US Q4 labour costs are revised
Department of Labor considers inflation to be more stable than was previously thought
The US Department of Labor has revised its figures for growth in unit labour costs in the fourth quarter of 2019. This revision has been seen by some as an indication that inflation could be more stable than previously thought.
Instead of the 1.4 per cent Q4 growth it reported last month, the department found that the price of labour per single unit of output actually rose by 0.9 per cent.
Statistics for the third quarter were also readjusted, from 2.5 per cent to 0.2 per cent. Overall labour cost growth in 2019 grew by 1.7 per cent, down 0.1 per cent on the year before. It is therefore likely that inflation will continue to run below the 2 per cent target set by the Federal Reserve.
On March 3, the Fed undertook its largest interest rate cut since the 2008 global financial crisis, reducing its benchmark overnight interest rate by 0.5 per cent to a new target range of 1.00-1.25 per cent. The Covid-19 virus has haemorrhaged global financial markets and sent central bankers scrambling to act.
The Dow Jones, Nasdaq and S&P 500 are respectively down 10.22, 7.51 and 8.74 per cent in the past month alone. In morning trading all three indices have fallen by at least 2 per cent.
The Department of Labor also found that productivity grew at a seasonally adjusted annual rate of 1.2 per cent in the fourth quarter of 2019. While this slightly missed analyst predictions of 1.4 per cent, this still represented a 1.5 per cent gain on the previous quarter.
With at least 161 cases of the coronavirus confirmed in the United States and 11 deaths, analysts are now expecting a marked decline in productivity in the first quarter of 2020. This morning the governor of California Gain Newsome declared a state of emergency in order to help the state cope with the epidemic.