You may have noticed that in recent weeks we sometimes had economic news releases that covered more than one month. This was due to federal agencies getting caught up on the data collection and analysis that was delayed because of the government shutdown. Well, the impacts from the shutdown are still being felt. Two items that were scheduled for release today have been delayed. The Commerce Department has delayed release of the January new home sales and housing completion reports until Monday.

The Labor Department announced today that productivity during the last quarter of 1995 declined at an annualized rate of 0.5 percent. This contrasts with a third quarter productivity gain of 1.7 percent. For all of 1995, productivity rose by 1.1 percent, an improvement over 1994's gain of 0.5%. 1995's increase was the highest since 1992 when productivity advanced by 3.2 percent.

Productivity is a measure of production output per hour of labor. When the economy slows down, demand for goods slows down. As producers recognize the slowdown in demand, they slow down their production output. Since there is usually a lag between cutting production and cutting the workforce, a temporary reduction in productivity occurs. So, the change in productivity from a gain of 1.7 percent in the third quarter to a drop of 0.5 percent in the fourth quarter seems to be telling us that the economy was slowing at the end of last year.

And, speaking of cutting workforces, a survey conducted by Chicago employment firm Challenger, Gray and Christmas shows that the number of layoffs announced by U.S. businesses in February was 33,830. This was up 9.3 percent from February 1995.

For 1996 thus far, 131,209 planned layoffs were announced, up 87.7 percent from the same period last year. AT&T accounts for 42,500 of that total. Computer companies account for another 13,188, and the struggling retail sector plans to let 11,480 people go.

Sometime in June, when the next quarterly report comes out, we'll see whether these first-quarter workforce reductions had any impact on productivity.

Byline: Lafferty (MF Merlin)