U.S. worker production up as wages slide

American workers were more efficient in the final three months of last year, although their gains in productivity slowed from the previous quarter. Still, inflation-adjusted wages fell 1.2 percent in all of 2011, the steepest annual drop since 1989.

The U.S. Labor Department said Thursday that worker productivity rose at a 0.7 percent annual rate in the October-December quarter. That's below a downwardly revised 1.9 percent in the previous quarter.

Labor costs rose 1.2 percent in the final three months of last year, the report said, as wages and salaries grew at a faster pace than productivity, despite the overall slide in wages for the year.

Productivity is the amount of output per hour of work. A slowdown in productivity is bad for corporate profits. But it can be good for the economy if it signals companies aren't able to squeeze more work out of their existing staffs. When that happens, it often means they must hire more workers if they want to grow.

Productivity jumped after the recession, largely because companies boosted output without hiring much.

In the first six months of 2011, productivity fell largely because consumers cut back on spending in the face of higher food and gas prices. That slowed overall economic growth.

Growth accelerated in the October-December quarter to a 2.8 percent annual rate. That spurred more hiring. Companies added an average of 137,000 jobs per month in the final three months of last year. That was below the third quarter's average but much higher than the 97,000 added in the April-June quarter.

The average workweek ticked up in the final three months of last year, to 34.4 hours.