(Bloomberg News circulated the following story by Bob Willis on May 7, 2009.)
NEW YORK — U.S. worker productivity probably rose in the first quarter as the worst recession in at least half a century prompted companies to squeeze more out of remaining staff, economists said before a report today.
Productivity, a measure of employee output per hour, rose at a 0.6 percent annual rate after dropping at a 0.4 percent pace at the end of 2008, according to the median forecast of 61 economists surveyed by Bloomberg News. Another report may show claims for jobless benefits rose.
CSX Corp. and Texas Instruments Inc. are among companies trying to survive the slump by paring payrolls and hours to cut labor costs and shore up profits. An improvement in earnings is a necessary step in getting the economy to expand again later this year.
“Firms are undergoing a really sharp adjustment,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “That helps the bottom line and eventually that helps set the stage for a recovery.”
The Labor Department’s report is due at 8:30 a.m. Washington time. Estimates for productivity ranged from a drop of 1 percent to a 3 percent increase.
At the same time, another Labor report may show 635,000 Americans filed claims for first-time unemployment benefits last week, according to the survey median. The total number of people receiving benefits probably climbed to a record 6.35 million a week earlier, according to the forecasts.
Companies continued to slash jobs this quarter in a bid to protect profits, signaling the labor market will be one of the last areas to emerge from the economic downturn.
25-Year High
A report tomorrow may show the unemployment rate jumped to a 25-year high of 8.9 percent from 8.5 percent the prior month, according to economists surveyed. Payrolls last month probably dropped by about 600,000 workers after decreasing by 663,000 in March.
The world’s largest economy has already lost 5.1 million jobs since the recession began in December 2007, making it the biggest employment slump in any postwar economic downturn.
“Labor market conditions were weak and reports of layoffs, reductions in work hours, temporary factory shutdowns, branch closures and hiring freezes remained widespread across Districts,” the Federal Reserve said in its Beige Book regional business survey covering five weeks through early April and released April 15. “Wage and salary pressures eased as labor markets weakened.”
Job Cuts
As sales slowed, companies redoubled efforts to control expenses. Jacksonville, Florida-based CSX, the third-largest U.S. railroad company, last month reported its first-quarter net profit fell less than analysts estimated. The company said April 15 it has about 2,300 to 2,400 employees on furlough, an increase from 1,600 workers late last year. It also parked some unused cars and locomotives, helping blunt lower demand for consumer goods, housing and industrial freight shipments.
“In this economic downturn, CSX is focusing sharply on the things that are more within our control — safety, customer service and productivity,” Chief Executive Officer Michael Ward said in a statement. “We are taking tough actions to right-size our operations in this challenging environment.”
Texas Instruments reduced costs by $115 million in the first quarter, more than double the target of $40 million, Ron Slaymaker, its manager of investor relations, said in an interview last month. The company has gotten costs “realigned with the realities of the economic environment,” he said.