WASHINGTON -- The productivity of U.S. workers increased during the fourth quarter at the fastest pace in six years as companies cranked out more goods and services while labor and other costs fell, the government reported yesterday.
Productivity -- a measure of how quickly and easily workers can produce goods and services -- rose at an annual rate of 4.6 percent during the final three months of 1998 after rising at a 2.5 percent pace in the third quarter, the Labor Department said.
"I never cease to be amazed at the ability of our flexible and innovative economic system to take advantage of emerging technologies in ways that raise our productive capacity and generate higher asset values," said Alan Greenspan, the Federal Reserve Board chairman.
The increase in productivity was the largest since a 6.2 percent gain in the fourth quarter of 1992, the Labor Department said. For all 1998, productivity increased 2.2 percent, almost double 1997's 1.2 percent gain.
Analysts say the rise in productivity is the main reason the economy has managed steady growth without inflation. The increase is credited with a generation-low unemployment rate and higher wages, while keeping consumer prices rising at the slowest pace in 12 years.
"Productivity is extraordinary and that's what's keeping inflation under control," said Astrid Adolfson, an economist at MCM MoneyWatch in New York. As a result, Federal Reserve policy-makers have held off raising interest rates.
Fourth-quarter productivity was previously reported as increasing at a 3.7 percent rate. Before yesterday's revised report, analysts expected a revised gain in productivity of 4.3 percent for the final three months of last year. The 2.2 percent annual productivity gain was the same as first estimated.
Stockpiles at U.S. wholesalers decreased in January as inventories of clothing, farm products and imported cars declined, the Commerce Department reported yesterday. Sales at wholesalers also fell.
Wholesale inventories fell 0.2 percent during the month to $286.262 billion, the Commerce Department said. The decrease in January wholesale inventories followed a revised 0.4 percent increase in December, previously reported as a 0.5 percent gain.
Sales of wholesalers decreased 1 percent to $215.287 billion in January after rising an unrevised 1.2 percent in December.
Unit labor costs -- a separate gauge of changes in worker compensation and productivity -- fell at a 1.1 percent annual rate in the fourth quarter, after increasing at a 1.4 percent rate in the third quarter. The drop was the first since a 1.5 percent decline in the first quarter of 1996.
Hourly wages adjusted for inflation rose at a 1.7 percent rate in the fourth quarter after a 2.1 percent gain.
Pub Date: 3/10/99