News on economic growth and employment released this week sets the stage for the big disappointment in the data next week: a large drop in nonfarm productivity.
By Kathleen Madigan
Growing productivity is a building block to improving living standards and keeping inflation low. But economists surveyed by The Wall Street Journal think the coming Wednesday's report will show output per hour worked contracted in the first quarter. The median projection expects a 1.1% annual rate of decline, almost reversing the 1.8% increase in the fourth quarter.
What's behind the productivity crash? Economists say the lack of growth in first-quarter real gross domestic product, reported by the Commerce Department, coupled with a pickup in jobs and aggregate work hours, seen in Friday's payrolls report, mean each work hour generated less output.
Falling productivity at a time when compensation is rising means unit labor costs probably jumped by 2.8% last quarter, say forecasters.
The March trade deficit should also garner attention. Commerce said a steep drop in exports subtracted more than 1 percentage point from GDP growth last quarter. But Commerce had to estimate March trade flows. Tuesday's trade deficit report will offer more clarity.
Economists think the trade gap will narrow to $40.9 billion in March from $42.3 billion in February.
Write to Kathleen Madigan at kathleen.madigan@wsj.com
(END) Dow Jones Newswires
May 02, 2014 14:36 ET (18:36 GMT)
0 Response to "Productivity Expected to Crash -- Data Week Ahead"
Thanks for give comment.