Labor Data: Milking More Blood From Stones

We have just seen the weekly jobless claims data, and it gets scary when you consider the readings seen from workforce productivity and unit labor costs.  It seems as though employers are driving up output and slashing wages or slashing the overall cost associated with labor.

The Labor Department has just released its weekly jobless claims and that was a drop of some 20,000 to 512,000.  This is a head in the right direction if it can continue, but this 500,000 barrier is still just like the sound barrier for the first test pilots after World War II. Bloomberg had consensus economist predictions right at 523,000.  Last week’s unrevised data was put at 530,000 and that was revised to 532,000.  The army of unemployed measured by the continuing jobless claims dropped again to 5.749 million.  The wild card in the continuing claims will be over efforts and approvals made of late to extend the terms of unemployment benefits.

But elsewhere it seems that employers are able to take more blood from the same stones.  Q3 worker productivity rose by +9.5%, but the unit labor costs fell by -5.2%.  It seems that the companies are able to have the whip-masters patrolling the workplace floors.  The question comes down to whether you believe the productivity and costs figures.  Either way, that direction cannot continue indefinitely.

JON C. OGG