Labor Department report shows increased summer productivity
As companies across the country wait for the monthly jobs report from the Bureau of Labor Statistics, it appears that U.S. workers were more productive in the late summer than previously thought.
According to The Associated Press, the latest figures from the Labor Department showed that productivity grew at an annual rate of 2.9 percent from July to September, and not at the initial estimate of 1.9 percent. The revised figures were released on December 5, and demonstrated that U.S economic growth was faster in the third financial quarter of the year than previously thought with economists seeing it as an encouraging sign for manufacturing companies.
The economy also showed encouraging signs of growth in the three months under study. Initial estimates put the annual rate at around 2 percent, but it appears that it was slightly more robust, recording a figure of 2.7 percent from July to September, over double the 1.3 percent achieved during the second financial quarter.
However, the figures are still not enough to convince economists that U.S. manufacturing companies have avoided the deceleration of productivity in the last quarter, with a number of reasons cited for a potential lean manufacturing future. These included the disruption to business activity caused by Hurricane Sandy, which allegedly instigated a drop of 86,000 in payrolls in the 24 states affected, and the continuing concern over the "fiscal cliff," with worker productivity expected to reflect this.
The report also showed that while productivity had increased during the summer, the numbers of hours being worked had remained unchanged suggesting that companies were finding new ways to squeeze output from existing workers. This is good news for the bottom line of a company, but less encouraging for anyone seeking employment in the manufacturing industry.
Manufacturing companies tend to hire new workers when the economy grows, with demand for products requiring an increase in workforce. However, early estimates from the BLS show that the fourth quarter will show a growth rate of less than 2 percent, which is unlikely to spur a hiring drive that will reduce the national unemployment rate.
"The productivity gains should help companies’ profit margins," commented Kevin Cummins, an economist at UBS Securities LLC, in an interview with Bloomberg. "There’s going to be continued downward pressure on labor costs given the high rate of unemployment."