                                ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Thursday, April 11, 1996               TAG: 9604110030
SECTION: BUSINESS                 PAGE: B-7  EDITION: METRO 
DATELINE: WASHINGTON
SOURCE: Associated Press

U.S. PRODUCTIVITY POSTS BEST FIGURES IN 3 YEARS

The productivity of the American workplace posted its best showing in three years last year but was faltering as the year ended.

Many analysts believe productivity rebounded slightly in the quarter just ended.

Robert G. Dederick, an economist consultant at Northern Trust Co. in Chicago, said big employment gains in February and March combined with continued sluggish output to keep productivity from growing faster.

``Given the impact of the weather and the GM strike, there likely were some temporary problems ... in the first quarter,'' he said.

Nonfarm productivity - output per number of hours worked - grew 1.1 percent during 1995, the largest gain since a 3.2 percent advance in 1992, the Labor Department said Wednesday.

While that was well above the previous two years, growth was less than half the annual increases in the 1950s and 1960s. Productivity increased just 0.2 percent in 1993 and 0.5 percent in 1994.

Productivity is considered a key element of Americans' standard of living, since increased efficiency means businesses can boost their workers' pay without having to mark up their prices.

A lack of productivity gains could lead to stagnant wages. Businesses would be reluctant to raise prices to pay for higher wages, fearing they would price their products out of the market.

Economists argue over the cause of recent productivity gains. Some contend the improvement is the result of greater efficiency as businesses reduce and restructure their work forces and invest in high-tech equipment.

Others maintain that it merely is the result of the economic recovery and that as the business cycle matures and levels off, productivity gains will slow.

Output rose 2.7 percent in 1995 after jumping 4 percent a year earlier. Hours worked rose 1.6 percent following a 3.4 percent gain.

LENGTH: Short :   45 lines
ILLUSTRATION: GRAPHIC:  Chart by AP: Productivity.

by CNB