- Prior quarter 6.9% for unit labor costs and -1.8% for productivity.
- Unit labor costs 1.6% versus 1.5% estimate
- Productivity preliminary 2.4% versus 2.0%.. The prior month was revised to -1.8% from -1.5%
The data can be a little squirrely as a result of tariffs
Details from the BLS:
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Nonfarm business productivity rose 2.4% (annualized), driven by a 3.7% increase in output and a 1.3% rise in hours worked.
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Unit labor costs in the nonfarm sector increased 1.6%, with hourly compensation up 4.0% and productivity gains partially offsetting cost pressures.
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Real hourly compensation (adjusted for inflation) rose 2.3% in Q2 and 1.4% year-over-year.
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Year-over-year productivity in the nonfarm sector increased 1.3%.
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Since Q4 2019, nonfarm productivity has grown at a 1.8% annualized pace, stronger than the 1.5% rate in the 2007–2019 cycle.*
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Manufacturing productivity rose 2.1% in Q2, led by:
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Durable goods: +3.3% productivity (output +4.1%, hours +0.8%)
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Nondurable goods: +1.2% productivity (output +0.5%, hours −0.7%)
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Unit labor costs in manufacturing rose 1.7%, with a split:
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+3.8% in nondurable goods
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−0.2% in durable goods
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Manufacturing productivity is up 1.5% year-over-year, the strongest since Q2 2021.
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Over the current cycle, manufacturing productivity has grown at a 0.5% annualized rate, better than the 0.1% pace from 2007–2019 but well below the 2.1% long-run average.
IN SUMMARY:
The real hourly compensation is higher which is good for workers/economy. Productivity increase is also good for GDP and it has grown by 1.8% which is above the trend from 2007 to 2019 (at 1.5%). That is good too. The Manufacturing Productivity is also up 1.5% YoY (strongest since Q2 2021). Trump wants manufacturing to return to the US. Of course for that to happen, it would need an investment in capital and robotics and not necessarily a lot of workers. It will be interesting to see how the numbers work out but I can imagine that the data might be hard to calculate as these major shifts are established.
This article was written by Greg Michalowski at investinglive.com.