- Final 2Q Unit Labor Costs rose 4.9% versus estimates of a 4.0% gain and a prior estimate of a 4.2% increase.
- ISM Non-Manufacturing for August rose to 57.0 versus estimates of 55.1 and a reading of 54.8 in July.
BOTTOM LINE: Productivity slowed and labor costs rose last quarter, Bloomberg reported. Compensation to American workers rose 6.6% in the second quarter, almost twice most measures of inflation. Productivity growth rates had averaged 3.2% each quarter since the expansion began in 2001 compared with 2.1% during the prior 10-year expansion. Job cuts announced by US employers fell 7.5% in August, a sign the labor market remains healthy, according to a recent report from Challenger, Gray & Christmas. I continue to expect productivity to remain relatively high and unit labor costs to remain subdued over the intermediate-term.
Growth in US service industries in August accelerated as business surged at transportation companies, utilities and retailers, Bloomberg reported. An unemployment rate at low levels by historic standards and a drop in gas prices are boosting consumer spending. Gas prices dropped about .21/gallon just in the month of August. The new orders component of the index fell to 52.1 versus 55.6 the prior month. The prices paid component fell to 72.4 from 74.8 in July. I expect the service sector to continue to decelerate to around average levels over the intermediate-term. There is no evidence to suggest a sharp consumer spending slowdown is at hand, which is what the many market bears have been warning about for months. Better-than-expected retail sales this holiday season will likely provide another catalyst for broad market gains this fall.
No comments:
Post a Comment