16/06/2016 - Growth in unit labour costs (ULCs) in the OECD area slowed to 0.5% in the first quarter of 2016 (compared with 0.6% in the previous quarter) in spite of a decline in labour productivity (by minus 0.2%, compared with zero growth in the previous quarter), as growth in compensation costs slowed (0.3%, compared with 0.6%).
Among major OECD countries, the United States was the only country where ULCs continued to rise strongly (1.1% in the first quarter, compared with 1.0% in the previous quarter), despite compensation costs rising at their slowest rate (0.3%) since the first quarter of 2015, as labour productivity decreased significantly (minus 0.8%).
ULCs declined or grew at a slower pace in all other major OECD countries. In Canada, ULCs declined by minus 0.1%, compared with 0.7% growth in the previous quarter, as labour productivity growth (up 0.5%) rebounded from the previous quarter’s contraction (minus 0.1%).
ULCs also declined in Japan (minus 0.1%, compared with an increase of 0.7% in the previous quarter), reflecting a fall in compensation costs (minus 0.1%) and flat labour productivity.
In the United Kingdom, ULC growth slowed (to 0.2%, compared with 0.4% in the previous quarter) as labour productivity growth picked up marginally to 0.2%.
In the Euro area, ULC growth also slowed (to 0.1%, compared with 0.3% in the previous quarter), with labour productivity growth picking up slightly (to 0.2%).
Within the Euro area, tentative signs are emerging that the adjustment process may be abating in some countries. ULCs were flat in Germany and increased only marginally in France (0.1%). They fell in Italy (minus 0.1%) and Spain (minus 0.6%). However ULCs accelerated strongly in Greece (up 2.1%, as productivity fell for the fourth straight quarter and compensation costs rose by 1.7%) and Portugal (up 1.6%, with only marginal productivity growth).
Early Estimates of Quarterly Unit Labour Costs