WASHINGTON – U.S. worker productivity shrank in the final three months of 2012, although the decline was caused by temporary factors.
Productivity contracted at an annual rate of 2 percent in the October-December quarter, the biggest drop since the first quarter of 2011, the Labor Department reported Thursday. Productivity had risen at a 3.2 percent rate in the July-September quarter.
Labor costs rose at a 4.5 percent rate in the fourth quarter, the fastest gain since the first quarter of 2012.
Productivity is the amount of output per hour of work. It shrank in the fourth quarter because economic activity contracted while hours worked rose. The economy declined at an annual rate of 0.1 percent in the last three months of 2012, a drop caused mainly by deep defense cuts and slower restocking, changes not expected to last.
The trend in productivity has been weak for the past two years. For all of 2012, productivity rose by just 1 percent following an even smaller 0.7 percent rise in 2011. Those gains were less than half the average growth that companies saw in 2009 and 2010, shortly after many laid off workers to cut costs during the Great Recession. And it’s below the long-run growth of 2.2 percent a year dating back to 1947.
Economists predict worker productivity will be weak through 2013.
For all of 2012, labor costs were up a modest 0.7 percent. That compared to a gain of 2 percent in 2011 and a decline of 1 percent in 2010. Labor costs were rising more rapidly before the Great Recession, which triggered millions of layoffs and reduced workers’ bargaining power.
Drop in jobless claims good sign, expert says
WASHINGTON – Fewer Americans sought unemployment benefits last week, indicating companies continue to hire at a modest but steady pace.
The Labor Department said Thursday that weekly applications for unemployment benefits fell 5,000 to a seasonally adjusted 366,000.
The four-week average, a less volatile measure, dropped to 350,500, the lowest in nearly five years. The average is low because of seasonal factors, which reduced applications sharply last month.
Still, economists were encouraged by the decline. Weekly applications are a proxy for layoffs. When layoffs decline, net hiring typically rises.
The drop in the four-week average “is good news and supports the view that the U.S. labor market is gradually improving,” said Jennifer Lee, an economist at BMO Capital Markets.
30-year rate remains steady as 15-year falls
WASHINGTON – The average U.S. rate on the 30-year fixed mortgage was unchanged this week near historic lows, while the average rate on the 15-year loan fell. Low mortgage rates could help strengthen the housing recovery.
Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan stayed at 3.53 percent. That’s still near the 3.31 percent rate reached in November, the lowest in records dating to 1971.
The rate on the 15-year fixed mortgage dropped to 2.77 percent from 2.81 percent last week. The record low is 2.63 percent.
The average fee for 30-year loans ticked up to 0.8 point from 0.7 point last week. The fee for 15-year loans was unchanged at 0.7 point.
The average rate on a one-year adjustable-rate mortgage fell to 2.53 percent from 2.59 percent. The fee for one-year adjustable-rate loans declined to 0.4 from 0.5 point.