OT *** "Productivity Surged at 8.6% Rate In First Quarter as Output Jumped"
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
WASHINGTON -- Productivity jumped in the first quarter by the biggest amount in 19 years, as businesses cut payrolls but boosted output.
Separately, wholesale inventories leveled off in March after falling for nine months, and sales fell slightly.
Nonfarm business productivity -- the amount of output per hour of work -- grew at a seasonally adjusted annual rate of 8.6%, the fastest rate since the second quarter of 1983, the Labor Department said Tuesday. The increase led to the steepest decline in unit labor costs since 1983 -- a welcome development to companies struggling against declining profits.
The productivity surge exceeded even the strong 7% gain expected by economists, according to a survey by Thomson Global Markets.
The improvement came as businesses cut jobs in response to the lingering effects of last year's recession. The total number of hours worked fell at a rate of 1.9%. Output, however, rose at a solid 6.5% rate, the biggest increase in two years.
The productivity surge led to a 5.4% drop in unit labor costs. Average hourly compensation for nonfarm employees, however, rose 2.7% after a 2.3% increase in the fourth quarter.
Manufacturers of durable goods enjoyed the biggest productivity gains during the quarter, jumping 13.3% after a 3.5% rise in the fourth quarter. Overall, the manufacturing sector saw a productivity gain of 9.7%, compared with 4.7% in the prior quarter.[snip]
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