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March 03, 2005

Wow...

The FT reports:

FT.com / World / US - Dollar rises on strong productivity report: US productivity grew much faster than first estimated at the end of last year, easing worries that inflation may accelerate but also reducing the pressure on firms to step up hiring. The initial estimate for fourth quarter productivity growth showed a rise of only 0.8 per cent annualised the slowest increase in nearly four years. On Thursday this was revised up to 2.1 per cent. Unit labour costs, meanwhile, rose by only 1.3 per cent in the last three months of the year rather than the 2.3 per cent initially reported. As a result, unit labour costs were up only 0.4 per cent during the year. Despite an upward revision to the unit labour costs for the third quarter, this suggests that employment conditions are still too weak to start pushing up prices.... Between 1973 and 1995 annual productivity growth averaged 1.4 per cent. It accelerated to 2.5 per cent between 1995 and 2001. Since then it has averaged 4.3 per cent a year. The latest burst of speed has been widely attributed to the delayed effects of the high-tech investment of the late 1990s which took companies some time to integrate into their business processes...

Posted by DeLong at March 3, 2005 12:47 PM