The Change Mariner

Productivity Slows to 2.7%

New York Times:

"We saw companies finally needing to increase the number of hours worked after cutting hours and workers through the prior three years," said Lynn Reaser, chief economist at Banc of America Investment Services in St. Louis. "This is a trend we will likely see followed in 2004. Companies will need to ramp up hiring."

And a Federal Reserve governor, Ben S. Bernanke, said in a speech yesterday that economic growth of more than 4 percent this year "is not at all unreasonable." Productivity gains, Mr. Bernanke said, would restrain inflation and provide room for interest-rate setters to "be patient" in the next six months.

Even at a slowed pace last quarter, the rise in productivity was enough to cause unit labor costs, or the amount paid for each unit of production, to fall 1.3 percent annually.

For all of last year, productivity rose 4.2 percent after a 4.9 percent increase in 2002. The two-year average was the largest since 1950-51.