Productivity Growth Slowed in Q2

The market is fairly quiet this morning. The S&P 500 had been at an all-time intra-day high earlier today, but now it’s only up a small bit. I’m looking forward to Thursday when the last of our three earnings reports comes out for this earnings season.

In fact, the next cycle is going to begin soon. Ross Stores (ROST) is due to report next Thursday. The last earnings report for the deep-discounter was a huge beat. I can’t wait for next week’s report.

This morning’s report on productivity said that growth in productivity increased by 2.3% in Q2. That’s down from 4.3% in Q1. That Q1 figure was revised lower from the original 5.4%.

Compared to the second quarter of 2020, productivity rose at a 1.9% pace. Hours worked increased at a 5.5% rate last quarter, accelerating from a revised 4.0% growth pace in the January-March period.

Overall output is now 1.2% above pre-pandemic levels but hours worked remain 2.8% below it, the report also showed. The resurgence in economic activity has not been matched by people flooding back into the workforce. On Monday, U.S. job openings jumped to a fresh record high in June, Labor Department data showed.

Small business owners across the United States grew less confident in the economic recovery in July as labor shortages remained an issue, according to a National Federation of Independent Business survey released on Tuesday.

(…)

Unit labor costs – the price of labor per single unit of output – rose at a 1.0% rate. They contracted at a revised 2.8% pace in the first quarter. Unit labor costs increased at a 0.1% rate from a year ago. They have also been distorted by the pandemic’s disproportionate impact on lower-wage industries.

Hourly compensation rose at a 3.3% rate last quarter. That followed a revised 1.4% growth pace in the first quarter. Compensation increased at a 2.0% rate compared to the first quarter of 2020.

Posted by on August 10th, 2021 at 10:54 am


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