U.S. non-farm productivity up 3.2 pct in 4th quarter

WASHINGTON Thu Feb 5, 2009 1:59pm GMT

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WASHINGTON (Reuters) - U.S. non-farm productivity rose in the fourth quarter, data showed on Thursday, as companies reduced working hours to cope with a worsening economic climate.

The Labour Department said non-farm productivity rose at a 3.2 percent annual rate from the 1.5 percent increase in the third quarter, while output plunged 5.5 percent, falling at the fastest pace since the first quarter of 1982.

U.S. manufacturing continued to suffer, with productivity declining at a 3 percent pace after a record 3.3 percent decline in the third quarter.

Analysts polled by Reuters had forecast productivity increasing at a 1.4 percent rate.

For 2008, productivity rose 2.8 percent, the highest since a matching rate set in 2004.

Unit labour costs, a gauge of inflation and profit pressures closely watched by the Federal Reserve, were up 1.8 percent in the fourth quarter, the preliminary report showed, well below Wall Street's estimates for a 3 percent increase.

The number of hours worked dropped at 8.4 percent annual rate during the fourth quarter, the lowest since the first quarter of 1975.

(Reporting by Lucia Mutikani; Editing by Neil Stempleman)

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