Unit Labour Costs had moved up 0.1% in the previous quarter
Unit labour costs (ULCs) in the OECD area rose by 0.2% in the third quarter of 2014, compared with 0.1% in the previous quarter. This OECD total however masks diverging patterns across economies.In the United States, ULCs fell for the second straight quarter (by 0.1% following a 0.6% fall in the previous quarter), on the back of continued robust labour productivity growth (0.6%).
ULC growth in the United Kingdom decelerated to 0.1% in the third quarter, compared to 0.6% in the previous quarter, with labour productivity growth steady at 0.4%.
ULC growth also slowed in Japan (to 0.7%, following a strong rise of 2.8% in the previous quarter), although this partly continues to reflect the unwinding effects of last April's increase in consumption tax. Labour productivity continued falling (by 0.7%), albeit at a slower pace than in the previous quarter (minus 2.0%), whilst labour compensation costs were subdued.
In the Euro area, ULCs rose by 0.4% in the third quarter of 2014, marginally higher than in the previous quarter, as labour productivity stalled and labour compensation costs increased by 0.4%, compared to 0.1% in the previous quarter.
The adjustment in ULCs across the Euro area remains mixed. ULCs rose by 0.7% in Germany and Italy, at the upper end of euro area countries, as productivity fell for the second straight quarter. However, productivity also fell in Portugal (for the third straight quarter) with ULCs rising for the first time since the first quarter of 2013. ULCs increased slightly in France (0.2%), as increases in labour compensation costs marginally outpaced productivity growth (0.3%). In Spain, after the previous quarter's increase, ULCs returned to their recent downward trend, falling by 0.6% in the third quarter.
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