Well, the following convinces me. We simply need to fire more folks and
productivity goes up. A simple equation, what?

MoonMan

     STRONGER DEMAND FOR CARS, computers, household appliances and machinery
helped to boost orders to factories, the Commerce Department reported
Friday. It was the fifth-straight monthly increase.
       In another report, productivity, a key ingredient of the economy?s
long-term vitality, grew at an annual rate of 8.4 percent in the
January-March quarter as hard-pressed companies produced more with fewer
workers.
       The latest batch of economic data shows a recovering economy,
including the manufacturing sector, which was hardest hit by last year?s
recession.
       The Labor Department?s revised reading on productivity ? the amount
of output per hour of work ? was a bit weaker than the 8.6 percent rate of
increase previously reported for the quarter. But it still marked an
improvement over the strong 5.5 percent productivity growth rate posted in
the fourth quarter of 2001.
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         The big productivity gain in the first quarter came at a price.
Businesses, responding to the lingering effects of last year?s recession,
cut back on their payrolls. That caused the total number of hours worked to
fall at a rate 2.1 percent. Output rose at a rate of 6.1 percent.
       In the factory-orders report, gains were broad based. The 1.2 percent
rise was the biggest since a 7.5 percent advance in October.
       In the long run, productivity gains are good for workers, for the
economy and for companies, whose profits took a hit during the slump.
       Gains in productivity allow companies to pay workers more without
raising prices, which would eat up those wage gains. And, productivity gains
permit the economy to grow faster without trigger inflation. If productivity
falters, however, pressure for higher wages could force companies to raise
prices, thus worsening inflation.
       The 8.4 percent rise in productivity in the first quarter marked the
biggest increase since the second quarter of 1983.
       The rise in productivity helped to push down unit labor costs, a
gauge of inflation. Unit labor costs declined at an annual rate of 5.2
percent in the first quarter, a slightly smaller drop than the 5.4 percent
reported a month ago. Still, the latest number is an improvement over the
3.1 percent rate of decline in unit labor costs seen in the fourth quarter.
       In general, productivity tends to rise strongly when the economy is
booming. But gains in productivity can become weak or productivity can fall
when the economy slows or contracts.

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