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Q3 Productivity Slips to -0.3%, Labor Costs Rise 3.6%

Mark Vickery

Wednesday, November 6, 2019


U.S. Productivity in Q3 reported preliminary results (subject to future revisions) ahead of today’s opening bell, with a fairly disappointing outcome: -0.3% on the headline, well beneath the +0.6% expected and the upwardly revised +2.5% for the final print on Q2. This productivity report refers to non-farm goods produced domestically.


To see a negative headline read on U.S. Productivity is thankfully quite rare. The last time we saw this was nearly 4 full years ago, back in December 2015. From the Great Recession a decade ago onward, at 107.513 remains near multi-year highs on the index. From the December 2015 trough, we’ve seen a slow, steady climb from around 102 index points.


Q3 Unit Labor Costs, on the other hand, rose higher than anticipated, up 3.6% from an estimated 2.5% and last quarter’s final +2.6%. So while we see negative output in domestic goods produced over the last 3 months, costs for labor have jumped 100 basis points over the same time period. Here we see some initial signs of economic strain in an otherwise quite robust economy.


CVS Health CVS posted better-than-expected Q3 earnings this morning, with $1.87 per share beating estimates by 7 cents on revenues of $64.81 billion, which topped expectations by 2.83%. These figures compare favorably to the $1.73 per share and $47.27 billion, respectively, in Q3 2018. Shares are up nearly 3% in the pre-market, higher than CVS’ total year-to-date gains. For more on CVS’ earnings, click here.


Humana HUM also impressed investors by surpassing estimates on its top and bottom line ahead of today’s open, with $5.08 per share beating by 50 cents on the bottom line and $4.58 billion coming in +0.55% on the top. the health insurance major has not missed on earnings since Q4 2015, and shares are up 2.5% on the earnings release. For more on HUM’s earnings, click here.


Papa John’s PZZA put up a mixed overall Q3 with a miss on the bottom line by 2 cents to 21 cents per share, while $403.71 million in quarterly sales beat the Zacks consensus by 4.13%. Both Q3 figures compare favorably to the year-ago 20 cents per share and $364.01 million reported, respectively. Shares are up another 3.6% in pre-market activity, after already having zoomed up 43.7% year to date. For more on PZZA’s earnings, click here.


Mark Vickery

Senior Editor


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