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Posts Tagged ‘Productivity’

Could Higher Industrial Production Result in Less Hiring?

March 15th, 2010 Michael McDonough Comments off

February’s surprise 0.1% increment in industrial production came despite severe winter weather during the month that was expected to hamper production.  Amongst the index’s biggest gainers were computers and information processing equipment, which each rose roughly 1%.  As Bloomberg put it these increments ’signal the pickup in U.S. business investment is being sustained’.  However, could these gains come at the expense of job gains?  Afterall, one of the primary functions of computers and ’information processing equipment’ is to bolster productivity. And let us not forget, productivity gains have exploded since the onset of the financial crisis, while employment has fallen off a cliff.  It may be too early to tell, but the possibility exists that companies could be investing in new cheaper technology rather than investing in new expensive employees to support output and profits–a trend which could continue for a while…

U.S. IP y/y:

Source: Bloomberg

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Productivity Up, Labor Costs Down, & ADP Might Not Be As Bad As It Seems

September 2nd, 2009 Michael McDonough Comments off

Productivity was revised up slightly for 2Q09 to +6.6% from +6.4%, while unit labor costs were revised down to -5.9% from -5.8%.  Additionally, the ADP employment survey indicated a loss of -298K jobs, compared to -360K last month.  This was worse than analyst’s estimates.  Nevertheless, the details behind the ADP report, like the rest of the sector continue to demonstrate well-rounded improvements.  In fact every category of the report, excluding small goods producing companies, showed a smaller decline from the previous month.  The market reacted adversely to the release, but the real story may be the improvements behind the headline.

Finally, I must apologize I will be moving office locations today, and will only have intermittent access to my computer for real-time updates.

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Productivity Up, Unit Labor Costs Down

August 11th, 2009 Michael McDonough Comments off

Productivity rose 6.4% in 2Q09 compared to a consensus forecast of 5.5%. This is the biggest gain since 2003.  The drop was due to the amount of hours worked declining faster than output. At the same time, unit labor costs fell -5.8% versus a consensus forecast of -2.8%. In face the of lay-offs and reduced capital expenditures, higher productivity has been one of the few forces helping to support corporate profits.  What higher productivity boils down to is that companies are able to get more for less.  Productivity should remain elevated for at least the next several quarters.  Higher productivity along with lower unit labor costs should also help to reduce any potential inflationary pressure over the coming month’s given the fed’s lax monetary policy.

From BLS:

%Change previous Quarter
Productivity Output Hours Hourly
Comp.
Real Hourly
Comp.
Unit Labor
Costs
Business 6.3 -1.8 -7.5 0.1 -1.2 -5.8
Nonfarm business 6.4 -1.7 -7.6 0.2 -1.1 -5.8
Manufacturing 5.3 -9.9 -14.4 5.8 4.4 0.5
Durable 3.9 -16.5 -19.6 8.7 7.3 4.7
Nondurable 2.0 -3.4 -5.3 2.0 0.7 0.0
%Change from a year ago
Productivity Output Hours Hourly
Comp.
Real Hourly
Comp.
Unit Labor
Costs
Business 1.9 -5.4 -7.1 1.1 2.1 -0.7
Nonfarm business 1.8 -5.6 -7.3 1.3 2.2 -0.6
Manufacturing -1.3 -15.0 -13.9 6.0 7.0 7.4
Durable -5.0 -21.1 -16.9 7.1 8.1 12.7
Nondurable -0.2 -8.9 -8.6 4.9 5.9 5.1
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