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Economy in Brief
German PPI Rises at Nine-Month High Pace
The German PPI gained 0.2% in June on the heels of a 0.6% rise in May...
U.S. Leading Economic Indicators Improve
The Conference Board's Composite Index of Leading Economic Indicators increased 0.5% (5.8% y/y) during June...
Philadelphia Fed Factory Conditions Recover; Prices Surge
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rebounded to 25.7 during July...
U.S. Initial Unemployment Insurance Claims Hit Lowest Since 1969
Initial claims for unemployment insurance dropped to 207,000 during the week ended July 14...
Japan's Trade Deficit Swings Back to Surplus (Small Surplus)
Japan's early June trade results show a goods trade position having swung back to surplus in June from deficit in May...
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% |
