U.S. Productivity Drops 1.8% In Fourth Quarter

U.S. productivity in the fourth quarter shrank by a 1.8% annual pace as the increase in the amount of time employees worked outstripped the gain in output, the government said Thursday. Hours worked shot up 5.1% - the biggest increase since 1998 - to reflect a surge in hiring and people spending more time on the job. Yet output rose at a slower 3.2% clip, the Labor Department said. Unit-labor costs increased 2.7% in the fourth quarter. Hourly compensation rose a mild 0.9%, but adjusted for inflation, worker pay increased 2.1% in the final three months of 2014. In the third quarter, productivity rose by a revised 3.7% instead of 2.3%.