US Unit Labor Costs Slump Most In 4 Years… ‘Spark’ Productivity Gains

Great news America – US worker productivity jumped in Q2 by 2.9% QoQ, the best gain since Q1 2015. However, unit labor costs (what Americans are being paid to be productive) tumbled 0.9% QoQ in Q2, the biggest slump since Q3 2014.

So, do you want the good news… or the bad news?

As Bloomberg notes, the data indicate that the lift to growth in the quarter from Republican-backed tax cuts also came with a boost to productivity. That gives President Donald Trump another economic point to cheer, though many analysts are skeptical that the administration’s policies will deliver a large, sustained acceleration in efficiency.

The latest advance in productivity compares with a 1.3 percent average pace over the period spanning 2007 to 2017, and a 2.7 percent average from 2000 to 2007.

However, what Americans made from all that ‘improved efficiency’ tumbled 0.9% QoQ – the worst drop since Q3 2014 – and well; below the +1.4% QoQ average of the last 10 years


So take your pick – celebrate the surge in productivity, or face the reality of doing more for less.

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Author: Tyler Durden