The CNBC crowd was all over this claiming it was indicating "imminent" hiring.
Nonfarm business sector labor productivity decreased at a 0.5 percent annual rate during the first quarter of 2012, the U.S. Bureau of Labor Statistics reported today. The decline in productivity reflects increases of 2.7 percent in output and 3.2 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2011 to the first quarter of 2012, productivity increased 0.5 percent as output and hours worked rose 2.8 percent and 2.2 percent, respectively. (See chart 1 and table A.)
There's some truth to the crooner claim, but not for the reasons that people expect. When recessions hit (especially deep ones) employer demands for "more output, less wage" or at least "more output, same wage" work reasonably well, because the employee side of the table has a lot of trouble saying "bite me!" and qutting to go work somewhere else.
As this shifts back toward balance that tends to dissipate. But there's a big difference between dissipation of a trend toward higher productivity and decreases in productivity.
The problem with the CNBS claims is that they didn't bother looking inside the report before proclaiming their alleged "movements." If they had....
Manufacturing sector productivity rose 5.9 percent in the first quarter of 2012, as output grew 10.8 percent and hours worked increased 4.6 percent. The increases in productivity and output were the largest since the second quarter of 2010. Over the last four quarters, manufacturing sector productivity increased 2.5 percent. Unit labor costs in manufacturing fell 4.2 percent in the first quarter of 2012 and decreased 1.3 percent from the same quarter a year ago. (See tables A and 3.)
Heh, how'd that happen?
'Ya gotta look at the internals before you pontificate on the air Misser Lies-man!
"I hate when that (the truth) happens."
In any event the internals are interesting -- real hourly compensation is down except in non-durable manufacturing where they rose slightly. And while durable productivity was up big with manufacturing in general being only behind a bit, it's hourly labor compensation that's a problem for the consumer.
That trend isn't good folks but it does explain the "ramp job" in the stock market -- at least for a while. Of course the problem with such productivity improvements into declining real hourly wages also explains how we get the income and sales numbers we've recently seen that have indicated a resumption of deterioration in consumer balance sheets.
While this may be "good" for a little while when it comes to stock prices such gains when made in this fashion will be short-lived.
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