U.S. productivity up 0.8% in 4Q

jobless claims spurted last week

And factory orders rose in January, 3rd report says

March 07, 2003|By BLOOMBERG NEWS

WASHINGTON -Productivity, a measurement of how much a worker produces in an hour, rose at a 0.8 percent annual rate from October through December, the Labor Department reported yesterday.

That compared with the government's previous estimate of a 0.2 percent decline.

For all of last year, productivity rose 4.8 percent, the most since Harry Truman was president in 1950.

In another report, the Labor Department said initial unemployment claims unexpectedly rose 12,000 to 430,000 in the week that ended Saturday. That was more than at any time so far this year, as some companies are engaged in layoffs to shore up profits.

"At the moment, it still is a jobless recovery," said Diane Swonk, director of economics at Bank One Corp. in Chicago. Productivity is the "silver lining helping the bottom line of companies that will eventually hire."

During the 12 months through December, the cost of labor for each good or service produced dropped 1.9 percent, the biggest decline on record. Fourth-quarter profit increased 10.4 percent for companies in the Standard & Poor's 500 stock index.

A separate Commerce Department report yesterday showed that factory orders rose in January by the most in six months. Many of the gains stem from companies trying to catch up after depleting inventories in the fourth quarter rather than increasing production because of demand, economists said.

Initial unemployment claims had been forecast to fall to 404,000, based on the median economist forecast in a Bloomberg News poll. The less volatile four-week moving average of claims rose to 408,750, the most since December's final week.

In the week that ended Feb. 22, the number of workers continuing to receive unemployment benefits increased by 180,000 to 3.516 million, the most since the week that ended Nov. 16.

"Companies have gotten efficient and are very adept at reducing costs," said Joseph LaVorgna, an economist with Deutsche Bank Securities Inc. in New York. Once companies start to profit from the increased productivity, "then you start to grow your business and get some traction in the economy."

Economists had expected a revised 0.4 percent rate of increase in productivity, and had expected a 4.1 percent rise in unit labor costs after a previously reported 4.8 percent gain.

Still, fourth-quarter productivity was lower than in the previous three months, when economic growth surged and productivity rose at a 5.5 percent rate.

The cost of labor rose for each good or service produced as worker efficiency gains slowed. Unit labor costs increased at a revised 3.8 percent in the fourth quarter.

U.S. factory orders in January rose by the most in six months, led by more bookings for autos, business equipment and higher-priced petroleum, government figures showed.

Factory orders increased 2.1 percent during the month to $327.1 billion after a revised 0.3 percent increase in December.

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