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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (6070)	5/9/2002 9:34:14 AM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 33421

I just am having a hard time getting on board this productivity thing. First it said right in the report that .... Productivity growth in manufacturing in the first quarter of 2002 reflected an increase of 3.2 percent in output and a drop of 5.9 percent in hours of all persons (seasonally adjusted annual rates). Output and hours in manufacturing, which includes about 16 percent of U.S. business sector employment, tend to vary more from quarter to quarter than data for the more aggregate business and nonfarm business sectors. So much of the increase was due to laying off workers not actual increases in output. Note also that unit labor costs were down only because they are dividing it by the output that they admit varies widely. Costs for employees was actually up almost 3% quarter or quarter which would be a 12% inflation rate in wages if this kept up..... Real Hourly hourly Unit Produc- compen- compen- labor Sector tivity Output Hours sation sation costs ------------------------------------------------------------------------ Percent change from preceding quarter Business 8.5 6.5 -1.8 2.8 1.3 -5.3 Nonfarm business 8.6 6.5 -1.9 2.7 1.2 -5.4 Manufacturing 9.7 3.2 -5.9 2.5 1.1 -6.5 Durable 13.3 5.0 -7.3 2.0 0.6 -9.9 Nondurable 5.1 1.2 -3.7 3.9 2.4 -1.1 ------------------------------------------------------------------------ Percent change from same quarter a year ago Business 4.1 1.2 -2.8 3.4 2.1 -0.7 Nonfarm business 4.3 1.3 -2.9 3.3 2.1 -0.9 Manufacturing 4.0 -3.6 -7.4 3.6 2.4 -0.4 Durable 4.6 -4.7 -8.9 4.0 2.8 -0.5 Nondurable 2.8 -2.3 -4.9 3.4 2.1 0.6 ------------------------------------------------------------------------ Are companies really having the pricing power to recoup these higher costs? With oil once again knocking on the 28 handle door. It just seems to me that costs of production are going up while there is little recourse to make up those higher costs which leads to lower profits. I also have yet to see an uptick in business loans or CapEx expenditures. Maybe I am just too cynical. Off to work. Good Luck, Lee