US labor costs rise more slowly than expected in second quarter

Alexander Bueso Sharecast | 09 Aug, 2017 15:58 - Updated: 15:58 | | |


US labor productivity picked up during the second quarter of 2017, helping to keep a lid on unit labor costs.

Productivity growth rose to a 0.9% quarter-on-quarter (consensus: 0.8%) pace after an increase of 0.1% over the previous three quarters, according to the Department of Labor.

In parallel, unit labor cost growth slowed to a gain of 0.6% (consensus: 1.0%) for the three months to June after a 5.4% spurt over the prior three-month stretch.

The latter followed a sharp 6.3% fall in the last three months of 2016.

Labor costs cooled down as rising productivity combined with a lower rate of increase in real hourly compensation, with the rate of growth down from 2.3% to 1.9%.

"On a y/y basis, productivity was up 1.2%, unchanged from Q1 but a clear improvement from the very slow growth throughout 2016. But despite the recent pickup, productivity growth remains subdued by historical standards. By contrast, unit labor cost growth has been more buoyant.

"Slow growth in output prices, disappointing productivity trends, and fast-rising unit labor costs have depressed unit profits for companies in recent years and have been one factor preventing wages from picking up at a faster pace, in our view. However, unit profits have improved somewhat over the past two quarters and are now in positive territory for the first time since the start of 2015," said Blerina Uruci at Barclays Research.

More news

10:30 Real Good Food warns of full-year loss

Baking ingredients business Real Good Food warned on Monday that it will report a loss for the year as higher costs and currency movements take their toll.

10:24 Government's new housebuilding plans 'could end cosy climate for builders'

The government has proposed a major state housebuilding push to ease the housing crisis, with one side-effect being an end to the "cosy and golden trading climate" that large building companies currently enjoy.

10:20 Europe open: Stocks flat, investors mull political news on euro area periphery

European stocks have started the week little changed, albeit amid a tad of weakness in periphery stocks given political events at the weekend and not only in Spain.

10:09 Arqiva announces plans for London listing

Broadcast and mobile masts company Arqiva has announced its intention to float on the London Stock Exchange in a £6bn listing.

09:55 Essentra returns to revenue growth, but profits hit by hurricanes

In the third quarter Essentra returned to like-for-like revenue growth for the first time in almost two years, though full year margins for the plastics and packaging group will be dented by the impact of Hurricane Maria on its Puerto Rico sites.

09:53 Clinigen buys Japanese medicine supplier

AIM-listed pharmaceutical and services company Clinigen has acquired International Medical Management Corporation (IMMC), Japan's largest supplier of unlicensed medicines, for an undisclosed sum.

09:29 Petra revenue and production drop on diamonds seizure, labour disruptions

Petra Diamonds posted a 4% drop in production and a 17% decline in revenue for the first quarter.

09:10 Interserve secures £140m contract extension with BBC

Support services and construction group Interserve has won a £140m contract with the BBC to continue providing facilities services until 2023.

09:07 London open: Stocks dip down in quiet start to busy week

London stocks nudged lower in early trade amid a lack of market-moving news, with the economic calendar set to get busier later in the week.

08:24 Capita's sale of Asset Services arm nears completion

Capita expects to complete the sale of its Asset Services businesses to Link Administration a week on Friday.