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Productivity Off 1st Time Since Late '82 : Spring Quarter Drop Another in Series of Disappointing Signs

August 27, 1986|United Press International

WASHINGTON — Productivity of American workers slipped at an annual rate of 0.5% in the spring quarter--the first decline since the last recession, the government said today, revealing another in a series of disappointing economic indicators.

Non-farm business productivity, which covers 85 million workers, was pulled back by a 0.3% decline in output paired with a 0.2% increase in hours worked. It was the first decline in output since the final quarter of 1982, the tail end of the last recession.

Productivity, defined as output per hour, declined at a 3.5% annual rate in the fourth quarter of last year but rebounded at a 4.3% rate in the first quarter of this year.

Productivity, which advanced 0.5% in 1985, has gained just 0.6% since the spring quarter of last year.

The Labor Department report is the latest in a string of disappointing economic indicators. The U.S. gross national product grew at a 0.6% annual rate in the April-June period, the slowest rate of growth since the beginning of the current business expansion.

'Statistical Discrepancy'

A preliminary report last month had charted a 1.7% rate of productivity growth for the quarter. Bureau of Labor Statistics analyst Lawrence Fulco said the steep downward revision was caused by a change in the "statistical discrepancy" from a positive $3.2 billion to a negative $4.7 billion.

Statistical discrepancy, which does not figure into the GNP data, is a measure of output in relation to income, Fulco said.

The only bright spot in today's report was a 2.2% rate of increase in manufacturing productivity, but the increase was due to a 3.4% decline in work hours paired with a smaller 1.3% drop in output. It was the first time that both manufacturing output and hours had declined since 1982.

The government's attempt to measure the effectiveness of management, the capability of workers, the efficiency of supply systems and the effects of modernization and wrap them into one number has seldom satisfied economists.

But most agree that increased productivity is the key to improving a society's standard of living. As productivity rises, workers' wages and corporate profits can be increased without cheapening the currency or heightening inflation.

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