The Labor Department said worker productivity grew at an even faster pace in the fourth quarter of last year than previously indicated.

Productivity, which is the amount of output per hour of work, increased at an annual rate of 5.2 percent in the October-December quarter. That compares with the 3.5 percent previously reported for the quarter. For the entire year, productivity increased just 1.9 percent compared with 3.3 percent in all of 2000.

Meanwhile, new claims for unemployment insurance dipped slightly last week, continuing an overall slide this year that indicates companies are easing layoffs as signs of economic recovery bloom.

The Labor Department reported Thursday that initial claims for jobless benefits for the work week ending March 2 fell by a seasonally adjusted 5,000 to 376,000.

The more stable four-week moving average of claims, which smoothes out week-to-week volatility, sank last week to 372,750. That was the lowest level since Aug. 11, when claims stood at 372,000.

Then, analysts thought the slumping economy was starting to show tentative signs of a revival. But the economy was dealt a considerable setback by the Sept. 11 terrorist attacks, which jolted already fragile consumer confidence, disrupted business nationwide and caused layoffs to rocket.

Claims peaked last year on Sept. 29 at 535,000, and have remained below 400,000 so far this year.

The fourth-quarter improvement in productivity came at a price. Businesses responded to slumping sales by sharply cutting back their payrolls. Workers' hours in the fourth quarter fell at a 3.8 percent rate. That caused the total number of hours worked to drop at a faster pace than output -- creating a rise in productivity.

For the year, workers' hours fell 0.9 percent -- the first annual decline since 1992, when the country was marred in the last recession.

Economists predict that when the Labor Department releases its monthly unemployment report Friday, it will show the nation's jobless rate ticked up in February from 5.6 percent, possibly to 5.8 percent. That's because businesses have been reluctant to hire back workers as they wait for more sure signs of definite economic recovery.

But analysts do expect the report to show some job growth, possibly as much as 13,000 new jobs added to payrolls.

A series of recent economic reports has indicated the recession, which began in March 2001, probably has ended and will be recorded as one of the mildest in U.S. history.

Federal Reserve Chairman Alan Greenspan gave Congress his economic assessment last week, saying the country is on the road to recovery, but Americans should not expect a red-hot rebound.

Because consumers kept buying throughout the slump, they will have less pent-up demand. That means spending probably will not rise as quickly as in past rebounds, Greenspan and other economists said.

The Federal Reserve meets March 19 to consider interest rate policy. Economists predict the Fed, which sliced short-term interest rates 11 times last year, will hold them steady as it did at January's meeting.