Good news: Productivity improved across the US economy and unit labor cost growth moderated, according to preliminary estimates for Q2, released Thursday by the BLS.
Recall that productivity slipped 1.8% in Q1 (that figure includes today’s revision), the worst result in nearly three years. In Q2, it rebounded to post a 2.4% advance. That was better than the 2% economists expected.
As a quick reminder (and if the language sounds familiar, that’s because I recycle it from quarter to quarter), this is output per hour we’re talking about. You don’t want it to fall, particularly if you’re a business.
The mathematical read-across for operational efficiency from Thursday’s reported productivity gain was a much smaller increase in unit labor costs, which rose an in-line 1.6% in Q2, down from an uncomfortable 6.9% the prior quarter. Hourly compensation rose 4%, the slowest since Q3 of 2024.
I won’t spend an inordinate amount of time on this release, but remember: The key to robust growth without uncomfortably high inflation is steady productivity gains. In that regard, Thursday’s as-expected rebound in the productivity measure and accompanying deceleration in the pace of unit labor cost growth, was good news.
Meanwhile, initial jobless claims for the week to August 2 were 226,000. That’s up 7,000 from the prior week, but still low. The initial filers series is coming off a veritable plunge following a brief spike to 250,000 in June.
The four-week average slipped to 220,750. That’s the lowest since April 19.
Continuing claims for the week to July 26 were 1.974 million, up pretty sharply (38,000) from the prior week, and the most since November 6, 2021.
None of this is eminently tradable, and it won’t move any needles. But it’s all worth a mention if for no other reason than the data docket’s pretty sparse this week.
So we are supposed to believe this data from BLS but not the jobs report. It is hard for me to keep all this straight. My chronic TDS keeps me off balance.
How can you give those numbers without noting that the BLS guys are working in a terrifying situation and all of us can see the previous – and continuing – horsing around with them? The continuing claims are at recent highs – far more important than the week to week wiggles.
John, give me a break. Give everyone here a break. Suggesting that the BLS is already manipulating the data six days on from McEntarfer’s ouster is just as ridiculous as suggesting the jobs revisions were evidence of a conspiracy.
This is exactly what I was talking about yesterday evening in “We’re All Deranged Here.” Consensus for the productivity print was for a 2% advance. That consensus was formed before McEntarfer was fired.
You reckon the BLS, under Trump’s thumb, is that clever? That they thought, “Ok, we’re gonna start this manipulation process right away, with the preliminary productivity and ULC data series covering last quarter, and lest anyone should get wise, we’ll just do a subtle goal-seek this time such that the headline productivity print is four tenths better than consensus.”
I mean, come on, John. How realistic is that? Because that’s what you’re suggesting. And the continuing claims series is published weekly too. It’s as high as it is because of this week’s 38,000 “wiggle.” And if you were actually keeping up with this as closely as you implicitly claim to be, you’d know that the ongoing claims series has been printing “since November 2021” highs all year. Pan out on that continuing claims series to 1967, when it starts. Are current levels “high” in any historical sense? Any historical sense at all?
I was angry at any positive assumptions about the numbers and about Trump’s management or wisdom. Look her low employment numbers were more right and we can tell because productivity went up. Fewer – and maybe the best – workers made the same amount of stuff. What I wanted you to conclude that this was a sign (tentatve maybe) of a coming recession. Isn’t that the way things work?
“I was angry at any positive assumptions about the numbers.” So, again, you’re looking for confirmation bias — which is to say you have it in your head that Trump’s policies are going to cause a recession, and if anyone so much as suggests otherwise, even if that suggestion is merely a brief editorial on a third-tier data point released on a random Thursday in August, it makes you mad. Do you reckon that’s healthy, John? ‘Cause I don’t. It’ll drive you crazy.
Also — and we’ve been over this before, you and I — what you “want” me to conclude, and what you “want” other readers to conclude, is irrelevant. We’re going to conclude whatever we want to conclude. We’ll listen to what you have to say, but you’re no different from the rest of us in being just some guy with an opinion. I realize you’re convinced that your opinion holds more weight — or should hold more weight — than everyone else’s, but as someone who was convinced of that himself for the better of two decades, allow me to say that the sooner you come to terms with the fact that your opinion’s “just your opinion, man” (as The Dude would put it), the more inner peace you’ll have.
LOL
Don’t we expect productivity to increase along with jobless claims? You don’t lay off your most productive employees.