U.S. factory output leapt nearly 5% in 1st quarter

May 07, 1993|By New York Times News Service

NEW YORK -- The productivity of American factories soared in the first quarter, an upbeat sign for profits and another indication that the drive to make American manufacturing leaner and more competitive has continued into the 1990s.

Spurts in the production of computers and cars helped push up output per hour in the manufacturing sector, which makes up about a fifth of the economy, at an annual rate of 4.8 percent in the quarter, the Bureau of Labor Statistics reported yesterday.

But productivity in the entire private economy -- which consists of services like banking, health, education and retailing -- did not rise in the first quarter, the first no-growth quarter since the recession officially ended two years ago.

The bureau said yesterday that productivity edged down at an annual rate of 0.1 percent, after having surged at an annual rate of 4.1 percent in the fourth quarter of 1992.

The leveling of productivity ended a string of solid gains that had raised hopes that long-term productivity growth, which had been less than 1 percent during the 1980s, had rebounded to its historical average of about 2 percent a year.

"It raises a question about whether we are on a new, higher productivity trajectory, especially in services," said Lawrence Mishel, an economist at the Economic Policy Institute in Washington.

The lull in productivity growth did not surprise analysts. Productivity measures output per hour of work. The government had previously reported that in the first quarter, the gross domestic product -- the economy's total output -- had grown at only half the fourth-quarter rate while jobs had sprouted at their strongest rate in several years.

Part of the lagging overall productivity in the first quarter may have been due to the unusually severe winter weather.

Bruce Steinberg, an economist at Merrill Lynch, said he expected productivity would improve this year. "We think the stall was only a temporary setback."

Still, the report was a reminder that the slow-growth economy had either generated good productivity gains or a crop of new jobs, but not both in the same quarter.

The bureau also reported that hourly compensation grew at an anemic annual rate of 3.3 percent in the quarter, a bit more slowly than inflation.

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