U.S. businesses increased their productivity at an annual rate of 3.6 percent over the summer, the government said yesterday, which some economists said indicated a lean economy that could make any recession a mild one.
The third-quarter improvement in efficiency, the largest since the first three months of 1986, was a full percentage point greater than the 2.6 percent gain originally reported in preliminary figures last month.
The Labor Department said the revision upward reflects a much healthier increase in the private output of goods and services component of the gross national product.
Output rose at an annual rate of 5.5 percent from July through September instead of the 4.4 percent reported earlier, the department said, with only a 1.8 percent increase in the number of hours worked.
"With output running that much ahead of employment, it's a very nice buffer for the stock market collapse," said Roger Brinner, an economist for Data Resources Inc. of Lexington, Mass. "You worry about a recession when employment gets ahead of demand. At least for the third quarter, demand growth is still outstripping employment."
While productivity and output were stronger among U.S. businesses as a whole, the summer increases were smaller than previously reported for the manufacturing sector, which accounts for about one-fourth of the nation's economic activity.
The third-quarter output of goods in manufacturing rose 7.4 percent from the April-June period at a seasonally adjusted annual rate, instead of the 8.2 percent previously reported. As a result, the Labor Department said, the gains in manufacturing were 3.8 percent instead of 4.5 percent, as previously reported.
A separate report showed that increased demand in the transportation sector helped boost factory orders 1.1 percent in October.
The Commerce Department said orders for durable and nondurable manufactured products rose $2.2 billion from the September level to a seasonally adjusted $208.9 billion in October. In September, orders had risen 1.8 percent. Most of the strength came in transportation sector, which posted a 7.5 percent increase as demand for aircraft, autos and ships and tanks all showed gains.