While this data is a first quarter revision, the trend may have been hit that worker productivity may have peaked. Worker productivity fell by -0.9%, which is worse than the -0.5% prelimnary report and a tad worse than the Dow Jones estimate of -0.8%. The measurement is the output per hour of employees in the non-farm sector. Unit labor costs were revised lower as well with the new rate for the first quarter coming in at +1.3% rather than the 2.0% reported on a preliminary basis and much worse than the Dow Jones target of +2.1%.
It is interesting to see the trend of productivity being lower. This rate has tended to rise, and many employees and employers have the view that productivity is often the key competition of the unemployment rate. If you can milk more and more out of your workers, why bother spending more on new hires?
Another measure tracked was hours worked. This rose by 3.3% versus a preliminary report of 3.2%. That is the largest gain going back at least four years and this also competes with unemployment in one manner of speaking. If you can make your workers work longer, why spend more to hire new workers.
Today’s news is generally in line with slower growth as we are seeing, but it is interesting that the trends are all in favor of potentially more hiring yet the more recent data on jobs and other measures has been so weak since the first quarter data.
JON C. OGG