- “Unit labor costs in the US are very attractive compared to the rest of the world, even China”
US markets have decoupled recently from the rest of the world rising much more, especially against Europe. James Swanson, Chief Investment Strategist at MFS, argues in this video that lower manufacturing costs in the US are behind this performance.
“The biggest expense in manufacturing is labor costs”, emphasizes Swanson. “Unit labor costs in the US are very attractive compared to the rest of the world, even China”, he adds. Secondly Swanson refers to energy costs, which in the US are also falling due to the growth in the shale gas industry. “This is also impacting positively in the cost of manufacturing US goods, adding to growth in the GDP through manufactured exports”, explains Swanson.
A good example of this is the ethylene sector. “Costs in this sector have become so much lower in the US that it is now the most competitive producer in the world".