Global| May 07 2014U.S. Worker Productivity Declines; Output is Depressed
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm business sector productivity fell at a 1.7% annual rate (+1.4% y/y) during Q1'14 following 2.3% growth during Q4, revised from last month's estimate of a 1.8% rise. Real output growth of 0.3% (3.2% y/y) was accompanied by a [...]
Worker productivity declined last quarter at the same time that adverse winter weather held down economic activity. Nonfarm business sector productivity fell at a 1.7% annual rate (+1.4% y/y) during Q1'14 following 2.3% growth during Q4, revised from last month's estimate of a 1.8% rise. Real output growth of 0.3% (3.2% y/y) was accompanied by a 2.0% increase (1.7% y/y) in hours worked. Compensation increased 2.4% (2.3% y/y) but when adjusted for inflation it increased 0.5% (0.9% y/y). This combination of firm compensation and reduced productivity caused unit labor costs to surge 4.2% (0.9% y/y), the swiftest growth since Q4'12. The rise followed two quarters of decline. The drop in Q1 productivity disappointed expectations for a 0.3% rise in the Action Economics Forecast Survey. A 2.3% rise in unit labor costs was expected.
In the aggregate, Q1's productivity decline
occurred outside of manufacturing. In the
factory sector, worker productivity increased at a 3.3% rate (2.2% y/y),
the quickest rise since Q2'13. Output improved 1.8% (2.4% y/y) after a
4.7% gain, while hours worked declined 1.4% (+0.2% y/y) following a 3.4%
jump. Worker compensation increased at a 3.3% rate (2.0% y/y), the
strongest rise since Q4'12. Adjusted for price inflation, compensation
moved 1.4% higher (0.6% y/y) after little change during Q4. Unit labor
costs edged up 0.1% (-0.2% y/y) and have been roughly unchanged for over a
year.
The Economic Outlook is the title of today's testimony by Fed
Chair Janet L. Yellen and it is available here http://www.federalreserve.gov/newsevents/testimony/yellen20140507a.htm The productivity & cost figures are available in Haver's USECON
database. The expectations figure is from Action Economics and is the
AS1REPNA database.
Productivity &
Costs (SAAR,%)
Q1'14
Q4'13
Q3'13
Q1 Y/Y
2013
2012
2011
Nonfarm Business
Sector
Output per Hour (Productivity)
-1.7
2.3
3.5
1.4
0.5
1.5
0.5
Compensation per Hour
2.4
1.9
1.3
2.3
1.6
2.6
2.5
Unit Labor Costs
4.2
-0.4
-2.1
0.9
1.1
1.2
2.0
Manufacturing
Sector
Output per Hour (Productivity)
3.3
1.3
0.5
2.2
1.8
1.8
1.0
Compensation per Hour
3.3
1.3
0.5
2.0
0.9
1.9
1.3
Unit Labor Costs
0.1
0.1
-0.1
-0.2
-0.9
0.1
0.4
by Tom Moeller May 7, 2014
The Mortgage Bankers Association reported that their total Mortgage Market Volume Index improved 5.3% last week (-62.9% y/y) but remained in the sideways pattern of the last month. Applications remained two-thirds below the peak in September 2012. Applications to purchase a home jumped 8.9% (-16.0% y/y) to the highest level since late-January. Application to refinance an existing loan increased 2.4% from its recovery low.
Interest rates took to a downward path last week. The
effective interest rate on a 15-year mortgage ticked down to 3.58%, the
lowest level since early-May. Most other mortgage rates were under greater
downward pressure. The effective rate on a 30-year fixed rate loan
declined to 4.50%, the lowest level since early-November. The rate on a
Jumbo 30-year loan plunged to 4.33%, its lowest level in nearly a year.
For adjustable 5-year mortgages, the effective interest rate at 3.12% was
its lowest since late-October.
The average mortgage loan size surged to $246,900, the highest level
since late-2008. The average loan size for home purchases rose to $277,200
and for refinancings it increased to $215,000. Applications for fixed interest rate loans declined by nearly
two-thirds y/y while adjustable rate loan applications were off by roughly
one-quarter. The survey covers over 75 percent of all U.S. retail residential
mortgage applications, and has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts. The
base period and value for all indexes is March 16, 1990=100. The figures
for weekly mortgage applications and interest rates are available in
Haver's SURVEYW database. Challenges for Monetary Policy Communication from Federal
Reserve Governor Jeremy C. Stein can be found here http://www.federalreserve.gov/newsevents/speech/stein20140506a.htm
MBA Mortgage Applications
(SA, 3/16/90=100)
05/02/14
04/25/14
04/18/14
Y/Y%
2013
2012
2011
Total Market Index
350.9
333.2
354.0
-62.9
616.6
813.8
572.3
Purchase
185.2
170.1
178.0
-16.0
197.5
187.8
182.6
Refinancing
1,297.6
1,267.0
1,361.4
-75.2
3,070.0
4,505.0
2,858.4
15-Year Mortgage Effective Interest
Rate (%)
3.58
3.61
3.63
3.08
(5/13)3.42
3.25
3.97
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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