U.S. Business Productivity Stronger Than Initial Estimates

By John S. McClenahen In another example of how different the most recent U.S. recession has been, productivity gains for both business generally and for manufacturing in the fourth calendar quarter of 2001 were substantially higher than first estimated. Productivity usually falls during a recession. Compared with the third quarter of 2001, fourth-quarter business-sector productivity -- measured as output per hour of work -- actually increased 5.1% at a seasonally adjusted annual rate, reveal new data from the U.S. Labor Department's Bureau of Labor Statistics (BLS). That figure is 1.7 percentage points higher than the 3.4% the BLS initially reported. Manufacturing posted a 4.1% fourth-quarter gain, with output for both durable and nondurable goods producers higher than initially estimated. BLS' previous productivity growth figure for manufacturing was 3.5%. "Productivity growth always picks up early in expansions, so the current trend bodes well for future gains," states Stan Shipley, a senior economist at Merrill Lynch & Co., New York. Another Labor Department report, containing the latest numbers on initial claims for unemployment insurance, indicates the U.S. labor market is stabilizing, says Shipley. Initial jobless claims for the week ending March 2 were 376,000, some 5,000 below the previous week's revised figure of 381,000. For the week ending March 2, the four-week moving average for claims was 372,750, a decline of 1,250 from the previous week's running average of 374,000.

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