U.S. worker productivity fell in the last quarter of 2008, while labor costs climbed more than expected, Bloomberg reported.

Productivity, which measures employee output per hour, fell at a 0.4 percent annual rate, a far worse performance than the 1 percent gain economists projected. It is the first decrease in a year. Meanwhile, labor costs jumped 5.7 percent, more than the 3.8 percent rise economists expected.

These figures suggest that companies may continue to cut jobs to contain escalating costs, furthering the recession. The Labor Department’s employment report is scheduled to come out tomorrow and is expected to show that the unemployment rate jumped to 7.9 percent, according to a Bloomberg survey.

A Labor Department report today showed that first-time unemployment applications decreased 31,000 to 639,000 in the week ended Feb. 26, down from a 26-week high. The number of people continuing to collect unemployment benefits also decreased to 5.1 million from 5.12 million, reversing five straight weeks of record highs, the Associated Press reported.