U.S. Initial Claims very low, Q3 Productivity and Unit Labor Costs healthy but Non-Labor Costs strong
Initial claims at 189k from 195kare back at the July 18 low. Continued claims did correct higher by 23k 1.718m after a preceding 27k decline but the net message is still for a very tight labor market. The latest data were however surveyed after October’s non-farm payroll was.
Q3 non-farm productivity is higher than expected reflecting a 3.7% increase in non-farm business output and a surprisingly low 0.1% increase in aggregate hours worked.
Strong productivity and a slower 2.9% increase in hourly compensation leaves unit labor costs down by 0.7% on the quarter.
Non-labor costs remain firm, rising by 5.2%, leaving the deflator up by a moderate 2.0% on the quarter, but a strong 4.1% yr/yr, consistent with above target inflation.
Yr/ye unit labor costs are up a moderate 2.5% yr/yr, while productivity is 2.1% yr/yr. This is respectable but not sufficient to imply a productivity boom sharp enough to offset inflationary pressures elsewhere.