WASHINGTON (AP) -- The productivity of American workers grew at a healthy 3 percent annual rate over the summer even as manufacturers struggled with sales lost to the Asian economic slump.
The increase in the productivity of nonfarm, nonsupervisory workers in the July-September quarter -- measured as output per hour of work -- was even better than the 2.3 percent seasonally adjusted rate reported in an initial estimate last month.Economists said today's report from the Labor Department shows that businesses, especially manufacturers, have been quick to economize to preserve profit margins threatened by the loss of export sales to Asia and other economically troubled parts of the world.
Many businesses can't increase prices much because of competition from exports. Nor can they cut back on wages and salaries because with unemployment remaining near a 28-year low, it's difficult to retain qualified employees.
What they can do is keep payrolls lean. That's illustrated by a separate Labor Department report today showing the number of first-time applications for unemployment benefits rose by 12,000 to 313,000 last week.
Economists consider healthy productivity gains the key to prosperity and rising living standards. Sizable gains mean companies can pay employees more, hold the line on prices and still deliver increased profits to shareholders.
After growing at a brisk 2.9 percent annual rate in the 1960s and early 1970s, productivity slowed to an anemic 1 percent a year from 1974 through 1995. Since then, it's been growing at about a 2 percent rate.
That's led some economists to speculate that the economy has embarked on a new era of productivity growth, driven by computers and other high-tech innovations.
In the third quarter, hours worked rose a lackluster 1.2 percent at nonfarm businesses. Compensation per hour rose at a strong 4.1 percent rate. But output increased at an even more robust 4.2 percent rate. That meant that unit labor costs, a key measure of underlying inflation pressure, rose at a tame 1.1 percent annual rate.
At factories, productivity increased at a 5.2 percent rate. Output was up only slightly, at a 0.7 percent rate, but hours worked plummeted at a 4.3 percent rate.
Meanwhile, the level of jobless claims reported for last week was still below the level of early November. However, a four-week moving average, which smoothes fluctuations in the volatile data series, rose by 250 to a seasonally adjusted 319,250.
That was the highest level since July, when the General Motors strikes temporarily swelled the number of claims. Excluding the GM strike, the four-week average hit a 10-month high.
Since the spring, loss of sales abroad, primarily in Asia, has prompted manufacturers to slash payrolls by nearly 200,000 jobs and the nation's unemployment rate has crept to 4.6 percent from a 28-year low of 4.3 percent.
The latest evidence of Asian impact came this week when Boeing Co., the world's largest aerospace company, said it would lay off 20,000 workers, bringing its planned job cuts announced since the summer to 48,000.