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Productivity up 3.5% in 1Q
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June 8, 1999: 11:56 a.m. ET
Revised gain meets expectations; April wholesale inventories up 0.2%
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NEW YORK (CNNfn) - The U.S. labor force maintained its productive pace in the first three months of the year -- although the rate of improvement was, as expected, lower than originally reported, the government said Tuesday.
Productivity - which measures the time and effort needed to provide goods and services -- rose among Americans employed outside the farm sector at a revised annual rate of 3.5 percent in the first quarter, the Labor Department reported. The figure, which was in line with analysts' estimates, was reduced from the initial estimate of 4 percent reported in May.
Productivity rang in at 4.3 percent the fourth quarter of 1998, the best showing since 1983.
Unit labor costs, a measure of what it costs companies to pay their workers, rose a revised 0.7 percent in the first quarter. While that's higher than the 0.3 percent increase initially reported, it's below the 0.8-percent rise that was the consensus of analysts surveyed by Reuters.
Hourly wages adjusted for inflation rose at a 2.6 percent annual rate, previously reported as a 2.8 percent gain for the quarter.
The report is seen by at least one analyst as underlining the strength of the U.S. economy. But it isn't seen as a deterrent to the possibility that the Federal Reserve will raise interest rates to quell inflation.
"The numbers show a pretty solid economy that doesn't look poised just yet for a slowdown," said Doug Porter, a senior economist with Toronto-based brokerage Nesbitt Burns Inc. "The productivity numbers are encouraging, but I don't think they're enough to rule out higher rates."
Still flying off the shelves
In a separate report, U.S. businesses stocked their shelves at a slightly slower than expected pace in April, while wholesale merchants' sales rose to a new record, the Commerce Department said.
Total inventories rose 0.2 percent to a seasonally adjusted $288.96 billion. The increase was just below the 0.3 percent rise that was the Reuters' consensus estimate, and matched the 0.2 percent increase in March.
Wholesale inventories are the amount of stock sitting on warehouse shelves waiting to be sold and shipped to retail outlets.
Wholesale sales rose to a seasonally adjusted record $221.87 billion in April, up from $221.80 billion in March. The inventory-to-sales ratio, which measures how long it would take to completely deplete stocks, remained steady at 1.3 months' worth.
"What it shows is that inventories are still in pretty good balance," Porter said of the report. "There's no sign that there's any unwanted build-up." 
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