Manufacturing Posts 4.8% Productivity Gain In 2005

The manufacturing sector posted 3.9% productivity growth in the fourth quarter of last year and 4.8% growth for all of 2005, far outpacing rates for the overall non-farm business portion of the U.S. economy, of which manufacturing is a part, the U.S. Labor Department reported on Feb. 2.

Productivity in the non-farm business sector fell six-tenths of a percentage point in the fourth quarter of 2005 and grew just 2.7% for the year.

"It remains to be seen whether this poor quarterly performance is an anamoly, caused by the fourth-quarter slowdown in economic activity, or a break from the strong productivity performance the U.S. economy has demonstrated in recent years," says Peter Morici, a professor at the University of Maryland's Smith School of Business in College Park. "The absence of inflationary pressures outside the volatile energy sector provides an important indication that this fourth-quarter dip is temporary," states Morici. "Only strong productivity growth would permit nonfinancial corporations and manufacturers to continue posting large gains in profits, given rising wages, and energy and other material prices."

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