Implications: Productivity was revised up slightly for the fourth quarter, consistent with last week’s upward revisions for real GDP growth. More output and a lower number of hours worked means more output per hour. Productivity is up only 0.3% in the past year, but was up 2.3% in the year ending in 2010 and 5.3% in 2009. It is not unusual to have productivity surge at the very beginning of a recovery and then temporarily slow down as hours worked increase more sharply. Output in the manufacturing sector was revised up from the original estimate, showing the factory sector continues to be a bright spot for the recovery. We believe the long-term trend in productivity growth will remain strong, due to a technological revolution centered in computer and communications advances. In other news this morning, the ADP Employment index, a measure of private sector payrolls, increased 216,000 in February, almost exactly as the consensus expected. In the past three months, the report has shown an average monthly gain of 219,000. Based on the ADP data, as well as falling unemployment claims and other improving economic news, we think the official Labor Department report (to be released Friday morning) will show a private sector gain of 245,000. Including a continued decline in government jobs, total nonfarm payrolls should increase about 230,000. No sign of a “double dip” anywhere in these numbers.
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