Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 8, 1995 TAG: 9509080080
SECTION: BUSINESS PAGE: B7 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
The Labor Department said Thursday that nonfarm productivity shot up 4.8 percent at a seasonally adjusted annual rate from April through June, even stronger than its 3 percent initial estimate last month.
The increase was the biggest since productivity - defined as output of goods and services per number of hours worked - jumped 7 percent in the first three months of 1986.
It was much larger than the 3.5 percent improvement that many analysts had expected and followed a 2.5 percent gain in the January-March quarter.
Productivity is a key measure of the nation's living standards and business competitiveness. Increases mean companies are making their goods more efficiently and at lower costs.
``The fact that it is up so steeply is encouraging,'' said Samuel D. Kahan, a Chicago-based economist. ``Usually toward the end of a business cycle, productivity tends to decline because resources have been exhausted.
``But we're now into the fourth year of the recovery and we're still getting solid growth,'' he added. ``It rivals what we had in the 1950s and is considerably better than the '70s and '80s.''
Productivity increased more than 2 percent annually during the 1950s, but slowed to 1.5 percent in the 1960s and 1970s and to less than 1 percent in the 1980s, Kahan said.
Kahan and other economists attribute much of the recent gains to business investments in high-tech equipment and to the restructuring and downsizing that many companies have undergone.
The report also said unit labor costs - including workers pay, typically two-thirds of the cost of a product - fell 1.2 percent during the three months ended June 30. It was the biggest drop since a 2.5 percent decline in the final three months of 1993 and nearly erased a 1.6 percent increase in the first quarter of 1995.
by CNB