I plead guilty to the same sort of sloppiness I have noted elsewhere. Earlier this week I commented on the coverage of Commerce Department's release of data for March on consumer spending and prices. I then noted that the consensus forecasts for first quarter productivity growth appeared to be too high. I based this on the fact that the hours data reported in the monthly employment reports indicated that hours were growing at close to a 4.0 percent annual rate in the quarter. As it turned out, hours growth was reported as 2.5 percent. What went wrong?
Well, the hours data that go into the published index in the employment reports are for production and non-supervisory workers in private non-farm employment. That means that the index excludes the impact of changes in employment and hours for production and supervisory workers. (There are also some private sector workers who are not in the business sector, for example workers in non-profit universities or hospitals.) Since the vast majority of workers (@80 percent) fall into the production/non-supervisory category, I got lazy and assumed that the change in hours for this group of workers would be pretty much the same as the change in hours for all workers in the non-farm business sector.
As it turned out, this was wrong big time. While non-production supervisory employment rose by 664,000 from the fourth quarter to the first quarter, employment of supervisory workers actually fell by 80,000. (This is an interesting story, which I may return to in future notes.) Anyhow, the moral is to do your homework. I didn't do it as thoroughly as I should have (all this data was publicly available), and therefore I was wrong.