Global| Jun 02 2005U.S. Productivity Revised Higher But Compensation Strong
by:Tom Moeller
|in:Economy in Brief
Summary
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 [...]
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% |
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.
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