PRODUCTIVITY HIT: U.S. worker productivity shrank at an annual rate of 2 percent in the final three months of 2012, the biggest drop since the first quarter of 2011. Productivity had risen at a 3.2 percent rate in the July-September quarter.
MIMICKS ECONOMY: Productivity shrank because economic activity contracted while hours worked rose. The economy declined at an annual rate of 0.1 percent in the last three months of 2012, mainly due to defense cuts and slower restocking.
THE OUTLOOK: Companies may ultimately need to hire more workers if they see only modest gains in productivity and more demand for their products.
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