U.S. productivity advances; labor costs increase 1.8 percent

U.S. companies, struggling to contain escalating losses in the deepening recession, squeezed more output from their remaining workers last quarter.

Productivity, a measure of employee output per hour, rose at a 3.2 percent annual rate in the fourth quarter, more than twice as much as forecast, a Labor Department report today in Washington showed. Labor costs climbed at a 1.8 percent rate, less than anticipated.

Efficiency rose as companies slashed millions of workers from payrolls and cut hours for those still on staff by the most since 1975. The job market is likely to keep deteriorating as the slump in consumer spending forces companies including Macy’s Inc. and Pier 1 Imports Inc. to trim costs further, according to a Feb. 5 Bloomberg report.

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