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 Rose at a 3.6% Annual Rate in the First Quarter
Posted Under: Data Watch • Productivity

 

Implications:  Productivity growth surprised to the upside in Q1, rising at the fastest pace since late 2014 and notching the second-best reading for a quarter since 2009.  The rise in nonfarm productivity came as output and hours worked both rose, but output grew at a faster pace pushing output per hour higher. Productivity has been steadily rising over the past three years, and the 2.4% increase over the past four quarters marks the fastest one-year gain in productivity since 2010.  It's normal for productivity growth to surge early in an economic recovery as firms are reluctant to add hours even as output turns higher. The recent gain, however, comes deep in an economic recovery, which suggests tax cuts and deregulation are the key drivers. We expect productivity will remain elevated in 2019, as the investments in machinery and R&D continue to come online, generating more output per hour.  Meanwhile, the tight labor market will encourage firms to keep looking for more efficient ways to produce.  Real (inflation adjusted) compensation continues to rise, pushing up wages – and consumer spending power – and providing further incentive for companies to seek innovation. That said, and even with the large jump in Q1, we think government statistics still underestimate actual productivity growth.  The figures from the government miss the full value of technological advances, such as all those free smartphone apps so many people carry around in their pockets.  Items that are free, no matter how much they improve everyday life, aren't directly included in output, which means they're not included in productivity either.  This means our standard of living is improving faster than the official reports show.   In employment news this morning, initial jobless claims were unchanged last week at 230,000, while continuing claims rose 17,000 to 1.671 million.  Plugging these figures into our models suggests tomorrow's official report will show nonfarm payroll gains of 195,000.  In other recent news, automakers yesterday reported selling cars and light trucks at a 16.4 million annual rate in April, falling short of the consensus expected pace of 17.0 million.  Sales were down 5.8% from March and 4.5% from a year ago.  We anticipate slower sales in the years ahead as consumers shift their spending to other sectors. 

Click here  for PDF version

Posted on Thursday, May 2, 2019 @ 10:16 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.