Productivity Falls While New Claims Edge Down
U.S. nonfarm productivity fell in the fourth quarter by the most in nearly two years as output increased marginally despite steady gains in employment, the Labor Department said on Thursday.
A separate report showed that weekly unemployment aid applications fall to 366,000, indicating steady but modest hiring.
Productivity declined at a 2 percent annual rate, the sharpest drop since the first quarter of 2011 and a larger fall than the 1.3 percent forecast in a Reuters poll.
Output rose 0.1 percent outside the farm sector, while hours worked rose by 2.2 percent.
Productivity is expected to rebound in the current period because analysts believe weak output during the fourth quarter was partially due to temporary factors like an unusually sharp decline in government spending on the military.
Data last week showed output in the overall economy contracted 0.1 percent in the fourth quarter, and analysts expect gross domestic product to return to growth early this year.
Unit labor costs - a gauge of the labor-related cost for any given unit of output - jumped at 4.5 percent rate in the fourth quarter, beating analysts' expectations of a 3 percent gain.
The number of Americans filing new claims for jobless benefits, meanwhile, fell last week and a trend reading hit a near five-year low, pointing to ongoing healing in the labor market.
Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said on Thursday. The prior week's claims figure was revised to show 3,000 more new claims than initially reported.
Economists polled by Reuters had expected 360,000 claims last week.
Claims were volatile in January due to the timing of holidays and the dates on which weeks ended, but a Labor Department analyst said some of that volatility appeared to be receding. The analyst said there was nothing unusual in the data, and no states estimated their readings.
The four-week moving average for new claims, a gauge of the trend in layoffs, dropped 2,250 to 350,500. That was the lowest level since March 2008, suggesting a steady improvement in labor market conditions.
The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid increased 8,000 to 3.22 million in the week ended Jan. 26.