THE BASIS POINT

Worker Productivity down again.

 

Productivity and Costs  (1stQ2016)

– Nonfarm productivity quarter/quarter seasonally adjusted, annualized -0.6%. Previous was -1.0%
– Unit labor costs quarter/quarter seasonally adjusted, annualized +4.5%. Previous was +4.1%.

Productivity is defined as total GDP divided by total hours worked.  Traditionally it has been associated with getting more done (higher GDP) with the same amount of human labor.

Investments in equipment creates higher productivity.  Lately what has happened is that we have lost jobs with high productivity such as oil field workers and added jobs with low productivity (waitresses and bartenders.) This is not an implication that waitresses do not work hard.  It only means that they produce less GDP/hour than oil field workers.

Capital Investments have been low and Productivity will likely not increase until business starts investing but this recent downturn in Productivity is more about losing those high Productivity oil field and manufacturing jobs.

 
Redbook Chain Store Sales (week ended 6/4/2016)

– Chain Store Sales +0.6%. Previous was +0.9%.

This measures same store sales at Chain Store locations which were open last week and 1 year previous.  This metric can be deceiving because it disregards store closures.

 

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