WASHINGTON -- U.S. worker productivity for all of 1997 was little changed from the year before, producing the best back-to-back yearly showings in more than a decade as companies benefited from a booming economy and a surge in business investment.
Non-farm productivity -- a measure of the time and effort of providing goods and services -- rose 1.7 percent for all of last year, almost matching the 1.9 percent increase for 1996 and the best two-year gain since 1985-86, government figures yesterday showed.
For the fourth quarter alone, productivity rose at an annual rate of 1.6 percent, the Labor Department said, down from an earlier estimate of a 2.0 percent increase and less than the third quarter's 3.6 percent gain. The revision stemmed entirely from a reduced estimate for overall growth during the period.
"This is one bad quarter in the context of a good year," said Cary Leahey, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, N.Y. "Productivity is still pretty good, and well above the 10-year average of about 1 percent."
There's also evidence companies are still finding efficiencies that will allow them to pass along savings to consumers through lower prices, and to workers through higher wages. Over the last two years, the nation has witnessed a "notable pickup" in productivity, Federal Reserve Chairman Alan Greenspan has said, and that's helped keep inflation in check even as wages have climbed. "There is something different" going on in the U.S. economy, he said.
The revision to the fourth quarter's productivity gain had the effect of pushing up unit labor costs for the period -- a measure of wages and benefits tied to productivity. Unit labor costs rose 3.5 percent in the fourth quarter, up from the initial estimate of a 3.0 percent increase and the largest increase since the third quarter of 1996.
Still, analysts said that doesn't mean investors should be concerned about accelerating inflation because the numbers over the past several quarters show employment costs haven't risen by much. For all of last year, unit labor costs rose 2.1 percent. That's close to the 1.9 percent gain a year earlier and below the 2.4 percent increase in 1995.
"Productivity growth is doing the job in keeping wage pressure in check," said Jonathan Basile, economist at HSBC Securities Inc. in New York.
Pub Date: 3/11/98