Productivity grew 4.9 % & labor costs fell 0.2 % in 3Q/edit:
(The Labor Department had initially estimated growth in productivity
-- which can help keep inflation at bay -- at 4.2 percent in the quarter, and labor costs as rising 0.6 percent)
cnnfn.com
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Some details from bloomberg:
bloomberg.com
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Some excerpts:
>..Productivity at non-financial corporations, a statistic
watched by Federal Reserve Chairman Alan Greenspan, rose at a 4.7
percent pace in the third quarter, the biggest increase in a
year.
Labor accounts for two-thirds of business costs. And
advances in productivity -- calculated as an index of worker
output per hour -- let companies keep those costs from feeding
through to price or trimming profits.
Productivity is on track to grow by 2.8 percent this year,
the same as in 1998. Since the beginning of 1997, productivity
has grown an average annual rate of 2.6 percent.
With an unemployment rate at a 29-year-low of 4.1 percent in
November, the economy speeding along at a 5.5 percent annual rate
in the third quarter and limited pricing power for U.S.
companies, businesses are striving to make productivity gains to
keep profits rising.
Companies have invested heavily in computers and other
innovations to boost efficiency and reduce costs. After
languishing at about 1 percent in the 1970s and 1980s,
productivity growth in all U.S. businesses, except farms, has
been above 2 percent the past three years.
Such capital investments help explain why the economy has
managed to grow almost inflation-free for several years at a pace
faster than the 2.5 percent long considered the point at which
price increases were likely to accelerate.
Federal Reserve officials want to see these productivity
gains continue in order to ensure consumer prices stay in check.
''This will be seen as very favorable to the case of those
members of the FOMC that believe there is a productivity revival
blunting the threat from inflation,'' said John McAuley,
economist at Wilkinson Boyd Capital Markets in New Canaan,
Connecticut, before the report.
Fed policy-makers have already raised interest rates three
times this year by a total of three-quarters of a percentage
point to ensure inflation doesn't accelerate with economic
growth.
''What we're seeing is increases in productivity,'' said
William McDonough, president of the New York Fed, last month.
''Our view is that the economy can grow at 3.5 percent a year. As
long as the rate of productivity continues to rise, you can have
the economy grow faster without inflation.
It's clear that there have been fundamental changes in the
U.S. economy -- gains in worker productivity, for example -- that
allow it to grow faster and unemployment fall further than once
thought acceptable, Fed Governor Laurence Meyer said during a
speech in New York last month.
Still, even if productivity gains are permanent, ''policy-
makers have to be alert in the short run to the possibility of
overheating,'' he said....<
Not to mention:
The implicit price deflator for nonfinancial corporations (an alternate
measure of inflation) fell 0.3 percent in the quarter and is up 0.4 percent in
the past year. |
