A rather disappointing first assessment of US productivity in the third quarter. Non-farm productivity registered the first qoq decline since the end of 2015. On the positive side the yoy rate still looks a reasonable 1.4%, compared to a 5-year average of 1.1%, but the trend still lacks much conviction. Really, we’re still flatlining at best. Labour costs were stronger than expected, rising at a 3.6% annualised rate in the non-farm sector overall. That’ll raise the heckles of the hawks that view the tight labour market as a risk.
A very strong Q1 non-farm productivity report, partly flattered by a surprisingly soft unit labour costs number. Obviously, GDP growth has been strong, and with employment growth running at a consistent weight the implication is that productivity had to have accelerated. But there are some other distortions within the mix.