A preliminary productivity report released Thursday by the Bureau of Labor Statistics showed U.S. non-farm productivity increased in Q4’08 at a 3.2% annual rate from the 1.5% increase in the previous quarter. It is the largest decline in output since the first quarter of fiscal 1982 (-8.6%). Reports of persisting economic distress continue to further dampen consumer confidence, shrink revenues and push companies to reduce working hours. The Labor Dept. said output for the non-farm business sector declined 5.5% and hours fell 8.4%.
In the manufacturing sector which continues to suffer, productivity in Q4 declined for the third consecutive quarter at a 3.0% annual rate with the decline concentrated in the durable goods sector. Productivity in durables dropped 13.4%, as output fell 26.1% and hours declined 14.7%. These were the largest decreases in output per hour since second quarter of fiscal 1987.
For FY2008, productivity rose 2.8%, the highest since a matching rate set in 2004, the preliminary report showed. Meanwhile, unit labor costs, which relate hourly compensation to output per hour and are considered a gauge of inflation and profit pressures, increased 1.8% in the forth quarter and 0.7 percentage points over the last four quarters.
The number of hours of all persons–employees, proprietors, and unpaid family workers ; fell more, 8.4% (seasonally adjusted annual rates) during the forth quarter, the lowest since the first quarter of fiscal 1975.
Needless to say a very weak Q4 fiscal 2008 productivity report, with a workforce that continues to become less-efficient. It is certainly beyond contention at this point, that the ongoing U.S. financial crisis is severe by any metric.