US business productivity rose at a slower-than-expected pace in the fourth quarter and at the lowest rate in a year and jobless claims rose unexpectedly last week, government reports showed on Thursday.
Non-farm business productivity, or worker output per hour, increased at a 2.7 percent annual rate in the final three months of the year after an upwardly revised 9.5 percent pace in the previous quarter, the Labour Department said.
The advance was the slowest since a 1.5 percent gain in the final quarter of 2002 and was lower than the 3.0 percent clip expected by analysts.
Unit labour costs fell 1.3 percent, a larger drop than the 0.8 percent decline expected by analysts, after a 5.6 percent tumble in the third quarter.
"Productivity growth has slowed down from the second and third quarter but it's still managed to eke out a decline for unit labour costs and that's what it comes down to," said Elisabeth Denison, an economist with Dresdner Kleinwort Wasserstein.
"To have unit labour costs declining is a good sign for corporate profits."
The dollar was little changed after the reports but Treasury bond prices rose.
Productivity gains have helped businesses keep production costs low - a plus for profits - but can be a double-edged sword as they can dampen hiring.
Economists say an improvement in the labour market is crucial for a sustained economic recovery.
JOBLESS CLAIMS RISE: The Labour Department said separately that claims for state unemployment aid rose 17,000 to 356,000 in the week ended January 31 from a revised 339,000 in the previous week.
A Labour Department official said inclement weather in the Midwest and Southeast had affected the numbers. The official said he could not quantify the impact but said that layoffs can increase during bad weather in industries like construction.
Analysts were expecting claims to dip to 340,000 from the originally reported 342,000 in the week ended January 24.
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