Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Click for Bio
Follow Brian on Twitter Follow Brian on LinkedIn View Videos on YouTube
   Bob Stein
Deputy Chief Economist
Click for Bio
Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 
  Nonfarm Productivity Increased at a 3.0% Annual Rate in the Third Quarter
Posted Under: Data Watch • Productivity

 

Implications:  Nonfarm productivity rose at the fastest pace in three years during the third quarter, as output rose much quicker than hours. Despite the nice gain, productivity is up at a modest 0.7% annual rate in the past two years.  But we think government statistics underestimate actual productivity growth.  There are many examples, in every area of the economy, but the service sector is particularly hard to measure.   Want to talk face to face with someone in Europe?  You no longer need to get on a flight, just Facetime them, for free!  The benefits to consumers and businesses have been huge, but the figures from the government miss much of the value of these improvements, because many of these amazing technologies are free, and anything free, no matter how much it improves everyday life, isn't directly included in output, which means it's much harder to measure productivity.   Still, even on the manufacturing side, where it's easier to measure output per hour, productivity is up only 0.1% in the past year.  This is due in part to the hurricanes, which hit the manufacturing sector particularly hard, driving down manufacturing productivity at a 5.0% rate in Q3, the fastest pace of decline since 2009.  As we have seen in other data series, the storm impacts have subsided and activity is making up lost ground in Q4, and we expect manufacturing productivity to rebound in Q4 as well. Despite slower productivity growth in recent years, we think the long-term trend is still strong, a result of the technological revolution that began in the 1980s.  We anticipate an acceleration in productivity growth over the coming years, with a potential boost if tax and regulatory reform comes out of Washington.  The declining unemployment rate and faster growth in wages should create more pressure for efficiency gains, while the technological revolution continues to provide the inventions that make those gains possible.  In other news this morning, new claims for jobless benefits declined 5,000 last week to 229,000.  Continuing claims fell 15,000 to 1.88 million.  These figures are consistent with our forecast that tomorrow's official report will show nonfarm payrolls up 320,000 in October, a sharp rebound from the hurricane-related 33,000 decline in September.  Investors should expect another solid month in November, which means it's almost certain the Federal Reserve will raise short-term interest rates in December.  In other recent news, automakers sold cars and light trucks at an 18.1 million annual rate in October, a decline of 2.6% from the torrid pace in September, but well above consensus expectations and up 1.2% from a year ago.  The pace of sales should remain unusually strong through year end due to vehicles destroyed in Hurricanes Harvey and Irma.  However, sales for all of 2017 should still be slightly below the pace of 2016 and should move lower in 2018.  Don't get worried when this happens; it's not a negative sign for the economy overall, just a shift by consumers from the auto sector to other kinds of purchases.  

Click here for PDF version

Posted on Thursday, November 2, 2017 @ 11:00 AM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.