Not So Encouraging

According to the conventional wisdom, data released this morning should be taken as an encouraging sign for the labor market.

"US Worker Productivity Growth Slowed in Q4, Which Could Signal More Hiring in Coming Months" (Associated Press)

U.S. companies will have to keep hiring steadily to meet their customers’ rising demand. That’s the message that emerged Wednesday from a report that employers are finding it harder to squeeze more output from their existing staff.

Worker productivity rose at an annual rate of 0.9 percent in the October-December quarter, the Labor Department said. While that’s a slight upward revision from last month’s preliminary estimate, it’s half the pace from the July-September quarter.

Productivity, the amount of output per hour of work, grew last year at the slowest pace in nearly a quarter of a century.

A slowdown is bad for corporate profits. But it can be a good sign for future hiring. It may mean that companies have reached the limits of what they can get out of their existing work force and must add more workers if they want to grow.

That trend already looks to be happening. A report Wednesday from ADP, a payroll provider, estimated that companies added 216,000 workers in February. The survey did not include government agencies, which have been cutting jobs.

A more reliable read on hiring will come Friday when the government issues its February jobs report. Expectations are high after two strong months of job growth in December and January, a steady decline in unemployment benefit applications and a jump in consumer confidence.

“The slowing trend in productivity growth has largely confirmed that the cyclical bounce in productivity that the economy typically experiences following a recession has run its course,” said Troy Davig, an analyst for Barclays Capital Research. “Future productivity gains are likely to be harder won, so firms will likely need to rely increasingly on adding to payrolls to increase output, rather than squeeze existing resources.”

Unfortunately, history suggests that's not quite correct. As the following chart shows, a relatively sharp deceleration in the rate of productivity growth -- like we've seen recently -- has, except on two occasions over the past five decades, preceded or been associated with a slowdown in the pace of hiring.

Of course, this time could be different -- right?

Comments

[Doable Finance]

Let's hope there is always the first time. In this case, it would be the third time.

[RedRut]

Surely if staff numbers stay constant (loyalty to staff) and orders drop, your staff become less productive. So this isn't a sign that hiring will follow at all... the stat in isolation isn't even helpful

[Juvenal]

The numbers mean nothing when everything is gamed...

How stupid do they think we are?

Rules of propaganda teach us that if you repeat something long enough, no matter how absurd, it will eventually be believed.

http://www.opalesque.com/641018/Do_they_think_we_are101.html

[roger]

"US Worker Productivity Growth Slowed in Q4,
Translation: due to poor nutrition, the cows on the dairy
farm are producing less milk.

[Yuri]

Hello,
we live in hard times now. Bible really tells us about Armageddon. What it means. This is the war of God against this wicked world. We are approaching this war very quick. But before it will be we must endure fall of America as world power and coming of cruel 8 king of Revelation Rev. 17. This king will be the UN organization. He will rule for short time and every man will be forced to put symbolic mark on their hand to obey this king. This mark is 666. If we want to obey God we should avoid this mark and then we will not perish in future war of Armageddon.
Study Bible and you will receive knowledge of will of God. Those who will do his will will be saved in Armageddon.