U.S. Q3 labor cost growth cut
Topics: U.S. LABOR COST
The sharp downward revision to labor costs, reported by the Labor Department on Tuesday, also pointed to some easing of the squeeze on profit margins.
Corporate profits have been reduced by strong labor cost growth that has outpaced revenue.
With worker productivity still sluggish, however, the pace of growth in labor costs is likely to remain solid.
Unit labor costs, the price of labor per single unit of output, increased at a 2.5% annualized rate in the third quarter.
They were previously reported to have advanced at a 3.6% rate.
Compared with the third quarter of 2018, labor costs grew at a 2.2% rate, rather than the previously estimated 3.1%.
Growth in hourly compensation was also revised lower, to a 2.3% rate in the third quarter, from the originally reported 3.3% pace.
Hourly compensation grew at a 3.7% rate compared with the third quarter of 2018, instead of the previously reported 4.5% pace.
Last quarter’s gains in unit labor costs and compensation are in line with other measures showing moderate wage gains.
A survey of small businesses on Tuesday showed the share of owners raising wages was unchanged in November.
While the proportion of those planning to increase compensation rose to near a 30-year high, there was no strong appetite to increase prices. ■