2018 Economic Calendar
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Productivity and Costs  
Released On 2/1/2018 8:30:00 AM For Q4(p):17
PriorPrior RevisedConsensusConsensus RangeActual
Nonfarm productivity - Q/Q change - SAAR3.0 %2.7 %1.1 %-0.5 % to 2.6 %-0.1 %
Unit labor costs - Q/Q change - SAAR-0.2 %-0.1 %0.9 %-0.1 % to 2.2 %2.0 %

Fourth-quarter output did rise at a 3.2 percent annualized rate compared to the prior quarter, but it took 3.3 percent more hours to accomplish the increase. For productivity this is no improvement at all, falling 0.1 percent and near the bottom end of Econoday's forecast range. Compensation rose 1.8 percent which, relative to productivity, makes for a 2.0 percent rise in unit labor costs which is the high end of expectations.

Costs may be up but worker compensation, when adusted for inflation, actually fell at a 1.8 percent rate compared to the prior quarter. This is the latest bad news on wages and helps explain Monday's decline in the savings rate and may well explain what could be another jump in credit-card use in next week's consumer credit report.

The rise in costs in this report probably was absorbed in corporate profit margins and not passed through to final customers based at least on what have been stubborningly flat inflation data. High levels of employment pose a further risk that wage pressures may soon be triggered, pressures that would also, together with low productivity, have to be absorbed at the profit level.

Consensus Outlook
Fourth-quarter GDP came in at 2.6 percent which points to a respectable fourth-quarter productivity rate and no more than moderate pressure for labor costs. Forecasters see nonfarm productivity rising 1.1 percent in the fourth quarter vs 3.0 percent in the third quarter with unit labor costs seen up 0.9 percent vs a 0.2 percent third-quarter decline.

Productivity measures the growth of labor efficiency in producing the economy's goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends.  Why Investors Care
Nonfarm productivity growth has remained healthy during this expansion, but it has prevented employment from growing very fast and this hurt income growth to some extent. Unit labor costs tend to fall when productivity growth accelerates and then rises as productivity growth abates.
Data Source: Haver Analytics

2018 Release Schedule
Released On: 2/13/75/36/68/159/611/112/5
Release For: Q4(p):17Q4(r):17Q1(p):18Q1(r):18Q2(p):18Q2(r):18Q3(p):18Q3(r):18

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