Productivity in the U.S. nonfarm business sector fell at a revised annual rate of 0.5% in the fourth quarter, a slight improvement from the negative 0.6% estimate made a month ago, the Labor Department said Tuesday. It was the first decline in productivity since the first quarter of 2001, the quarter the recession began. Unit labor costs -- a key gauge of inflationary pressures - increased 3.3%, revised down from 3.5% earlier. It was the biggest increase in unit labor costs in a year. Economists were expecting a larger upward revision in productivity to negative 0.2% and expected a larger downward revision in unit labor costs to rise 3.1%, according to a survey conducted by MarketWatch. In the past four quarters, productivity has increased 2.5% while unit labor costs have increased 1.3%. In all of 2005 compared to 2004, productivity increased 2.9%, the slowest growth since 2001. Unit labor costs rose 2.6% in 2005, the fastest gain since 2000. The weaker-than-expected productivity report could add to the pressures on the Federal Reserve to keep raising interest rates to keep inflation at bay. The Fed is expected to raise rates at least two more times to bring overnight lending rates to 5% by summer.