Global| Aug 09 20052Q U.S. Productivity As-Expected, Revisions Down
by:Tom Moeller
|in:Economy in Brief
Summary
Non-farm labor productivity increased 2.2% last quarter and about matched Consensus expectations for a 2.0% rise. Downward revisions to output growth from 2002 to 2004 (mostly due to upwardly revised estimates of inflation) lowered [...]
Non-farm labor productivity increased 2.2% last quarter and about matched Consensus expectations for a 2.0% rise. Downward revisions to output growth from 2002 to 2004 (mostly due to upwardly revised estimates of inflation) lowered average growth in productivity during the period to 3.7% from 4.2%.
Unit labor costs slowed in 2Q to 1.3% from a 3.6% rate of growth in 1Q. The average rate of growth during the prior three years was revised up to 0.3% from -0.2%. Compensation costs decelerated to 3.5% from 6.9% growth in 1Q and the average during the prior three years was unchanged at a 4.0% rate of growth.
In the factory sector, productivity held steady at 4.1% (4.7% y/y) versus 4.2% growth in 1Q. The average rate of growth during the prior three years was unrevised at 6.0%.
Unit Labor costs in manufacturing rose 2.3% (3.7% y/y) following 2.8% growth in 1Q. The average of the prior three years was lowered to -0.1% from 0.7% mostly due to a much sharper decline during 2004 of 2.9% versus a 0.5% decline estimated earlier.
The implicit price deflator for nonfarm business rose 2.3% (2.3% y/y) and raised the ratio of prices to unit labor costs to the highest level since 3Q04, suggesting higher profit margins. During the last ten years there has been a 59% correlation between the ratio and the y/y growth in operating corporate profits.
Long-Term Yields Fall as Industrial Output Decelerates from the Federal Reserve Bank of Dallas is available here.
| Non-farm Business Sector (SAAR) | 2Q '05 | 1Q '05 | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Output per Hour | 2.2% | 3.2% | 2.3% | 3.4% | 3.8% | 4.0% |
| Compensation | 3.5% | 6.9% | 6.7% | 4.5% | 4.0% | 3.5% |
| Unit Labor Costs | 1.3% | 3.6% | 4.3% | 1.1% | 0.2% | -0.5% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
