US unit labor costs fell 0.7% in Q3 as nonfarm productivity rose 3.6% annualized and the labor share hit a record low of 53.0%. That weakens the wage case for a Fed hike ahead of Friday's payrolls report.
DavidZero notes that a 3.6% productivity jump and falling unit labor costs left the 10-year barely moved even as claims printed at a multi-decade low. Source
The Fed's two hawkish dissenters left a question open: is the inflation threat coming from wages or from oil? Thursday's data answered it. The Bureau of Labor Statistics (BLS) reported Q3 nonfarm productivity up 3.6% annualized against a 2.8% forecast, with Q2 revised up to 2.1% from 1.4%. Unit labor costs (ULC), the wage bill per unit of output, fell 0.7% against a forecast rise of 0.3%, because hourly compensation grew only 2.9%. Wages are not the problem.
