Government Reports Higher Wages and Slowed Growth – Inflation Concerns

Government Reports Higher Wages and Slowed Growth – Inflation Concerns

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The government has recently released reports on factory orders and productivity. Concerns of slower growth and rising inflation are the focus of the Federal Reserve.

Hourly wages grew at a 7.5 percent annual rate during the fourth quarter. Wages were calculated by including wages, salaries, supplements, employer contributions to employee-benefit plans, and taxes.

Because of the increase in hourly compensation, there was an increase in unit labor costs at a rate of 6.5 percent during the fourth quarter of 2006.

Output of manufacturing decreased by 2.1 percent, while at the same time there was improvement of productivity by 2.2 percent in the fourth quarter of 2006. The manufacturing hours decreased by 4.2 percent and were seasonally adjusted for the fourth quarter.

Business sector productivity increased by 1.7 percent for the annual average for 2006 comparing this to 2005 yearly average and is the smallest gain for this sector seen since 1995.

Consumers are slowing down on purchasing big-ticket durable goods and the government reports an 8.7 percent drop in these purchases.

These reports issued by the government may be responsible for the 416 point drop in the Dow Jones average that was seen last week. Many economists believe that the rates will remain the same for the whole year, when the Feds meet on March 20 – 21st.

By Best Syndication Staff

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