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Good news America – productivity is surging at its fastest rate in nine years
- Bad news America – it’s on the back of lower labor costs
Theoretically, they are close to the mirror of one another in a stable world (a rise in one necessarily means the inverse in another) and US productivity in Q1 soared 3.6% QoQ – the biggest QoQ rise since Q3 2014
Driven by the fact that Unit labor costs fell 0.9% in 1Q vs. up 2.5% prior quarter (Output rose 4.1% in 1Q vs. up 2.6% prior quarter, Employee hours rose 0.5% in 1Q vs. up 1.3% prior quarter, and nominal compensation rose 2.6 percent, the least in three quarters).
On a year-over-year basis, productivity rose 2.4% – the largest rise since Q3 2010…
…While labor costs advanced 0.1%, the least since 2013.
Blooomberg notes that it will still probably take more time to determine whether productivity is enjoying persistent increases after relatively slow gains throughout the current expansion, with an average of 1.3 percent from 2007 to 2018. Fed Chairman Jerome Powell on Wednesday brushed aside pressure for an interest-rate cut and said productivity is partly driven by technology developments and very hard to predict.
Today’s report showed output rose at a 4.1 percent pace, while hours worked increased 0.5 percent; that gain was last slower in 2015.
via ZeroHedge News http://bit.ly/2VaOUxt Tyler Durden