US firms record positive signals
By Martin Crutsinger |
May 7, 2010, Friday
|
Print Edition
Print Edition
PRODUCTIVITY growth posted a better-than-expected gain in the first three months of this year in the United States while labor costs dropped more than expected. That combination is good for corporate profits but means household incomes continue to be squeezed, putting the economic recovery at risk.
The US Labor Department said yesterday that productivity grew at an annual rate of 3.6 percent in the first quarter. That was better than the 2.5 percent increase economists had expected.
Unit labor costs dropped at an annual rate of 1.6 percent, a bigger decline than the 0.7 percent forecast. It marked the third straight quarterly decline, underscoring how much a severe recession has dampened wage pressures.
Another report yesterday showed the job market is slowly improving. The department said applications for unemployment benefits dropped for a third straight week, decreasing by 7,000 to 444,000.
Economists believe the April jobless number, which is to be released today, will show unemployment stuck at 9.7 percent for a fourth straight month.
The economy has been growing since last summer but firms have been reluctant to hire back workers. They are instead opting to push their slimmed-down work forces to produce more.
That has translated into a surge in productivity. It grew at annual rates of 7.6 percent, 7.8 percent and 6.3 percent in the second, third and fourth quarters of last year.
The 3.6 percent rise in productivity for the first three months of this year marked a drop from the rates turned in over the last three quarters. That is something that economists expect will occur as companies reach the limit of how much they can expand output without hiring more workers.
The US Labor Department said yesterday that productivity grew at an annual rate of 3.6 percent in the first quarter. That was better than the 2.5 percent increase economists had expected.
Unit labor costs dropped at an annual rate of 1.6 percent, a bigger decline than the 0.7 percent forecast. It marked the third straight quarterly decline, underscoring how much a severe recession has dampened wage pressures.
Another report yesterday showed the job market is slowly improving. The department said applications for unemployment benefits dropped for a third straight week, decreasing by 7,000 to 444,000.
Economists believe the April jobless number, which is to be released today, will show unemployment stuck at 9.7 percent for a fourth straight month.
The economy has been growing since last summer but firms have been reluctant to hire back workers. They are instead opting to push their slimmed-down work forces to produce more.
That has translated into a surge in productivity. It grew at annual rates of 7.6 percent, 7.8 percent and 6.3 percent in the second, third and fourth quarters of last year.
The 3.6 percent rise in productivity for the first three months of this year marked a drop from the rates turned in over the last three quarters. That is something that economists expect will occur as companies reach the limit of how much they can expand output without hiring more workers.
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