The first look at second quarter productivity data
- Prior was -0.6%
- Unit labor costs +2.0% vs +1.8% exp
- Prior unit labor costs +4.5% (revised to -0.2%)
Stagnating US productivity has turned into a bit of a preoccupation at the Fed. This weak reading will spark another round of hand-wringing.
Meanwhile, don't be fooled by the rise in unit labor costs, it comes after a massive revision lower in Q1 along with annual benchmark revisions to the report.
Compared to the second quarter of 2015, productivity was down 0.4%. That's the first y/y decline since Q2 2013. Meanwhile, unit labor costs were up 2.1% over the past four quarters.
The textbook idea is that wages will rise along with productivity. However, in practice, productivity has leaped higher since the 1970s and US wages have been stagnant.
