· Due
mostly to an upward revision in output, nonfarm labor productivity
growth last quarter was revised up to 6.3% from 4.9%. The revised gain
matched Consensus estimates and it was the quickest quarterly rise
in four years.
· The largest factor behind the revision came from output growth to 5.7% from the preliminary 4.3%. More output from fewer hours worked. Hours worked were revised little and now are estimated to have fallen 0.6%, the largest quarterly drop in over four years.
· Revised in the opposite direction, compensation per hour last quarter was taken down to 4.2%. Despite that revision, as well as a deceleration in compensation growth from outsized gains during 1Q & 4Q '06, the annual gain in compensation of 5.8% was its quickest since 2000.
· The combination of
more productivity and less compensation lowered unit labor cost growth
to -2.0% from -0.2%, again the weakest since 2004. That was enough
to drop the y/y gain to its lowest in a year.
·
Productivity in the factory sector also was revised up, but to a
lesser extent, to 5.0% from a preliminary 4.6% gain. It was double the
2Q increase and it still owed to a slight decline in hours worked
accompanied by a swift 4.5% gain in output. Compensation growth in the
factory sector made up for a 2Q decline with a 1.5% rise. That left the
y/y gain stable at 5.6%, its fastest since early 2005. Unit labor costs
in the factory sector fell a revised 3.3%, about as they did in the
initial report. The annual increase was lowered a bit 2.8%, still the
quickest since late 2000.
· How well do wages follow productivity growth? from the Federal Reserve Bank of St. Louis can be found here.