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 user 2003-12-13 at 10:46:00 am Views: 50
  • #4225
    Business Productivity Hits 20-Year High
     In a performance with bullish implications for all Americans’ standard of living, the productivity of U.S. workers rose at the fastest rate in 20 years in the third quarter, revised data show.

    Output Per worker at nonagricultural businesses rose at an annual rate of 9.4% in the Third quarter, the Labor Department said, even better than the earlier estimate of 8.1%. That’s the best quarterly performance since 1983. It brought the 12-month rate of increase to 5%. In the last two years, productivity growth has averaged 5.5%, the best two-year performance since 1953, according to Banc of America Securities.

    If sustained, the third-quarter performance would lead to a doubling in the U.S. standard of living in just eight years. However, it likely has been temporarily elevated by companies’ ability to boost output without adding to capacity and by their reluctance to hire amid uncertainty about the sales outlook.

    In the short run, the strong productivity performance bolsters corporate profits and encourages the Federal Reserve to take its time about raising interest rates.

    In the long run, the recent performance likely means the economy’s long-term growth rate could have risen to as much as 4%, from about 2.5% between the early 1970s and mid-1990s.