US Productivity Fell at 2 Percent Rate

5 years 4 months 2 weeks ago Thursday, February 07 2013 Feb 7, 2013 Thursday, February 07, 2013 8:09:25 AM CST February 07, 2013 in News
By: Associated Press

WASHINGTON - U.S. worker productivity shrank in the final three months of 2012 although the decline was caused by temporary factors.
Productivity contracted at an annual rate of 2 percent in the October-December quarter, the biggest drop since the first quarter of 2011, the Labor Department reported Thursday. Productivity had risen at a 3.2 percent rate in the July-September quarter.
Labor costs rose at a 4.5 percent rate in the fourth quarter, the fastest gain since the first quarter of 2012.
Productivity is the amount of output per hour of work. It shrank in the fourth quarter because economic activity contracted while hours worked rose. The economy declined at an annual rate of 0.1 percent in the last three months of 2012, a drop caused mainly by deep defense cuts and slower restocking, changes not expected to last.
The trend in productivity has been weak for the past two years. For all of 2012, productivity rose by just 1 percent following an even smaller 0.7 percent rise in 2011. Those gains were less than half the average growth that companies saw in 2009 and 2010, shortly after many laid off workers to cut costs during the Great Recession. And it's below the long-run growth of 2.2 percent a year dating back to 1947.
Companies may ultimately need to hire more workers if they see only modest gains in productivity and more demand for their products.
Economists predict worker productivity will be weak through 2013. Higher productivity is typical during and after a recession, they note. Companies tend to shed workers in the face of falling demand and increase output from a smaller work force. Once the economy starts to grow, demand rises and companies eventually must add workers if they want to keep up.
For all of 2012, labor costs were up a modest 0.7 percent. That compared to a gain of 2 percent in 2011 and a decline of 1 percent in 2010. Labor costs were rising more rapidly before the Great Recession, which triggered millions of layoffs and reduced workers' bargaining power.
The Federal Reserve closely monitors productivity and labor costs for any signs that inflation is affecting wages. Mild inflation has allowed the central bank to keep interest rates at record lows in an effort to boost economic growth and fight high unemployment.
Paul Ashworth, chief U.S. economist at Capital Economics, said while wage costs were up in the fourth quarter, the annual increase was in line with the Fed's 2 percent annual inflation target, which will allow the central bank to keep providing support to the economy to boost growth and employment.
"The slowdown in productivity growth will put some downward pressure on corporate profit margins, which are currently close to record highs," Ashcroft said. "That's another reason to suspect that stock markets could have a more disappointing time in the second half of this year."
The 0.1 percent economic contraction in the October-December quarter was a sharp reversal from the 3.1 percent growth rate in the July-September period. A plunge in defense spending helped push the economy into negative territory for the first time since mid-2009.
For all of 2012, the economy grew 2.2 percent. Many economists believe growth will be weaker in 2013. An increase in Social Security taxes is reducing take-home pay, which is likely to dampen consumer spending. And across-the-board government spending cuts could also weaken growth.

More News

Grid
List
TIPTON - Some Tipton residents are working together to run their own hog farm. This is in response to... More >>
7 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 7:46:00 PM CDT June 24, 2018 in News
BEAVER DAM, Wis. (AP) — Sprint car driver Jason Johnson has died following a crash at Beaver Dam Raceway in... More >>
11 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 3:52:00 PM CDT June 24, 2018 in News
JEFFERSON CITY - A 17-year-old from Jefferson City will be competing at the CrossFit Games in Madison, Wisconsin in August.... More >>
13 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 2:20:00 PM CDT June 24, 2018 in Sports
(CNN) - Partial results in Turkey's snap elections put President Recep Tayyip Erdogan and his party in the lead, lifting... More >>
13 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 1:58:00 PM CDT June 24, 2018 in News
COLUMBIA - The Missouri Bikers Against Child Abuse group met with children to discuss past altercations with abusers in their... More >>
18 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 9:04:00 AM CDT June 24, 2018 in Top Stories
COLUMBIA - Power was restored at approximately 9:00 AM CT Sunday morning for most customers in the affected areas. ... More >>
18 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 8:53:00 AM CDT June 24, 2018 in News
COLUMBIA - MU has saved money and reduced emissions through its long-term energy efficiency programs. The university has reduced... More >>
19 hours ago Sunday, June 24 2018 Jun 24, 2018 Sunday, June 24, 2018 8:20:00 AM CDT June 24, 2018 in Top Stories
ST. LOUIS - An attorney is suing a nonprofit group connected to former Gov. Eric Greitens for its records. ... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 9:52:00 PM CDT June 23, 2018 in News
RIYADH, Saudi Arabia (AP) — Outside a sprawling mall in the Saudi capital, Riyadh, young single men and women walk... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 6:21:17 PM CDT June 23, 2018 in News
COLUMBIA - One softball player is setting her team up for success before she leaves for college. On Saturday,... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 4:54:00 PM CDT June 23, 2018 in News
COLUMBIA - The discussion on community policing continues to ripple through Columbia after a citywide meeting Saturday. The City... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 3:31:00 PM CDT June 23, 2018 in News
KANSAS CITY, Mo. (AP) — Kansas City police are investigating the shooting death of a man near a house in... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 3:12:00 PM CDT June 23, 2018 in News
(CNN) -- White House press secretary Sarah Sanders said she was kicked out of a Virginia restaurant by its owner... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 2:47:00 PM CDT June 23, 2018 in News
COLUMBIA (AP) — The wife of a former University of Missouri football coach is helping her husband remember the details... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 2:18:00 PM CDT June 23, 2018 in News
COLUMBIA – Reaching all generations was the goal of one Columbia woman on Saturday. Cheryl Miller is the president... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 1:03:00 PM CDT June 23, 2018 in News
CAMDEN COUNTY - Two teenage boys suffered serious injuries in an ATV accident Friday night, according to the Missouri State... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 9:34:00 AM CDT June 23, 2018 in News
ST. LOUIS (AP) — A national gathering in St. Louis in September will focus on election security. Missouri... More >>
1 day ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 7:54:00 AM CDT June 23, 2018 in News
FULTON - The city of Fulton kicked off their annual Street Festival in style Friday with live music, a carnival,... More >>
2 days ago Saturday, June 23 2018 Jun 23, 2018 Saturday, June 23, 2018 2:23:00 AM CDT June 23, 2018 in News
Columbia, MO
Broken Clouds 69°
4am 72°
5am 71°
6am 72°
7am 72°