Growth in OECD Unit Labour Costs picks up to 0.5 % in the second quarter of 2016
Growth in unit labour costs (ULCs) in the OECD area picked up to 0.5 % in the second quarter of 2016 (compared with 0.1 % in the previous quarter) as growth in compensation costs accelerated (0.6 %, compared with minus 0.1 % in the previous quarter). Labour productivity increased only marginally (0.1 % after decreasing for two consecutive quarters).
In the United States, ULCs rose strongly (0.9 % in the second quarter, compared with flat growth in the previous quarter), as compensation costs rebounded (up 1.1 %, compared with minus 0.8 % in the previous quarter), offsetting a pick-up in labour productivity (up 0.2 %, compared with minus 0.8 % in the previous quarter). ULCs also rose strongly in the United Kingdom (to 1.2 % in the quarter immediately preceding the referendum on EU membership, compared with 0.2 % in the previous quarter), as compensation costs increased (up 1.3 %) at their highest rate since the third quarter of 2012. In Canada, a sharp fall in productivity (minus 0.6 %) pushed up ULCs (by 0.6 %, compared with minus 0.2 % in the previous quarter). ULCs were stable in Japan (after a 0.3 % decrease in the previous quarter), reflecting flat labour productivity and compensation costs.
In the Euro area, ULCs picked up marginally (by 0.2 %, compared with 0.1 % in the previous quarter) as labour compensation growth slowed to 0.2 %. Productivity fell for the fourth consecutive quarter in Italy, with ULCs increasing by 0.5 %. Productivity also contracted in France but flat compensation costs kept ULCs in check (up 0.2 %). Growth in compensation costs eased in Germany (to 0.3 %) but a slowdown in productivity growth (up 0.1 %, compared with 0.3 % in the previous quarter) nudged up ULCs marginally (by 0.1 %). Compensation costs contracted significantly in Portugal (by 0.6 %) and Greece (by 1.0 %), pushing ULCs into negative territory (by 0.3 % and 0.7 % respectively), unwinding some of the strong pick-up seen in the previous quarter. On the other hand, compensation costs rose markedly in Spain (up 0.8 %), driving ULC growth (to 0.5 %, compared with minus 0.3 % in the previous quarter). Spanish productivity grew at its highest rate in five quarters.