Even After Revision, U.S. Q1 Productivity Gains Are Impressive

By John S. McClenahen Economists expected the Labor Department to revise first-quarter productivity gains in the non-farm business sector of the U.S. economy downward to 8.2% from the 8.6% initially reported on May 7. The revised figure, the department's Bureau of Labor Statistics (BLS) reported on May 31, was at an annual rate of 8.4%, a couple of tenths of a percentage point higher than anticipated. Even with the predictable surge in productivity that normally accompanies recovery from economic recession, the fact is the first-quarter figures are remarkable. Indeed, the 8.4% increase in output per hour in the non-farm business sector was the largest since 1983's April-June quarter, when growth was 9.9%. In manufacturing, which accounts for about 16% of all U.S. business sector employment, productivity advanced at a 9.4% annual rate during the first quarter of this year, only slightly lower than BLS' initial 9.7% estimate. During the first three months of 2002, U.S. manufacturing output increased 2.9% and working hours fell 5.9%. Among makers of airplanes, appliances and other durable goods, productivity soared 13.3%, as output grew 4.8% and the hours needed to produce the goods fell 7.5%. For food and other nondurable producers, productivity rose 4.6% in the first quarter of this year, as output increased 1% and hours worked dropped 3.5%.

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