Latest Economic Data Are Encouraging

By John S. McClenahen "Productivity is booming and unit labor costs are declining, helping to keep U.S. producers competitive and prices under control," says Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. On Aug. 7 the U.S. Labor Department reported that productivity in the manufacturing sector of the U.S. economy advanced at an annual rate of 4.2% during this year's second calendar quarter. For the entire non-farm business sector, productivity rose at an annual rate of 5.7%. In manufacturing, unit labor costs rose at an annual rate of just 1.2% in the second quarter. For the overall non-farm business sector, unit labor costs declined at a 2.1% annual rate. There were two other sets of encouraging economic numbers on Aug. 7. The Labor Department reported the initial claims for unemployment insurance fell to 390,000 last week, some 3,000 fewer claims than the 393,000 recorded for the week ending July 26. Initial claims have been below 400,000 for two consecutive weeks, suggesting the U.S. labor market is less soft than it was only a month ago. "Although the average may still be biased by early summer shutdowns, the latest weekly claims likely are largely free of any distortion," believes Maury Harris, chief U.S. economist at UBS Investment Research, New York. "The message seems to be that claims are edging lower. That should be a prelude to renewed hiring." The U.S. Commerce Department said that sales at the wholesale level, including manufactured durables and non-durable goods, rose 1.5% in June to $237.5 billion. Inventories were virtually unchanged from May, resulting in a June inventories-to-sales ratio of 1.22.

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