By John S. McClenahen Unlike the business and non-farm business sectors of the U.S. economy, manufacturing managed to post a productivity gain during the final three months of 2002. Manufacturing productivity grew at a seasonally adjusted annual rate of 0.7% during 2002's fourth quarter, compared with a 0.7% decline in productivity in the overall business sector and a 0.2% decline in the non-farm business sector, reported the U.S. Labor Department on Feb. 6. For full-year 2002 manufacturing productivity posted a 4.6% increase, much higher than the 0.8% rate of growth in 2001. "The manufacturing sector continues to outperform the rest of the economy by delivering above-average productivity gains, the key to international competitiveness," says Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, an Arlington, Va. business-policy group. However, manufacturing's 2002 productivity performance came in the context of a persistent economic slowdown, during which factory output was 1% less than in 2001and hours at work were 5.4% fewer. In another measure of the U.S. economy, the latest Labor Department data on initial claims for unemployment insurance were mixed. On one hand, the number of initial claims declined last week, down a substantial 11,000 to 391,000 from a revised figure of 402,000 for the previous week. On the other hand, the department's four-week moving average for initial claims, which some economists consider a better measure of the condition of labor markets, was down by only 500 to 384,750. In other words, it stalled. Nevertheless, Maury Harris, chief U.S. economist at UBS Warburg, New York, believes the latest claims data remain "broadly consistent" with some job-market improvement. "Although average jobless claims failed to drop in the latest week, other employment gauges signal improvement," he states. Among them: fewer households judging jobs hard-to-get, rises in the employment measures of the Institute for Supply Management's manufacturing and non-manufacturing indexes, and a slow decrease in the number of people collecting unemployment compensation.