at the fastest pace in more than 50 years.

A separate report showed a slight drop in the number of Americans lining up for the first time to claim unemployment benefits.

The Labor Department said the productivity of workers outside the farm sector eased 0.2% in the fourth quarter after surging 5.5% in the prior three-month period. The number was worse than market expectations for a 0.4% rise and was the first drop since the second quarter of 2001.

Still, many economists remained hopeful that the productivity dip would prove fleeting.

“We think that the first quarter should see fairly healthy growth. These numbers don’t affect our outlook at all,” said economist Mark Vitner of Wachovia Securities.

The economy turned in an uneven performance in 2002, with alternating quarters of softness and strength, ending on the weakest note of the year when gross domestic product crept ahead at a 0.7% annual rate, a steep falloff from a 4% growth rate in the third quarter.

Despite the setback in the final quarter, productivity for all of 2002 soared 4.7% -- the most robust clip since 1950 and more than four times the 1.1% gain in 2001.

Productivity, the amount of goods and services produced for each hour worked, is one of the most closely monitored measures of economic performance, with the surge in worker output cited regularly by analysts and the Federal Reserve as a key factor in suppressing inflation.

Through layoffs, other cost cutting and investment in technology, many companies have been able to record ongoing gains in productivity.

The Labor Department also reported Thursday that initial jobless claims for the week ended Feb. 1 fell by 11,000 to a seasonally adjusted 391,000.

The government today will report on employment trends in January.