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

DATE: THURSDAY, December 9, 1993                   TAG: 9312090105
SECTION: BUSINESS                    PAGE: B-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

AMERICAN PRODUCTIVITY SHOT UP AT A 4.3 PERCENT

The Labor Department report Wednesday coincided with the announcement that Xerox Corp. is joining many other large companies in cutting its work force, in part to increase productivity.

"The dark side of the scenario is that a lot of the productivity gains are coming through layoffs," said economist Stephen S. Roach of Morgan Stanley & Co. in New York.

"The hope is that by becoming meaner and leaner, companies can expand their markets globally, which will mean more employment later," he explained. "But that hope rings hollow now."

The revised seasonally adjusted increase in nonfarm productivity - output per hours worked - was the largest since it jumped a similar 4.3 percent in the second quarter of 1987, the Labor Department said.

It also was the first increase since a 4.2 percent jump in the final three months of 1992.

"It reinforces the view that America remains in the midst of productivity-led recovery," Roach said. "Productivity gains have accounted for virtually all of the [gross domestic product] growth that has occurred over the past 2 1/2 years.

"Typically, productivity accounts for just half of the GDP in the first 10 quarters. This recovery has broken the mold."

Productivity growth averaged less than 1 percent annually during the 1970s and 1980s, down sharply from 2.5 percent a year during the prior two decades.

Analysts contend growth is essential to raise Americans' standard of living and the ability of U.S. products to compete in world markets.

The 4.3 percent gain followed declines of 1.8 percent in the first quarter of 1993 and 0.4 percent in the second, the first drops since productivity fell 0.7 percent at an annual rate during January-March 1991.

But it had grown for seven consecutive quarters, beginning in April-June 1991, and was up 3.1 percent in 1992.

Output increased 4.4 percent from July through September, up from the 4 percent advance three months earlier. At the same time, total hours worked rose 0.1 percent, compared with 4.4 percent in the second quarter.

Manufacturing productivity rose 3.1 percent, including a 4.1 percent gain in factories that make long-lasting durable goods such as automobiles and appliances. Productivity in the nondurable sector that produces such goods as food and fuel advanced 1.7 percent.

Total business productivity, including farming, was up 3.6 percent, after remaining unchanged three months earlier.