Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 9, 1995 TAG: 9508090086
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Labor Department said Tuesday that seasonally adjusted nonfarm productivity gains in the second quarter improved on the revised 2.5 percent rate in the first three months, although it trailed the 4.3 percent gain in the fourth quarter of 1994.
``This is a very impressive performance for the quarter just ending,'' contended economist Stephen S. Roach of Morgan Stanley & Co. ``It continues to reflect the broad-based restructuring and re-engineering in the manufacturing and service industries.''
Roach noted that productivity gains were limited to about 1 percent during the 1970s and 1980s.
Productivity is defined as output per number of hours worked. It is a key measure of the nation's living standard and business competitiveness because increases mean companies are making their goods more efficiently and at lower costs.
But while workplace efficiency improved, workers themselves were not fully sharing in the gains.
Hourly compensation, when adjusted for inflation, advanced 0.2 percent, much slower than the 1 percent gain three months earlier. It was the smallest increase since compensation fell 0.8 percent in the third quarter of 1994.
Unit labor costs, a measure of inflation since they typically represent two-thirds of the cost of a product, edged up just 0.6 percent, much less than the 1.6 percent gain in the January-March period.
It was the smallest increase since costs fell 0.4 percent from October through December.
Output rose 0.6 percent in the second quarter, down from a revised 4.5 percent in the first. The January-March output was estimated earlier to have shot up 4.7 percent.
But total hours worked fell 2.4 percent, the largest drop since a 3.4 percent decline in the second quarter of 1980. Hours worked had risen 2 percent in the first quarter.
Manufacturing productivity slowed to a 2.1 percent gain in the second quarter after rising 3.5 percent in the first three months. Manufacturing represents about 20 percent of the U.S. business sector.
Productivity in the durable goods industry inched up 0.5 percent, compared with a 4.4 percent jump three months earlier. Economist Gordon Richards of the National Association of Manufacturers attributed the slower pace to a slump in demand for long-lasting products such as cars.
Productivity among nondurable goods manufacturers, on the other hand, shot up 4.5 percent compared with a 2.1 percent gain in the first quarter.
``Manufacturing productivity should pick up rapidly by the fourth quarter, when the inventory correction will be over and exports should be adding to demand,'' Richards predicted.
by CNB