19/03/2015 - Unit labour costs (ULCs) in the OECD area rose by 0.5% in the fourth quarter of 2014, compared with 0.3% in the previous quarter, driven by a pick-up in compensation costs and slowing productivity growth. This OECD total however masks diverging patterns across economies, with ULC growth slowing in nearly half of the OECD countries.
ULCs rose strongly in the United States (by 0.8%), following two quarters of falls, as labour productivity stalled. ULCs also picked up in the United Kingdom (by 0.6%), the third consecutive quarter of increase, as labour compensation growth (0.8%) continued to outpace labour productivity growth (0.2%). On the other hand, ULCs decreased in Japan (minus 0.1%), partially offsetting the strong increases of the previous two quarters, as positive labour productivity growth returned.
In the Euro area, ULC growth slowed (to 0.3% compared with 0.5% in the previous quarter), driven by an upturn in labour productivity growth.
The adjustment in ULCs across the Euro area remains mixed. ULC growth slowed strongly (to 0.1%) in Germany, after two consecutive quarters of rapid increases, as labour productivity growth returned. Italy also recorded positive labour productivity growth after three quarters of falls and although this was partly offset by rising compensation costs, ULC growth slowed (to 0.5%). ULC growth accelerated in France (to 0.3%), as increases in labour compensation costs outpaced productivity growth (0.1%) but remained amongst the lowest in the Euro area.
Early Estimates of Quarterly Unit Labour Costs