Productivity Rose at 2.7% Rate in Fourth Quarter

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.S. worker productivity grew at a 2.7% annual rate in the fourth quarter of 2003, well below the pace of the previous quarter, the Labor Department said Thursday.

Productivity, the amount an employee produces per hour of work, rose at a revised 9.5% rate in the third quarter, which was the strongest in two decades.

Analysts were predicting productivity to slow to a 3.4% clip as economic growth moderated, the Associated Press reported.

Efficiency gains are important to the economy's long-term vitality because they allow the economy to grow faster without igniting inflation. Companies can pay workers more without raising prices, and it can bolster a company's profitability.

For all of 2003, productivity grew by a 4.2% clip, following an even stronger 4.9% increase in 2002.

Companies' output in the fourth quarter increased at a 4.2% annual rate, after surging at a 10.4% rate in the third quarter.

Companies' unit labor costs fell at a rate of 1.3% in the quarter, after a 5.6% rate of decline in the prior quarter.

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