Productivity Number Needs a Little Probing

The productivity "miracle" rolled on today as the government's preliminary report showed second-quarter productivity rose 1.1%. That's down from 8.6% in the first quarter but well ahead of the 0.7% consensus forecast. Moreover, the first-quarter data were revised upward from 8.4% previously.

That first-quarter productivity was revised upward and second-quarter data bested expectations had optimistic economists gushing.

"Cost-cutting initiatives are producing even greater savings than previously thought," said Mark Vitner, senior economist at Wachovia Securities. "That is good news for corporate profits and the inflation outlook." ...