Q1 Productivity Misses; Plunges By Most In 6 Years

Tyler Durden's picture

Nonfarm productivity in the frost-bitten US in Q1 plunged at its fastest pace since Q1 2008. The 3.2% drop is considerably bigger than the 3% expected but was accompanied (oddly) by a rise in employee hours (so despite the catastrophic weather, everyone was going to work and working more) but producing less. Unit labor costs soared 5.7% - the most since Q4 2012.



From the report:

Nonfarm business sector labor productivity decreased at a 3.2 percent annual rate during the first quarter of 2014, the U.S. Bureau of Labor Statistics reported today, as hours increased 2.2 percent and output decreased 1.1 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The decrease in productivity was the largest since the first quarter of 2008 (-3.9 percent). From the first quarter of 2013 to the first quarter of 2014, productivity increased 1.0 percent as output and hours worked rose 2.8 percent and 1.7 percent, respectively. (See chart 1 and table A.)


Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers. The measures released today are based on more recent source data than were available for the preliminary report. 


In the first quarter of 2014, nonfarm business productivity fell 3.2 percent, a greater decline than was reported in the preliminary estimate. The revised figure reflects a 1.4 percentage point downward revision to output and a 0.2 percentage point upward revision to hours. Unit labor costs were revised up due to the downward revision to productivity, and grew 5.7 percent in the first quarter of 2014. In the manufacturing sector, productivity growth in the first quarter was revised up to 3.8 percent, due to an upward revision to output and a downward revision to hours worked. Unit labor costs declined 0.4 percent, rather than increasing 0.1 percent as previously reported. 

And notably: 1.8% increase in hours worked in a quarter in which, supposedly, nobody could get to work. Huh???

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papaswamp's picture

Inflation bitchez! Everywhere except wages....

Pool Shark's picture



Actually, Unit Labor costs went UP:


So much for Corporate Profits...


papaswamp's picture

Yes...inflation would be rising costs... Wages only rose 0.4% ( inflation adjusted). I suspect this is the impact of increased healthcare costs.

Dr. Engali's picture

Labor costs going up doesn't necessarily translate into wages.

insanelysane's picture

Especially if it went to purchase less health insurance at an increased price.  See Obamacare.

nuclearsquid's picture

The debt slaves must be staging a work slowdown.  'Puttin on ole massa.'

Mitch Comestein's picture

It is high school consumer economics only backwards.

Jumbotron's picture

We need MOAR robots and MOAR H1B Visa coders to write MOAR job killing, wage deflating, software for automation.

venturen's picture

We don't need productivity...we have bankers, lobbyists and accountants!

Pool Shark's picture



Biggest drop on record in the Revised Number:



SokPOTUS's picture

Oh please. The first, (and much higher) revision will be out later this morning, and the second (right-sized for palatable algo consumption) revision will be out this afternoon.

101 years and counting's picture

who cares?  ECB will fix EVERYTHING tomorrow. so, buy the fucking depression.

forwardho's picture


My thats a scary take on an old acronym.

The reality is so much worse.

PlusTic's picture

this batch of data is soooo bad it's hilarious to consider the current consensus is so far removed...the markets, as usual, don't give a FUKK about reality...

Jlasoon's picture

The last 30min have been quite entertaining if you ask me. I look forward to reading all the excuses later. 

HUGE_Gamma's picture

doesnt matter. beat/miss its all bullish

Jumbotron's picture

When there is only one chute and one direction the cattle will go....including the bulls.

youngman's picture

Lots of strange numbers out today



intric8's picture

Strange means fanegaling

Cognitive Dissonance's picture

And so we believe this particular (manipulated) data because it confirms our biasis? Which is it folks? Is all economic data manipulated or not?

Dr. Engali's picture

There you go throwing logic into the mix again. What have I told you about that? You'll scramble some people's noodles, and you don't want that on your conscience do you? If this was the number they published just thing how horrible the real number is. Man we must be FUBARed.

PlusTic's picture

it's all manipulated, so think of how bad the real data actually was!

g'kar's picture

That was my thinking too.

NoDebt's picture

Yeah, they don't manipulate government numbers to make it look WORSE than it actually is.  So figure the truth is either this number or something worse than this number.

buzzsaw99's picture

+1 but in my mind it goes like this. they want to fudge the gdp number lower. therefore (as a last resort) they will inject a little truthiness while blaming the working man for the decline. don't bend your noodle trying to follow a zher's warped logic. there is no spoon...

papaswamp's picture

Questions are which way was it manipulated and why ( if at all)? I look at most of the data as relatively unmanipulated ( not seasonally adjusted). Seasonal adjusted data has the problem of not being able to spot a trend until it is already set in motion. When all of the data is taken in context of time, the 'recovery' is horrible. Considering the +$20T thrown at the economy ( not including rise in govt and corporate debt) we are still well into the recession.

BringOnTheAsteroid's picture

Does any of this shit actually matter anymore, any of it ?

what's that smell's picture

yes, it matters....zhedge must attract moar eyeballs.

like muppets to the slaughterhause.

insidious's picture

Quick, someone apply the "correct" correction factor to the numbers, re-release the data with some "better than expected numbers", apologize for the confusion (and promise to investigate why last month's correction factors were applied to the data), hit the print button and buy something....

insanelysane's picture

I'm thinking that the Big O, seeing what a failure his VA scandal was, tried to fix it with the Swap but that has turned into scandal, has now decided to release the some economic numbers, slightly closer to reality than what has been allowed to be released, and then will announce that he needs to have a laser like focus on getting the economy back running again.  And any questions on any thing other than the economy are hurting working class families so how dare any questions be asked.

Eyeroller's picture

And any questions on any thing other than the economy are RACIST so how dare any questions be asked.


There.  Fixed it.

buzzsaw99's picture

the ceos must "get to work", those layoffs aren't going to announce themselves and bonuses don't grow on trees ya know.

insanelysane's picture

Also for the flaks out there that say that ISM and ADP are private organizations and the government doesn't control them.  Ratings agencies are also private organizations but every time they downgrade a government, their offices get raided by said government.

Chuck Knoblauch's picture

How long before all economic data becomes classified information?

I suggest that real economic data already has been classified.

General public is fed disinformation.

I also suggest the real data is worse than you think.

orangegeek's picture

a small child could have forecast this.


but let's wait for the do-over to be sure.


the WH hasn't approve this spreadsheet yet.

oklaboy's picture

come on folks, it was Obamcare conractors putting in those applications.

Space Animatoltipap's picture

We're in a new Vietnam domestically.

ejmoosa's picture

So what is gonna be the Fed's strategy when all this bad news translates into lower tax receipts and accelerating debt?  

And this time around, the rest of the world really do not want to be holding bags of dollars?

THis gig is just about up.

Chuck Knoblauch's picture

They can rapid fire distraction after distraction.

But at the end of the day, people want to know what the plan is.

When the people realize there is no plan, panic will soak into the markets.

Like a sponge, the markets will absorb all the fear at once and sink!

tick, tock, tick, tock ......

Jason T's picture

with our pitifully low gross capital formation, we can only expect that productivity is going to go no where and could well drop

Marc To Market's picture

Tylers make a straw man and blows it down.  Wow.  Impressive.  Who said "And notably: 1.8% increase in hours worked in a quarter in which, supposedly, nobody could get to work." Huh? The government data shows 570k net new nonfarm payroll jobs were created in Q1.  And the average work week of 34.4  hours was unchanged from Q4 (3-month average)  

tommylicious's picture

big margin pressure.  this, plus recent ISM prices paid.  

Chuck Knoblauch's picture

There is no plan to recovery.

It was a lie since 2008.

The believers are all screwed.

Run for your lives!!!!!!!!!!!

My words are prophetic.

Raging Debate's picture

I imagine productivity is declining as wages have not kept up with inflation. Hard to be motivated working for $10-$12 an hour with no bennies when it barely covers the basics for a subsistence living. I notice this a lot at retail stores especially, bad service and slow motion moving employees. At that pay I wouldn't move fast or give a damn either.

On the other hand I see a grocery company like Publix that pays a living wage and gives bennies. Prices are higher than Wal Mart but no lines, place is clean and service is great. Companies need to take a cue from Henry Ford on the importance of a living wage. Government needs to stop subsidizing companies like Wal Mart that don't pay a living wage and instruct employees how to get food stamps.

Never One Roach's picture

"Ahoy, Captain, Stagflationary Shitstorm ahead!"


Maybe worse, a Deflationary Disaster.

tommylicious's picture

= inflationary margin pressures without top line pricing power.  answer:  rally em!