Productivity in ’92 Highest in 2 Decades : Economy: Record set in factory orders adds to the evidence of a recovery.
Worker productivity made its largest gain in two decades last year, while orders for U.S. factory goods soared to a record high in December, the government reported Thursday, providing still more evidence that a national economic revival is under way.
Productivity levels, defined as output per hour of work, jumped 2.7% in 1992, the Labor Department reported--the best showing since 1972 and more than five times the 0.5% increase of 1991.
The Commerce Department said orders to U.S. factories surged 5.3% in December to a seasonally adjusted level of $256 billion--the biggest one-month gain since July, 1991. It surpassed the record of $250 billion set in October, 1990.
Economists said the increase should translate into higher production and rising employment in the months ahead.
The reports are the latest evidence that the U.S. economy is easing into a moderate recovery in 1993--even if the California economy is not. The growth rate for the nation’s gross domestic product--the country’s total output of goods and services--rose 3.8% in last year’s final quarter, not the robust 5% or greater of previous recoveries, but an improvement over the sluggish pace of the last two years.
The holiday retail season was the best in two years, new home sales are on the rise and consumer confidence is generally up. The only factor that’s missing, economists say, is a large number of new jobs.
The Labor Department is expected to report today that payrolls expanded in January, but at less than half the pace that typically accompanies recovery from recession. General unemployment hovered at 7.3% in December, with California even higher at 9.7%.
With so many people out of work, analysts say, the economy is unlikely to regain its former strength.
At the White House, President Clinton called the economic news encouraging but deplored the lack of progress on jobs.
“I’m happy that the productivity rates picked up, and I’m glad that people are able to finance their homes at lower interest rates,” he said. “But I’m still not convinced that this country is yet set on the right course in terms of generating jobs. And that’s the key thing--jobs.”
In an atmosphere of low job growth, said Richard Brinner, an economist with DRI/McGraw Hill, increased worker productivity “is a double-edged sword.”
On the one hand, he said, as companies push their employees to increase their hourly output, they often find they can make do with fewer people and refrain from hiring when orders begin to pick up again.
Conversely, the same productivity increase could mean that American firms are once again investing in the kinds of high technology that improve the country’s international competitiveness and raise living standards at home.
John Henrickson, president of Micro-Computer Logic, a small 3-year-old company in Santa Ana, has seen both dynamics at work.
Micro-Computer Logic sells IBM personal computers and computer networks to small- and medium-size companies, as well as individuals. Its sales rose 12% in 1992.
Most of that increase, Henrickson said, came from businesses rather than single buyers. Companies have begun to invest in computer technology to speed up the workplace, he said.
Additionally, firms are eager to learn how they can invest in computers to do some of the work for which they once hired people, he said, such as software that allows invoicing to be done at a desk.
Micro-Computer Logic may not be an aberration in the computer industry--where sales were up in general 18% last year--but the company is an odd-business-out in depressed Southern California.
Economists say the region suffers from the double blows of a shrinking defense industry and a depressed real estate market.
