Economy
BLS Reports Strong Productivity Growth in the Second Quarter
Written by Tim Triplett
August 17, 2018
Productivity growth was strong in the second quarter and unit labor costs increased 1.9 percent year over year, according to Steel Market Update’s latest analysis of Bureau of Labor Statistics (BLS) data.
Unit labor costs and productivity changes are reported quarterly by the BLS and results for Q2 2018 were released this week. This basic information is required to truly understand the steel market. One way of looking at GDP is that it is the growth of the working age population multiplied by their productivity. Steel consumption is correlated with the growth of GDP.
In Q2 2018, productivity increased by 0.7 percent quarter over quarter. Figure 1 shows labor productivity in output per hour as an index based on 2012 = 100 and the quarterly change. In the last 10 quarters, with three exceptions, there has been a healthy upward trend in the productivity of nonfarm businesses as a whole.
The bad news is that this is not true of manufacturing. Figure 2 shows the same analysis for manufacturing industries. The productivity growth of manufacturing has been stalled for 8 ½ years following the post-recessionary recovery.
In the second quarter, unit labor costs declined by 0.9 percent based on the previous quarter at an annual rate. Figure 3 shows the change in unit labor costs since Q1 2000 and that the cost increase has been around 2 percent for the last six quarters.
Tim Triplett
Read more from Tim TriplettLatest in Economy
ArcelorMittal plans wire-drawing closure in Hamilton, shifts production to Montreal
ArcelorMittal’s (AM) Hamilton location to be shuttered, wire production shifting to Montreal.
Beige Book finds growing economic, policy uncertainty
All districts reported "hesitancy and a cautious approach to business and household decisions,” according to the Beige Book.
ISM: Manufacturing continues to contract in May
May marks the third consecutive month US manufacturing activity declined, according to supply executives contributing to the Institute for Supply Management (ISM)’s latest report.
Chicago PMI decreases 4.1 points in May
The Chicago Business Barometer reports that decreases in new orders, order backlogs, and softer production pulled the index down by 4.1-points to 40.5, in May.
Architecture firms struggle through April
For the third month in a row, architecture firms reported a reduction in billings through April, according to the latest Architecture Billings Index release.