US worker productivity shrinks 1.9 pct. in 4th quarter, mostly because of temporary factors

WASHINGTON – U.S. worker productivity shrank in the final three months of last year, mostly because of temporary factors that dragged down growth.

The Labor Department says productivity contracted at a seasonally adjusted annual rate of 1.9 percent in the October-December quarter. That's about the same as last month's estimate of a 2 percent decline. It followed a 3.1 percent gain in the July-September quarter.

Productivity is the amount of output per hour of work. It shrank because economic activity barely expanded in the fourth quarter, while hours worked rose at a solid pace.

The decline in productivity doesn't necessarily signal more hiring. That's because the economy's 0.1 percent annual growth in the fourth quarter was due to defense cuts and slower company restocking. Those trends should reverse in the current quarter.