U.S. WORKERS' PRODUCTIVITY GROWTH IS BEST IN 20 YEARS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 10, 1993                   TAG: 9303100076
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
U.S. WORKERS' PRODUCTIVITY GROWTH IS BEST IN 20 YEARS
American workers posted their biggest productivity gain in two decades in 1992, which ended with the largest quarterly advance in nearly seven years, the government said Tuesday.
"It's an extraordinarily impressive performance," said economist Bruce Steinberg of Merrill Lynch Capital Markets in New York.
"If we can come close to sustaining it - we won't see the fourth-quarter performance too often - eventually we'll see our standard of living begin to rise again," he said.
The Labor Department said productivity - defined as output per number of hours worked - rose 2.8 percent last year, the best improvement since a 3.1 percent advance in 1972. The growth was even stronger than last month's 2.7 percent estimate for the year.
The year ended with a 4.8 percent surge at a seasonally adjusted annual rate from October through December, the largest quarterly increase since a 6.9 percent jump in the first three months of 1986.
The fourth-quarter advance was the seventh in a row. Productivity fell 0.7 percent in the first quarter of 1991.
Analysts noted that labor costs per unit of output, a key gauge of future inflation, rose just 0.9 percent last year, down sharply from a 4.6 percent advance in 1991.
"It means the inflation rate is still coming down," Steinberg said.
The economy's output rose 2.2 percent in 1992 after a 2.2 percent loss a year earlier.
Despite the increase, the number of hours worked fell another 0.5 percent last year after a 2.6 percent decline in 1991.
"We're able to generate more goods and services . . . with actually fewer people," observed Sung Won Sohn, an economist at the Norwest Corp. in Minneapolis. "This is one of the reasons why the labor market, especially in manufacturing, has been very sluggish . . . productivity is holding back job increases."
Over time, analysts agree, productivity growth will translate into increased competitiveness and a better standard of living, which has been stagnant since the mid-1980s.
Total business productivity, including farming, rose 2.9 percent in 1992, including a 4.9 percent advance in the final three months.
Manufacturing productivity rose 3 percent, including a 3 percent advance in the durable goods sector. Non-durable goods productivity was up 2.9 percent.
Productivity rose at an annual rate of less than 1 percent during the 1970s and 1980s, down sharply from an average annual rate of 2.5 percent during the prior two decades.

by Archana Subramaniam by CNB