Productivity Revised Up

The stock market marked time again today with the S&P 500 remaining around 4550. The 10-year Treasury bond yield continued to fall today to 4.10%. Apparently, today's economic indicators were deemed to be more bullish for bonds than stocks. Consider the following:

(1) Employment & wages. ADP reported that payrolls rose just 103,000 during November. Job-stayers saw a 5.6% pay increase in November, the slowest pace of gains since September 2021. Job-changers, too, saw slowing pay growth, posting pay gains of 8.3%, the smallest y/y increase since June 2021. The premium for switching jobs is at its smallest in three years of data, according to ADP. So the labor market is cooling, which increases the odds that the Fed is done tightening. The debate now is about how many Fed rate cuts next year rather than how many rate hikes.

(2) Productivity. Q3's nonfarm business (NFB) productivity growth rate was revised up from 4.7% (q/q, saar) to 5.1% (chart). NFB output was revised up from 4.9% to 5.9%. Hours worked was revised down from 1.1% to 0.9%.