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To: maceng2 who wrote (25151)	11/8/2002 12:27:21 AM
From: calgal	Respond to of 74559

11/07/2002 - Updated 10:54 AM ET URL:http://www.usatoday.com/money/economy/productivity/2002-11-07-economy_x.htm Productivity grows at 4% pace in Q3; jobless claims fall WASHINGTON (AP) — Productivity, a crucial ingredient in the economy's long-term vitality, grew at a brisk annual rate of 4% in the summer. It was the strongest showing since the beginning of this year. Productivity — the amount of output per hour of work — bounced back in the third quarter, after growing a sluggish 1.7% pace in the second quarter of this year, the Labor Department reported Thursday. While the 4% rise in productivity was slightly weaker than the 4.2% pace many analysts were forecasting, it still marked the best performance since a sizzling 8.6% growth rate posted in the first quarter of this year. Gains in productivity are helping to keep a lid on inflation, an important factor for Federal Reserve policymakers as they try to energize the sputtering economic recovery. After holding interest rates at low levels all year long, the Fed slashed a key interest rate by a bold half percentage point on Wednesday, its first rate reduction of this year. By lowering rates, Fed policymakers hope to motivate consumers to spend more and businesses to step up investment, factors which would boost economic growth as the holiday season approaches. "Productivity is our one strength and our one salvation at this difficult time," said economist Clifford Waldman, president of Waldman Associates. "It should make the Fed breathe a sigh of relief about its decision to cut rates." Separately, new claims for unemployment benefits dropped last week a seasonally adjusted 20,000 to 390,000, the lowest level since early October, the department said in a separate report. But the four-week moving average edged up to 402,000. It was the 10th week in a row the average was above the key 400,000 mark economists consider a weak labor market. The number of workers continuing to collect unemployment benefits rose to 3.58 million for the work week ending October 26, the most recent period for which the information is available. That figure suggests that not a lot of hiring is going on. Still, last week's drop in claims was bigger than expected. Economists in a Reuters poll forecast, on average, that initial claims would edge down to 401,000. "It looks like things are stabilizing in the labor market," said Carey Leahey, senior U.S. economist at Deutsche Bank Securities in New York. "Job growth is effectively zero, but it's not getting any worse." Also, inventories at wholesalers grew a larger-than-expected 0.5% in September, partially boosted by an increase in stocks of cars bound for dealers' lots, the government said. The gain was the biggest since July, the Commerce Department said. Leading the way was a 2.7% increase in wholesale inventories of autos — a reversal of the 2.4% drop in August — which was the largest increase since December 1998. Overall wholesale sales advanced only 0.1% in September. Analysts polled by Reuters had projected wholesale inventories to increase 0.2%. Despite the rise in inventories, the inventory-to-sales ratio, a measure of how well firms are matching supply and demand, remained unchanged from the record low seen in August, at 1.22 months. The ratio gauges how long it would take to deplete stocks at the current sales pace, with a lower number indicating leaner stocks. The rise in productivity in the third quarter helped to push down unit labor costs. Unit labor costs rose at only a 0.8% rate in the third quarter, down from a 2.2% growth rate in the second quarter. Compensation per hour advanced by 4.8%, the biggest quarterly gain since the third quarter of 2000. Improved productivity often is a byproduct of a sluggish economy as businesses work existing employees longer hours rather than hiring additional help. That's particularly crucial to companies as they try to cope with the faltering economic recovery and try to bolster profits, which took a big hit during last year's recession. Gains in productivity also allow the economy to grow faster without triggering inflation and lets companies pay workers more without raising prices, which would eat up those wage gains. For the 12 months ending September, productivity grew at a brisk 5.3% pace, representing the strongest showing since the third quarter of 1983. Unit labor costs, meanwhile, dropped by 2%. Contributing: Reuters Copyright 2002 The Associated Press. All rights reserved.

To: maceng2 who wrote (25151)	11/8/2002 4:17:45 AM
From: LLCF	Read Replies (4) \| Respond to of 74559

What is Rolf thinking? <<people are not happy, they are saving and not investing," said Rolf Elgeti at Commerzbank in Frankfurt.>> DAK