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Productivity, pay rise for workers

By ASSOCIATED PRESS
Published May 5, 2006

U.S. workers raised their productivity in the opening quarter of this year. Their compensation went up briskly, too.

From a worker perspective, more generous compensation is a good thing. But economists worry that big gains - if sustained for a long period - could cause inflation to take off.

The Labor Department reported Thursday that productivity - the amount an employee produces for every hour on the job - grew at an annual rate of 3.2 percent in the January-to-March quarter.

That marked a welcome turnaround from the closing quarter of 2005, when productivity declined at an annual rate of 0.3 percent, economists said.

Meanwhile, workers' hourly compensation in the first quarter galloped ahead at a 5.7 percent pace, more than twice as fast as the 2.7 percent growth rate in the previous quarter.

Oil prices drop more than $2 for second straight day

Oil prices sank more than $2 a barrel for the second straight day Thursday, falling below $70 as traders focused on U.S. government data that show gasoline supplies grew last week, reversing two months of declines.

"It has largely been a technical selloff," said ABN Amro broker Lee Fader. "Some of the air is coming out of the bubble."

The selloff coincided with a House energy committee's decision to send letters to major oil companies seeking detailed information about their investment priorities, particularly in the area of U.S. refining capacity, which has been very tight and a factor contributing to soaring pump prices.

After falling as low as $69.30 a barrel, light sweet crude for June delivery recovered to $69.95, a decline of $2.33 on the New York Mercantile Exchange.

Gasoline futures tanked by almost 10 cents to $1.986 a gallon, and some analysts say it could be a sign that the 2006 highs for gasoline prices in the U.S. are behind us - assuming there is no repeat of last summer's ferocious Gulf of Mexico hurricane season.

30-year mortgage rates continue to increase

Rates on 30-year mortgages climbed this week, hitting their highest point in nearly four years, a development that will be weighed by people thinking about buying a home or refinancing the one they own.

Freddie Mac, the mortgage company, reported Thursday that for the week ending May 4, rates on 30-year fixed-rate mortgages averaged 6.59 percent, up slightly from 6.58 percent last week.

The rate was the highest since the week ending June 20, 2002, when 30-year mortgage rates stood at 6.63 percent. It marked the sixth week in a row that rates on 30-year mortgages went up.

- ASSOCIATED PRESS

[Last modified May 5, 2006, 08:25:04]