BLS Daily Report

[Richardson_D <Richardson_D@xxxxxxx>]

> BLS DAILY REPORT, WEDNESDAY, FEBRUARY 9, 2000
>
> The productivity of U.S. private nonfarm workers grew at a 5 percent pace
> in the fourth quarter of 1999, contributing to the largest annual increase
> in seven years, according to preliminary data released by BLS. Gains in
> fourth-quarter productivity, or output per hour, matched the revised 5
> percent annual rate of increase in the third quarter. Output in the fourth
> quarter grew 6.6 percent, outstripping the 1.5 rise in hours worked.
> Hourly compensation increased 4 percent, but the gain in output helped
> push down unit labor costs 1 percent. For all of 1999, private nonfarm
> productivity rose 2.9 percent, up from 2.8 percent in 1998 and the highest
> since 1992's pace of 4.1 percent. (Daily Labor Report, page D-1).
> ___Productivity surged in the fourth quarter, boosting its annual growth
> to a seven-year high of 2.9%. Separately, banks are tightening their
> business-lending practices as delinquency rates on commercial loans
> continue to rise. (Wall Street Journal, page A1).
> ___The efficiency of American workers surged in the last six months of
> 1999, as U.S. productivity rose at a 5% annual rate during that period,
> according to BLS. With these final numbers, the 1990's entered the books
> as the decade that produced the greatest improvement in productivity since
> the golden 1960's. Productivity, an arcane statistic, explains--more than
> any other single statistic--how the economy can grow as strongly as it has
> the last four years without generating more inflation. Workers, in effect,
> are producing much more without having to be paid more, and that takes
> pressure off corporate America to raise prices. "This kind of data keeps
> alive the expectation that the economy will keep growing strongly with low
> inflation and that means the Federal Reserve will not have to end the
> expansion," said Kermit L. Schoenholtz, chief economist at the Salomon
> Smith Barney unit of Citigroup. Almost all of the improvement came in the
> last four years, when computers became much faster and the Internet
> expanded rapidly, suggesting to some economists that the new technologies
> played a significant role in lifting labor productivity. Others insist
> that technology has made only a small contribution. (New York Times, page
> A1).
> ___The efficiency of the U.S. economy took a further leap upward in the
> second half of last year as worker productivity rose at a 5 percent annual
> rate, the fastest pace in seven years, the Labor Department reported. Many
> economists and policymakers have highlighted an acceleration in the growth
> of productivity, which measures worker output per hour, as a key reason
> the economy has performed so spectacularly in recent years. And while
> productivity gains typically begin to fade as an economic expansion ages,
> that has not happened during what has become the longest expansion in U.S.
> history. To the contrary, Federal Reserve Chairman Alan Greenspan and his
> central bank colleagues say they have seen no evidence that the
> acceleration is diminishing. "It's the best of all worlds when you have
> productivity-driven economic growth," said Mickey Levy, chief economist at
> Bank of America in New York. "It's just a stunning number." Figures such
> as those released yesterday, analysts said, ought to relieve some of the
> Fed's anxiety that tight labor markets--unemployment is at a 30-year low
> of 4 percent--could soon cause inflation to get worse. Since the middle of
> last year, the Fed has raised its target for overnight interest rates by a
> full percentage point in four steps. Most analysts expect another increase
> when the policymakers next meet, on March 21, as added insurance against
> an outbreak of inflation--despite the continued good productivity news.
> (Washington Post, page A1).
>
> Companies increasingly need employees able to work around the flexible
> schedules associated with an Internet-related, nonstop economy.  This
> trend toward more flex-time workers is expected to continue. Using data
> from Challenger, Gray, and Christmas Inc. and the Bureau of Labor
> Statistics, a chart shows the percent of full-time paid workers with
> flexible schedules in 1985 was over 10 percent.  In 1995, it was 15
> percent and by 1997 it was over 25 percent. (Business Week, page 8)
>
> After beginning the year at $1.14 a gallon, retail heating-oil prices
> skyrocketed nationwide as the weather grew cold, reaching $1.67 last week.
> In the Northeast, the run-up was even more dramatic, to $1.77 a gallon
> from $1.15, according to the Federal Energy Information Administration. To
> explain the problem, most analysts begin with the Organization of
> Petroleum Exporting Countries, which for about a year has limited its
> production of the crude oil from which gasoline, heating oil and other
> products are refined. That has led to a doubling of crude's price to well
> over $25 a barrel, a price at which analysts said many heating-oil
> refiners are buying less crude, leading to less production of heating
> fuel. ( Wall Street Journal, page A2).
>

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