US third quarter labour productivity beats forecasts
By Alexander Bueso
Date: Thursday 01 Nov 2018
(Sharecast News) - US non-farm labour productivity was steady year-over-year in the third quarter and some economists believed it was set to accelerate significantly.
In comparison to the previous quarter, labour productivity grew by 2.2% over the three months ending in September (consensus: 1.8%), as hours worked rose by 1.8% but output bounded ahead by 4.1%, the Department of Labor said.
Hourly salaries meanwhile were up by 3.5%, which when productivity was subtracted left unit labour costs ahead by 1.2% (consensus: 1.2%).
Labour productivity for the second quarter meanwhile was revised higher by one tenth of a percentage points to 3.0%.
Versus a year ago, US labour productivity was steady in comparison to the prior quarter, rising by 1.3% year-on-year.
However, in the fourth quarter it would reach a clip of 2.0% year-on-year, for the first time in eight years, said Ian Shepherdson at Pantheon Macroeconomics.
Unlike in 2010, when productivity was bolstered by the fact that companies simply did not want to hire, now it was being driven by the need to replace an ageing capital stock and a resulting "revival in capex", he said.
"Firms have the cash to continue spending, and the need is great, given the ageing and shrinkage of the capital stock since the crash," said Shepherdson.
"We're hoping productivity growth can be sustained at 2% next year, boosting real wage growth. But the catch is that sustained strength in productivity will push up the Fed's estimate of neutral real short rates, which currently is just 1%."
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