Productivity Down; Costs Up

Bloomberg reports:

U.S. worker productivity in the fourth quarter unexpectedly fell as the economy shrank even faster than companies cut jobs and hours.

Productivity, a measure of employee output per hour, fell at a 0.4 percent annual rate, the first decrease in a year and much less than the 3.2 percent gain estimated last month, the Labor Department said today in Washington. Labor costs climbed 5.7 percent, more than prior projections.

The figures, coming a day before the government’s employment report, indicate companies will keep cutting jobs to contain escalating losses. Deteriorating labor and housing markets will sap consumer spending further, magnifying the risk this recession may turn out to be the worst in the postwar era.

Source: BLS