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February 02, 2006
Productivity Dips for First Time Since 2001

Productivity--as measured by output per hour worked--dropped at an annual rate of 0.6 percent in the fourth quarter, the first decline since the first quarter of 2001, according to the Bureau of Labor Statistics of the U.S. Department of Labor.

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Meanwhile, unit labor costs increased 3.5 percent in the fourth quarter of 2005, after falling 0.5 percent in the third quarter and 1.2 percent in the second quarter.

Overall, productivity rose at an annual rate of 2.7 percent in 2005. In the fourth quarter, output grew 0.9 percent and hours of all workers grew 1.5 percent (seasonally adjusted annual rates).

Productivity had increased 4.5 percent in the third quarter of 2005. The fourth-quarter decrease in productivity was the largest since the third quarter of 2000 (-0.9 percent).

Hourly compensation rose 2.8 percent in the fourth quarter of 2005, following a 4.1-percent increase in the third quarter. When changes in consumer prices were taken into account, real hourly compensation declined 0.4 percent during the fourth quarter of 2005. This was the third consecutive decrease in this measure--real compensation per hour declined 1.0 percent in the third quarter and 3.1 percent in the second quarter of 2005.

Manufacturing productivity grew 3.9 percent (seasonally adjusted annual rate) in the fourth quarter of 2005 as output increased 8.4 percent and hours increased 4.4 percent.

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