Conference Board Predicts Productivity Rebound After 2009 Drop

According to an estimate Conference Board, a global productivity growth will accelerate this year after a sharp decline in the effectiveness of the European economy that recorded for the first time since 1991.

According to today's report of a study group from New York, a global productivity per worker will rise by 2.2% after its worst recession for 6 decades, leading to a decrease of 1% in 2009, the first time since the decline of 0,1% in 1991.

Last year's drop underlines fundamental differences in the reaction of the largest economies in recession. Productivity in the U.S. grew by 2,5%, as manufacturers cut back wages working hours faster than in the euro area, where output fell by 1%.

"Employers in the U.S. reacted to the recession much stronger than their European counterparts," - said in a statement Bart van Ark (Bart Van Ark), chief economist at the Conference. "In 2010, both Europe and the U.S. will see greater growth in productivity, which will be due out of the recession.

Productivity is the main reason why investors such as BlackRock Inc., The world's largest companies, asset managers, prefer to buy U.S. stocks. Gains may also help curb inflation, giving policy-makers, able to maintain a record-low interest rates, even during the economic recovery.

"We just had a very, very serious recession, but U.S. productivity grew up" - said Robert Doll (Robert Doll), BlackRock vice chairman and chief global investment in shares on January 6 at the presentation. "This is very unusual, and indicates the ability of U.S. corporate sector to quickly adapt to new realities."

Decrease
Johnson & Johnson, the world's largest manufacturer of health products, and United Parcel Service Inc., The largest forwarding company, among U.S. companies that are trying to survive by cutting costs. New Brunswick, branch of Johnson & Johnson in New Jersey, said in November that will dismiss more than 7000 employees worldwide, that will help save $ 1.7 billion by 2011. UPS announced its intention to cut 1,800 jobs because of cuts in the American administration module.

In Europe, 11 January, Munich Siemens AG, the largest engineering company in the continent, said that productivity gains and savings on procurement will bring profits from 1.3 billion euros ($ 1.9 billion) to 1.8 billion euros. French Thales Sa, Europe's largest defense electronics companies, 11 December announced that it plans to save 1.3 billion euros over 5 years to achieve "growth in productivity and simplify the organization."

At that time, productivity will grow this year, Van Ark said that the "unemployed" recovery, as in the U.S. and in Europe - is "the most likely scenario."

Productivity in the U.S.
Productivity in the U.S. will grow by 3% after the fall of employment by 3,6%. The reduction of working hours on 1,5% has helped increase productivity in the past year.

Fed Chairman Ben Bernarke said that he was "somewhat skeptical" about the fact that recent increases in productivity can be retained and this may be the reason to expect an increase in rentals. Productivity growth may limit employment in the short term, as firms can do a smaller number of workers and delay hiring new employees, in addition, efficiency gains could be temporary, said Bernarke November 16.

European productivity growth in the time dimension will grow by 2% in 2010, said the head of the conference. Within 16 national eurozone, German output fell by 2.2% and is projected to grow by 2,8% this year due to growth in output and reduction of working hours, the report said. France became one of the few European countries where productivity growth was recorded in the past year, and it amounted to 0,3%.

"Very bad"
"Innovation and Dynamics in Europe at a very poor level", - said Jan. 14 on the radio in an interview with Bloomberg Nobel laureate Edmund Phelps (Edmund Phelps), a professor at Columbia University. "Europe in decades and decades has been in bad shape."

Productivity in the UK falling faster than its European neighbors, a decrease of 1,9% due to the large fall in output. Under the plan, this year grow by 1,7%.

The global acceleration in 2010 will depend on emerging markets, said at the conference. Chinese productivity growth increased by 8,2% in 2009 and the expected growth rate this year is 7,7%.

"Emerging economies are becoming global competitors to be reckoned with on the basis of their high rates of productivity growth", - said Van Ark.

Bloomberg
January 20