U.S. workers were less productive than originally thought in the fourth quarter, though productivity growth within the manufacturing sector was unchanged from the initial estimate.
The Labor Department said Tuesday that nonfarm business productivity grew at a 1.6 percent clip in the quarter, well below the original estimate of three-percent growth. For the entire year, productivity rose by 1.6 percent, the lowest rate of growth since 1995.
In the manufacturing sector, productivity increased by 2.2 percent in the fourth quarter, in-line with the original estimate. The reported increases in productivity resulted when hours fell faster than output, the government said.
Manufacturing productivity increased 2.2 percent in the fourth quarter of 2006, as output decreased 2.1 percent and hours fell 4.2 percent.
The productivity increase in manufacturing was the smallest since the first quarter of 2004, when output per hour declined 1.7 percent. In durable goods industries, productivity increased 3.4 percent as both output and hours decreased, 0.9 percent and 4.2 percent, respectively.
In nondurable goods industries, output per hour rose 0.8 percent, reflecting decreases of 3.5 percent in output and 4.2 percent in hours. In the third quarter of 2006, productivity increased 5.9 percent in total manufacturing, 8.1 percent in durable goods industries, and 2.7 percent in nondurable goods industries.
Manufacturing hourly compensation grew at a 7.1 percent annual rate during the fourth quarter of 2006. Durable and nondurable goods manufacturing posted increases in hourly compensation of 7.4 percent and 6.4 percent, respectively. Consumer prices decreased slightly in the fourth quarter of 2006, contributing to real hourly compensation gains of 9.3 percent in total manufacturing, 9.7 percent in durable manufacturing, and 8.7 percent in nondurables.
Unit labor costs in manufacturing increased 4.7 percent in the fourth quarter of 2006 after falling 5.8 percent in the third quarter. Costs increased 3.9 percent in durable goods industries and 5.6 percent in nondurable goods industries during the fourth quarter of 2006.