MetroIntelligence Economic Update by P. DUFFY
Labor costs rise 12.6 percent in 1Q2022 and 8.2 percent year-on-year
Unit labor costs in the nonfarm business sector increased 12.6 percent in the first quarter of 2022, reflecting a 4.4-percent increase in hourly compensation and a 7.3-percent decrease in productivity. Unit labor costs increased 8.2 percent over the last four quarters. (See tables A1 and 2.) This is the largest four-quarter increase in this measure since another 8.2-percent increase in the third quarter of 1982. BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them.
May manufacturing sector index rebounds to 56.1 percent, but challenges remain
The May Manufacturing PMI® registered 56.1 percent, an increase of 0.7 percentage point from the reading of 55.4 percent in April. This is the second-lowest Manufacturing PMI® reading since September 2020, when it registered 55.4 percent. Sentiment remained strongly optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to note supply chain and pricing issues as their biggest concerns.
ADP: Private sector employment rose by just 128,000 in May
Private-sector employment increased by 128,000 in May on a seasonally adjusted basis. This compares to 202,000 the previous month and 811,000 in May 2021. Of this total, 24,000 were in good-producing industries, and 104,000 were in services. During the month, small businesses lost 91,000 jobs versus gains of 122,000 for large employers and 97,000 for midsized employers. We’ll get a fuller read on the job market when the BLS releases their figures on Friday, June 3.