EVERY day, economy watchers are bombarded with seemingly contradictory indicators. Inflation is either contained, or it's about to explode. The price of oil is poised to drop, or to spiral higher. Lately, we've received seemingly contradictory figures on a crucial statistic: productivity.

When the growth rate of productivity -- the amount of output an hour the economy can produce -- falls sharply, it's frequently a sign that dreaded inflation could be on the rise. When productivity growth rises smartly, it may indicate that companies are figuring out how to make more goods and services while keeping costs under control.

That's why Alan Greenspan, the Federal Reserve chairman, closely watches the productivity figures released by the Bureau of Labor Statistics. Over his 18-year tenure, Mr. Greenspan has managed to puzzle most observers with Fedspeak -- a monotone patois that conveys small amounts of information in convoluted, carefully hedged sentences. But when he appeared before Congress in July, Mr. Greenspan acknowledged that he was a little puzzled by the recent productivity figures. "The traditional measure of the growth in output per hour," he said, "has slowed sharply in recent quarters." (Translation: productivity growth is way down, look out for inflation.) "But," he continued, "a conceptually equivalent measure that uses output measured from the income side has slowed far less." (Translation: maybe not.)

The "traditional measure" to which Mr. Greenspan referred is nonfarm business productivity. This broad measure of the economy calculates productivity based on examining the output and production of the vast American corporate sector. And as Mr. Greenspan noted, that figure had fallen sharply in recent quarters. The year-over-year growth rate of nonfarm business productivity fell from an impressive 4.2 percent in the second quarter of 2004 to a less impressive 2.3 percent in the second quarter of 2005.