By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- U.S. firms expanded their employees' working hours in the fourth quarter for the first time since the recession began in 2007 as the rate of productivity improvement slowed to 6.2%, according to Labor Department data released Thursday.
Productivity in the nonfarm business sector increased at a 6.2% annualized rate, down from a 7.2% rate in the third quarter.
Output rose 7.2% and hours worked increased 1.0%. The increase in hours worked was the first since the second quarter of 2007.
Economists surveyed by MarketWatch had expected productivity to increase at a 7.3% annual rate.
Real hourly compensation fell 1.9%. Unit labor costs -- a key gauge of inflationary pressures from labor markets - fell 4.4%.
For all of 2009, productivity expanded at a 2.9% pace, the fastest since 2003. Unit labor costs were down 0.9%.
Hours worked are down 6.4% and output is down 3.6% in 2009. These are both record declines.
In the manufacturing sector, productivity rose 7.8% in the fourth quarter, while unit labor costs fell 7.4%.
Manufacturing output rose 6.1%, while hours worked decreased 1.6%.
In a separate report Thursday, the Labor Department said initial state jobless claims rose to the highest level since mid-December.
