US Productivity Fell at 2 Percent Rate

3 years 9 months 4 weeks ago February 07, 2013 Feb 7, 2013 Thursday, February 07 2013 Thursday, February 07, 2013 8:09:25 AM CST 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
JEFFERSON CITY - The Missouri Department of Transportation reported Wednesday a rise in pedestrian deaths in Missouri. It said nearly... More >>
7 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 6:57:00 PM CST in Top Stories
SPRINGFIELD (AP) — A southwest Missouri jury has convicted a 41-year-old Springfield man in the 2014 death of a 21-year-old... More >>
7 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 6:55:33 PM CST in News
MILLER COUNTY - A woman died after a rollover crash early Wednesday morning on Route A. Missouri State Highway... More >>
7 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 6:36:00 PM CST in News
JEFFERSON CITY (AP) — Missouri's Republican House Speaker Todd Richardson is calling for an investigation of the state Department of... More >>
8 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 5:23:42 PM CST in News
COLUMBIA - Black women have many beauty products to pick through, but not all products are safe according to a... More >>
9 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 4:47:00 PM CST in News
JEFFERSON CITY – A U.S. district judge sentenced a Columbia man Wednesday for child sex trafficking. Kenyata Miles, 35,... More >>
9 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 4:35:00 PM CST in Top Stories
FULTON- The state's Office of Administration announced $97.2 million in bonds to rebuild the Fulton State Hospital. The hospital is... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:49:00 PM CST in Top Stories
EDWARDSVILLE (AP) — A Missouri man has been ordered to spend 40 years in prison after having admitted in court... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:36:00 PM CST in News
JEFFERSON CITY (AP) — Opponents are suing to stop a new Missouri constitutional amendment to limit political giving. ... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:26:38 PM CST in News
JEFFERSON CITY - The Federal Drug Administration is making moves to help the hearing impaired have easier access to hearing... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:26:00 PM CST in News
JEFFERSON CITY (AP) — Missouri Gov. Jay Nixon has begun spending more time at his new home in the St.... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:19:00 PM CST in News
ST. LOUIS (AP) — Eight Chicago residents have been indicted by a federal grand jury for the smash-and-grab crime at... More >>
10 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:17:31 PM CST in News
COLUMBIA - The University of Missouri released official recommendations on Wednesday for how the institution can proceed in addressing issues... More >>
11 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 3:01:00 PM CST in News
FULTON - It was a special day at the Kingdom of Callaway Historical Society in Fulton. Today marks the 75th... More >>
11 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 2:42:00 PM CST in News
COLUMBIA - The University of Missouri Student Health Center announced Wednesday it has identified 193 confirmed and probable mumps cases... More >>
11 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 2:38:00 PM CST in News
JEFFERSON CITY – Gov. Jay Nixon announced Wednesday he was restricting $51 million in Medicaid and other spending and making... More >>
12 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 1:57:00 PM CST in News
COLUMBIA — Police arrested Elisabeth Trumbower of Columbia Tuesday after she allegedly falsified and fullfilled multiple prescriptions for Adderall. ... More >>
12 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 1:43:00 PM CST in News
HARTVILLE (AP) — The state auditor says an audit shows new possible fraud by a former county collector who recently... More >>
13 hours ago December 07, 2016 Dec 7, 2016 Wednesday, December 07 2016 Wednesday, December 07, 2016 12:52:19 PM CST in News
Columbia, MO
Broken Clouds 21°
2am 21°
3am 20°
4am 20°
5am 21°

Select a station to view its upcoming schedule:

Coming Up Next

1:37a
Paid Program
2:07a
Today
3:00a
Mad Money
1:30a
Seinfeld
2:00a
Paid Program
2:30a
Paid Program

Tonight's Schedule

6:30p
Football Night in America
7:20p
Thursday Night Football
7:00p
DC's Legends of Tomorrow
8:00p
Supernatural
9:00p
KOMU 8 News @ Nine on The CW
9:30p
Seinfeld