Highlights of the preliminary Q4 productivity report from the Bureau of Labor Statistics:
- Prior unit labor costs -1.0% q/q (-revised to 2.3%)
- Non-farm productivity -1.8% vs +0.1% exp
- Prior non-farm productivity +2.3% (revised to +3.7%)
The revisions balance out a lot of the good news. The Fed has put on some rose-colored glasses in regards to wage inflation so they’ll probably interpret the rise in unit labor costs in Q4 as the trend and disregard the plunge in Q3. But if you tally them together, you have virtually zero wage growth in the final two quarters of the year despite a decent rise in productivity.
Unit labor costs with 4 quarter moving avg
Once that 12% rise in Q1 2014 rolls off, year-over-year wage growth will be non-existent.
Then again, rising productivity without a corresponding pickup in real wages has been the story for a generation.
US productivity versus real wages
