Unit labor costs rise 2.9% vs 2.8% expectations
- US 1Q nonfarm productivity rose by a smaller than expected 0.4% vs. 0.6% expectations.
- The preliminary estimate was 0.7%.
- Unit Labor costs rose by 2.9% vs 2.8% expected. The preliminary estimate was 2.7%.
- Output increased 2.7%
- Hours worked 2.3%
- From the 1Q of 2017 to 2018, productivity increased 1.3% reflecting a 3.6-percent increase in output and a 2.3-percent increase in hours worked.
Productivity remains a challenge and a headwind for the 3% growth targets. Tax cuts for businesses should lead to more capital expenditures which should increase the productivity numbers. It takes time, but investors will be looking for better things ahead (i.e. in the 2Q). Estimates for 2Q GDP are higher. Does it show up in productivity as well? Time will tell.
