Global| Aug 08 2012U.S. Unit Labor Costs Rise Again
by:Tom Moeller
|in:Economy in Brief
Summary
No wonder growth in corporate profitability has slowed. The cost of labor has been on the rise as growth in labor compensation outpaces productivity. Unit labor costs grew 1.7% last quarter following a 5.6% Q1 rise. These gains follow [...]
No wonder growth in corporate profitability has slowed. The cost of labor has been on the rise as growth in labor compensation outpaces productivity. Unit labor costs grew 1.7% last quarter following a 5.6% Q1 rise. These gains follow last year's 2.0% increase and outright declines during both 2010 and 2009.Productivity did post a 1.6% increase last quarter, but that followed just 1.1% growth during the prior four quarters. In 2010 and 2009, growth was three times the recent rate. Compensation grew at a 3.3% rate last quarter following a 5.5% Q1 advance. That left y/y growth at 1.9% versus the accelerated gains of 2.7% last year and 2.0% in 2010.(Data back to 2009 were revised reflecting last week's revision to the National Income & Product Accounts. For 2011 and 2010, productivity growth was revised to 0.7% and 3.1% from 0.6% and 4.0%, respectively.)
In the factory sector, unit labor cost growth also has turned positive, albeit modestly, following a decline in 2010. Unit labor costs grew last quarter at a 0.3% rate following a modest decline in Q1. For all of last year, growth of 0.1% was little to talk about except that it followed a 5.0% decline in 2010.Growth in manufacturing productivity of 0.2% last quarter followed a 5.5% Q1 rise. That was enough to lower growth to half that in 2010. Compensation has been positive. It ticked at a 0.5% rate last quarter but that followed a 5.1% spurt in Q1. For all of last year, compensation grew 2.6% versus a negligible rise of 1.1% in 2010.
The productivity & cost figures are available in Haver's USECON database.
| Productivity & Costs (SAAR,%) | Q2'12 | Q1'12 | Q4'11 | Q2 Y/Y | 2011 | 2010 | 2009 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 1.6 | -0.5 | 2.8 | 1.1 | 0.7 | 3.1 | 2.9 |
| Compensation per Hour | 3.3 | 5.1 | -0.7 | 1.9 | 2.7 | 2.0 | 1.4 |
| Unit Labor Costs | 1.7 | 5.6 | -3.3 | 0.8 | 2.0 | -1.0 | -1.5 |
| Manufacturing Sector | |||||||
| Output per Hour | 0.2 | 5.5 | 0.7 | 2.9 | 2.5 | 6.4 | 0.1 |
| Compensation per Hour | 0.5 | 5.1 | -6.0 | -0.1 | 2.6 | 1.1 | 4.1 |
| Unit Labor Costs | 0.3 | -0.4 | -6.6 | -2.9 | 0.1 | -5.0 | 4.0 |
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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