US: Productivity growth should improve in coming quarters - Wells Fargo

According to analysts from Wells Fargo, Productivity stalled in the final quarter of 2017, falling at a 0.1 percent annualized rate, noted analysts from Wells Fargo. According to them, with capital investment expected to strengthen, the trend in productivity growth should improve in the coming quarters.

Key Quotes: 

“After rising at annualized rates of 1.5 percent or more the past two quarters, productivity cooled in the fourth quarter. Nonfarm labor productivity fell at a 0.1 percent rate as hours worked (up 3.3 percent) slightly edged out output gains (up 3.2 percent).”

“Tighter labor market conditions pushed compensation costs up at a 1.8 percent clip. With productivity virtually unchanged, unit labor costs advanced at a 2.0 percent pace.”

“With capital investment expected to strengthen and job gains slow, we expect to see improvement in labor productivity growth this year. That should help keep unit labor costs in check even as compensation costs move higher amid the tighter labor market.”