U.S. Worker Productivity Falls Back : Indicators: Analysts say the retreat reflects slow first-quarter economic growth. They expect the picture to improve.

From Associated Press

The productivity of American workers declined during the first quarter for the first time in two years, but analysts said it would improve modestly during the year because the dip reflected slow economic growth.

The Labor Department said Thursday that non-farm productivity slipped 0.1% at a seasonally adjusted annual rate, down sharply from the fourth quarter's 4.1% increase.

It was the first drop since productivity--defined as output per number of hours worked--fell 0.7% in the first quarter of 1991.

"It clearly reflects the slow GDP growth" in the first quarter, said economist Lawrence Chimerine of DRI-McGraw-Hill, a Lexington, Mass., economic forecasting firm. "Assuming we don't repeat the first-quarter pattern, it's somewhat of an aberration."

"It's not surprising in view of the very meager economic growth in the first quarter," agreed Sung Won Sohn, an economist with Norwest Corp. in Minneapolis. "But assuming economic growth picks up in the second quarter, as I expect it is, productivity will rise again, although at a slower pace."

The government reported last week that the gross domestic product--the total output of goods and services within the United States--rose at an anemic 1.8% annual rate from January through March, down from a 4.7% rate during the previous quarter. For all of 1992, however, GDP grew just 2.1%.

In another report, the Labor Department said Thursday that new claims for jobless benefits held steady last week at 346,000.

But the less-volatile, four-week moving average of jobless claims, which analysts prefer because it more accurately reflects the labor situation, fell to 345,000 from 351,750 the previous week. That was the lowest in nine weeks.

The report signals "the employment situation is improving, albeit at a modest pace," contended economists Marilyn Schaja and Christine Schneider at Donaldson, Lufkin & Jenrette Securities Corp. in New York. They added that the Labor Department's employment report on Friday "is expected to show that the labor market grew moderately during April."

The consensus of economists is that the unemployment rate remained stuck at 7% for the third straight month.


Non-farm business productivity's percent change from previous quarter at seasonally adjusted annual rate.

First quarter, 1993: --0.1% (preliminary)

Source: Labor Department

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