Productivity Weakens As Hours Worked Increases

Nonfarm productivity increased by a less-than-expected 6.2% in the fourth-quarter after growing 7.2% in the third quarter. The consensus expected productivity to increase 6.5%.

Fourth-quarter productivity saw strength in output (7.2%) and hours worked (1.0%). Third-quarter productivity rose primarily because of a drop in the number of hours worked.

The increase in productivity is good news for corporate profits, but comes at the expense of the labor market, which has yet to see a rebound. A weak labor market continues to hurt consumer spending and housing even as the overall economy has come out of recession.