Please consider the BLS report on Productivity and Costs, Second Quarter 2022, Preliminary.
Productivity
Nonfarm business sector labor productivity decreased 4.6 percent in the second quarter of 2022, the U.S. Bureau of Labor Statistics reported today, as output decreased 2.1 percent and hours worked increased 2.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity decreased 2.5 percent, reflecting a 1.5-percent increase in output and a 4.1-percent increase in hours worked. The 2.5-percent decline in labor productivity from the same quarter a year ago is the largest decline in this series, which begins in the first quarter of 1948.
Only the 11.7 percent decline in 1947 was worse than the 7.4 percent quarterly decline in 2022 Q1.
Unit Labor Costs
Unit labor costs in the nonfarm business sector increased 10.8 percent in the second quarter of 2022, reflecting a 5.7-percent increase in hourly compensation and a 4.6-percent decrease in productivity. Unit labor costs increased 9.5 percent over the last four quarters. This is the largest four-quarter increase in this measure since a 10.6-percent increase in the first quarter of 1982. BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers. The second quarter of 2022 is the second consecutive quarter in which output decreased while hours increased. The resulting productivity declines over these two quarters reduced the average annual productivity growth rate since the fourth quarter of 2019–the last quarter not affected by the COVID-19 pandemic–to 0.6 percent in the nonfarm business sector. Output and hours worked in the nonfarm business sector are now 2.9 percent and 1.5 percent above their fourth-quarter 2019 levels, respectively.
Manufacturing Productivity
Manufacturing sector labor productivity increased 5.5 percent in the second quarter of 2022, as output increased 4.3 percent and hours worked decreased 1.1 percent. In the durable manufacturing sector, productivity increased 6.1 percent, with a 6.0-percent increase in output and a 0.1-percent decrease in hours worked. Nondurable manufacturing sector productivity increased 5.4 percent, as output increased 2.6 percent and hours decreased 2.6 percent. Total manufacturing sector productivity increased 0.4 percent from the same quarter a year ago.
Long-Term Chart
The long-term chart of the entire data series dating to 1947 puts the huge 7.4 percent decline in 2022 Q2 into proper perspective.
Why the Decline?
Five Things
1. Inflation
2. Huge boomer retirements, Demographics
3. Leisure and Hospitality jobs difficult to fill
4. Free money saved up, why work?
5. Lots of job hoppingLong-Covid might be an issue but not top five.
— Mike “Mish” Shedlock (@MishGEA) August 9, 2022
The Fed’s decade’s-long effort to produce sustained inflation was a remarkable “success”.
The Fed never bothered to take a bow. Instead, it’s chasing its tail.
The Next CPI Report: Expect Hot Rent, Tame Energy, Rent Matters More
On Wednesday, the BLS releases the CPI report for July.
I expect rent to be on the hot side, energy to be neutral to cool.
For discussion, please see The Next CPI Report: Expect Hot Rent, Tame Energy, Rent Matters More
This post originated at MishTalk.Com
Please Subscribe!
Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
This is nowhere near the employment bubble of Y2K. People with zero technical knowledge were getting hired. Same in banking during the real estate boom of the 2000s. We’ve hired some less experienced people but they at least have appropriate degrees. This employment boom was nowhere close to the previous ones imo because most smart companies knew it was a mirage and wouldn’t last. The companies that gave out upwards of 50% base pay hikes in January in high tech are now in a quandary because they have too many high salaried employees. Comparatively the 1990s boom in tech lasted way longer.
be negative.
Authorized for public release
by the FOMC Secretariat on 1/14/2022
“With a sufficiently large
quantity of reserves in the banking system, the Federal Reserve could choose to
set reserve requirements to zero as they are not needed for interest rate
control.”
I said: The only tool, credit control device, at the disposal of the monetary
authority in a free capitalistic system through which the volume of money can
be properly controlled is legal reserves. The FED will obviously, sometime in
the future, lose control of the money stock. May
8, 2020. 10:38 AMLink
Add in the woke mandates… and all the hours spent on CRT material, and the psychological backlash…
COVID-19 origins Commission is ‘convinced’ that the virus came out of a
lab and says that a real investigation is being blocked.”
“before they had done any research at all,” adding “they’re creating a
narrative. And they’re denying the alternative hypothesis without
looking closely at it.”
leak, adding “They just keep telling us, ‘Look at the market, look at
the market, look at the market!’ But they don’t address this
alternative. They don’t even look at the data. They don’t even ask
questions. And the truth is from the beginning, they haven’t asked the
real questions.”
then the initial inflationary effects of DFI financing are quickly overcome by
improved technology: larger output, lower unit costs, or increased utility
(higher quality).
All debt incurred which reduces unit costs of production and
promotes productivity is obviously quite often “good” debt, regardless of how
it is financed, with new money or existing savings.
When will you acknowledge that the lizard people are behind this? Are YOU a lizard person??