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Economy in Brief
U.S. Index of Leading Indicators Fell in April
Five of the index's components fell in April, one was unchanged and four increased...
U.S. Unemployment Claims Rose in the Latest Week
The state insured rates of unemployment in regular programs vary widely...
U.S. Housing Starts Dip in April but Remain Elevated
The pattern of housing construction activity seems to be shifting toward multifamily...
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Profits and Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
by Gerald D. Cohen August 15, 2018
Output per hour in the nonfarm business sector grew at a healthier-than expected 2.9% seasonally adjusted annual rate in Q2'18 (1.3% year-on-year), following a slightly downwardly revised 0.3% gain in Q1. In Q4'17 productivity declined at a 0.3% pace (was +0.3%). The consensus in the Action Economics Forecast Survey looked for an increase of 2.5% in Q2. As a result of last month's benchmark revisions to GDP, productivity was revised for previous years, with 2017 slightly lower (1.1% vs. 1.3%) and 2016 and 2015 a touch higher (0.1% vs. unchanged and 1.3% vs 1.2%).
Unit labor costs fell at a weaker-than expected 0.9% rate in Q2'18 (1.9% y/y) following an upwardly revised 3.4% gain in Q1 (was 2.9%). The Action Economics Survey expected an unchanged reading in the second quarter. Costs were revised meaningfully higher in 2017 (2.2% vs. 0.4%), slightly lower in 2016 (0.9% vs. 1.1%) and remained at 1.8% in 2015. Compensation increased 2.0% in Q2'18 (3.2% y/y), following an upwardly revised 3.7% gain in the first quarter (was 3.3%).
In the manufacturing sector, productivity grew at just a 0.9% pace in Q2'18 (-0.2% y/y) following a 1.0% decline in Q1 (was -1.2%). The fourth quarter's advance was revised slightly higher to 4.4%. Output increased at a 1.9% rate in Q2 (1.8% y/y) matching Q1's upwardly revised gain of 1.9%. Hours worked grew 1.0% in Q2 following 2.9% growth in Q1.
Unit labor costs in the factory sector rose at a 0.6% rate in Q2 (2.7% y/y), after an upwardly revised 5.5% increase in Q1 (was 5.2%). While output in the manufacturing sector was unaffected by the benchmark revisions, compensation was updated. As a result, unit labor costs in 2017 were revised meaningfully higher (2.6% vs. 1.0%). Costs in 2016 were revised slightly lower (0.3% vs. 0.4%), while 2015 remained at 4.1%.
The productivity & cost figures are available in Haver's USECON database. The expectations figures are from the Action Economics Forecast Survey and are found in the AS1REPNA database.
Productivity & Costs (SAAR, %) | Q2'18 | Q1'18 | Q4'17 | Q2'18 Y/Y | 2017 | 2016 | 2015 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | 2.9 | 0.3 | -0.3 | 1.3 | 1.1 | 0.1 | 1.3 |
Compensation per Hour | 2.0 | 3.7 | 1.9 | 3.2 | 3.4 | 1.1 | 3.1 |
Unit Labor Costs | -0.9 | 3.4 | 2.3 | 1.9 | 2.2 | 0.9 | 1.8 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | 0.9 | -1.0 | 4.4 | -0.2 | 0.7 | 0.3 | -1.5 |
Compensation per Hour | 1.5 | 4.4 | 1.6 | 2.5 | 3.3 | 0.6 | 2.5 |
Unit Labor Costs | 0.6 | 5.5 | -2.7 | 2.7 | 2.6 | 0.3 | 4.1 |