Unit labor costs fall at quickest pace in four years

WASHINGTON Wed Jun 5, 2013 8:45am EDT

A worker carries a piece of rebar at the World Trade Center transportation hub in New York May 6, 2013. REUTERS/Eric Thayer

A worker carries a piece of rebar at the World Trade Center transportation hub in New York May 6, 2013.

Credit: Reuters/Eric Thayer

WASHINGTON (Reuters) - A gauge of labor-related costs fell in the first quarter by the most in four years, although the reading appeared to be distorted by a shift in employee compensation during the prior period to avoid a tax hike.

Unit labor costs fell at a 4.3 percent annual rate during the period, revised readings from the Labor Department showed on Wednesday. The government had initially estimated a 0.5 percent gain, and the downward revision confounded analysts' expectations that the reading would remain unrevised.

However, the government revised sharply higher its estimates for employee compensation during the fourth quarter after incorporating new data sources.

That brought the readings more in line with other indicators of wages which have suggested that employers pulled forward compensation for staff into the fourth quarter so that employees would pay taxes on that income at 2012 tax rates. Washington raised tax rates in January.

Still, the figures show minimal inflationary pressures. Unit labor costs were up 1.1 percent in the year through the first quarter. That suggests the U.S. Federal Reserve has plenty of room to keep interest rates low, although signs of stronger job creation have boosted expectations the Fed could begin reducing its monetary stimulus this year.

Wednesday's report also showed U.S. nonfarm productivity rose modestly in the first quarter, increasing at a revised 0.5 percent annual rate. Economists polled by Reuters had expected productivity to gain at a 0.7 percent rate, the pace initially reported by the government.

(Reporting by Jason Lange; Editing by Andrea Ricci)

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Comments (4)
totherepublic wrote:
“New report says US hasn’t seen expected ‘Great Recovery’ as economy continues to fall short”

“An economic forecast says the country’s expected “Great Recovery” hasn’t materialized and the economy’s fallen short of even normal growth.

The Los Angeles Times (http://lat.ms/13ESjj3 ) reports the gloomy picture appears in the quarterly UCLA Anderson Forecast released Wednesday.

It says that real gross domestic product growth — the inflation-adjusted value of goods and services produced — is well below the 3-percent growth trend of past recoveries. The forecast says the country isn’t creating enough good jobs.”

http://www.foxnews.com/us/2013/06/05/new-report-says-us-hasnt-seen-expected-great-recovery-as-economy-continues-to/

Jun 05, 2013 10:03am EDT  --  Report as abuse
huckl wrote:
Unbelievable when things don’t agree with them, just add more thing till they get the results they want. Are we suppose to take this as reality as our buying power goes down but they tell us our wage is really increasing. Sorry I want born last night.

Jun 05, 2013 11:05am EDT  --  Report as abuse
huckl wrote:
Unbelievable when things don’t agree with them, just add more thing till they get the results they want. Are we suppose to take this as reality as our buying power goes down but they tell us our wage is really increasing. Sorry I want born last night.

Jun 05, 2013 11:05am EDT  --  Report as abuse
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