21/09/2015 - Unit labour cost growth in the OECD area was steady at 0.1% in the second quarter of 2015. Although compensation costs accelerated (up 0.5% in the second quarter compared with 0.1% in the first quarter), labour productivity rose to 0.4%, compared with flat growth in the previous quarter.
Unit labour costs (ULCs) decreased slightly in the United States (minus 0.1%), compared to 0.5% growth in the first quarter, as labour productivity rebounded strongly (0.6%), following the fall in the previous quarter (minus 0.5%). Compensation costs (up 0.5%) also rebounded from the flat growth in the previous quarter.
Labour productivity also picked up strongly in the United Kingdom (up 0.9% compared to minus 0.3% in the first quarter) but the significant rise in compensation costs (up 2.3%) saw ULCs increasing by 1.4%. ULCs also picked up in Japan (0.4%), as labour productivity decreased (minus 0.1%, following the strong 0.9% growth in the previous quarter), while compensation costs picked up by 0.2%.
In the Euro area, ULCs increased (by 0.1% compared with 0.2% in the first quarter), driven by a slowdown in labour compensation costs (up 0.1%, compared with 0.5% growth in the previous quarter) and flat labour productivity growth.
Within the Euro area the adjustment process remains mixed. ULCs continue to trend downwards in Ireland (minus 0.6% in the second quarter, on the back of strong productivity growth), Greece and Spain (minus 2.3% and minus 0.5% respectively, driven by falling wages), and upwards in Germany (0.5%, in the second quarter). But in Portugal, signs are emerging of a slowing in the correction process, with strong ULC growth for the second straight quarter (up 1.2%), as productivity fell again (by minus 0.8%). ULCs also fell in Italy (by minus 0.7%) but productivity growth remains weak and despite the deceleration in ULC growth since the crisis, overall ULC growth since 2000 remains amongst the highest in the Euro area.
Early Estimates of Quarterly Unit Labour Costs