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Economy in Brief
Kansas City Federal Reserve Factory Index Hits Record High
The Kansas City Fed reported that its index of regional manufacturing sector business activity surged to a record 26...
U.S. Initial Unemployment Insurance Claims Decline Sharply
Initial claims for unemployment insurance fell sharply to 209,000 (-17.1% y/y)...
U.S. Mortgage Loan Applications Are Little Changed; Rates Remain High
The MBA total Mortgage Applications Volume Index eased 0.2% last week (-1.9% y/y)...
Japan Shows Very Moderate Growth As Trade War Clouds Gather
Japan’s sector indexes showed a solid gain in February...
U.S. Consumer Confidence Unexpectedly Rose in April
The Conference Board Consumer Confidence Index rose to 128.7 in April from 127.0 (initially reported as 127.7) in March...
by Tom Moeller June 2, 2005
Non-farm labor productivity growth about matched Consensus expectations and was revised higher to 2.9%. A surprise, however, was that compensation costs were revised up in 1Q to 6.3% and up sharply to 10.4% in 4Q04.
As a result of revisions to compensation, unit labor cost growth accelerated to 4.3% versus 1Q '04 versus an upwardly revised 0.8% during 2004.
Productivity in the nonfinancial corporate sector rose 2.7% (4.9% y/y) following 9.0% growth during 4Q '04. Compensation, however, rose 6.8% after a 10.2% 4Q rise and caused unit labor costs to rise 4.1% (2.0% y/y). The ratio of prices to unit labor costs fell to the lowest level in a year, confirming the crimp on 1Q profits.
Does Wage Inflation Cause Price Inflation? from the Federal Reserve Bank of Cleveland can be found here.
| Non-farm Business Sector (SAAR) | 1Q '05 (Revised) | 1Q '05 | 4Q '04 | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|---|
| Output per Hour | 2.9% | 2.6% | 2.3% | 2.6% | 4.0% | 4.3% | 4.3% |
| Compensation | 6.3% | 4.8% | 10.2% | 7.0% | 4.8% | 4.0% | 3.2% |
| Unit Labor Costs | 3.3% | 2.2% | 7.7% | 4.3% | 0.8% | -0.3% | -1.1% |
