US Productivity: Trend still uninspiring - Wells Fargo

Analysts from Wells Fargo, point out that nonfarm productivity picked up in the second quarter on increased rates of output and hours worked but they warn that the trend remains weak.
 
Key Quotes: 

“Reflecting the largest gains in business output and hours worked since Q3 2014 and Q4 2015, respectively, nonfarm productivity increased at a 1.2 percent annual rate in Q2.”

“Today’s report includes revisions back to 2014. While modest gains were lifted a touch higher in 2014 and 2015, nonfarm productivity was revised down to a 0.1 percent decline in 2016– marking the first annual decrease since 1982.”

“In a surprising move, slower compensation growth resulted in unit labor costs decelerating to a 0.6 percent annualized pace on the quarter and down 0.2 percent over the past year. The annual pace of compensation growth, at 1.0 percent, appears
suspiciously low given the recent improvement in other metrics.”

“We continue to believe the tightening labor market will result in higher compensation costs in the coming quarters.”