Source: Wall Street
According to data released by the U.S. Bureau of Labor Statistics on ThursdayThe country's productivity rose 3 per cent year-on-year in the fourth quarter of last year, higher than expected of 2.4 per cent and the biggest increase in a year, compared with 1.4 per cent in the third quarter. Productivity fell sharply for two consecutive quarters in the first half of last year.Productivity refers to the hourly output of employees in non-agricultural enterprises.
Often, companies adopt new technologies or invest in equipment to improve the productivity of their employees and help offset the negative effects of higher wages and other cost inflation. In recent years, corporate investment in intellectual property products such as software has been particularly strong.
The report also showsHourly pay growth accelerated to 4.1%. Adjusted for inflation, it rose by 1%, the first positive growth last year.
The number of hours worked rose slightly by 0.5% in the fourth quarter, the smallest increase since the beginning of COVID-19 's epidemic.This is a worrying sign of labour demand.
Unit labor costs rose 1.1% in the fourth quarter, below expectations of 1.5% and the lowest level in nearly two years.Well below 2% in the third quarter. Unit labor cost refers to the amount paid by an enterprise to produce a unit of output. The slowdown in the growth of unit labour costs is due to the cooling of long working hours and the increase in productivity, offsetting the increase in hourly wages.
There is no doubt that the fourth-quarter figures show signs of cooling inflation in the US labour market.If this situation continues, it will help to further push down headline inflation.It is important to note, however, that the data are unstable and it will take time to determine whether they reflect real trends.
The employment cost index slowed to an annualised rate of 1 per cent in the fourth quarter, lower than expected. However, compared with the same period in 2021, labour costs are still very high. Previous data from the ADP Institute showed that wage growth for job-hoppers actually accelerated in January.
Throughout 2022, u.s. labor costs surged 5.7%, the biggest annual increase since 1982. Productivity fell by 1.3 per cent in 2022, the biggest drop since 1974.
The latest report from the labor department measures non-farm output, which accounts for about 75% of u.s. gross domestic product, up 3.5% in the fourth quarter. Us gross domestic product also grew in the fourth quarter, but the breakdown reflects a picture of weak demand. Among them, inventory is the main contributor to economic growth, while personal consumption, the biggest driver of the economy, has declined.
Under the current situation of high inflation in the United States as a whole, the inflation situation in the labor market has attracted much attention. Wall Street Journal reporter Nick Timiraos, who is regarded as the "Fed mouthpiece" and known as the "New Federal Reserve News Agency", said in an article a few days ago that the hot labor market may push wages to rise faster, becoming another "fuse" to ignite inflation. If wages continue to grow at a recent rate of 5 to 5.5 per cent, and assuming productivity growth of 1 per cent per cent a year, it will cause inflation to well exceed the 2 per cent target.
Earlier, Ellen Zentner, chief economist of Morgan Stanley, said that from now on, the labor market may be a key indicator, not CPI. Bank of America also said bluntly that cooling the labour market was the only way for the fed to slow core inflation to 2%.
Edit / Corrine