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Economy in Brief

U.S. Productivity Growth Surprisingly Strong in 2Q
by Tom Moeller August 10, 2004

Non-farm labor productivity grew 2.9% last quarter, a slowdown from 3.7% growth in 1Q but firmer than Consensus expectations for 2.0% growth.

Part of the upside surprise was due to a 3.8% (5.9% y/y) gain in non-farm output versus the 3.0% (4.8% y/y) rise in 2Q real GDP. Hours worked by all persons (employment times hours) also rose just a slight 0.8% (1.1% y/y).

Unit labor costs nevertheless grew at the fastest rate quarterly rate in a year, up 1.9% as compensation grew 4.9% (4.8% y/y).

Productivity in the manufacturing sector surged 7.5% (6.0% y/y) and rebounded from weak 2.8% growth in 1Q. Unit labor costs in the factory sector fell 2.2% (0.0% y/y).

Non-farm Business Sector (SAAR) 2Q '04 (Prelim) 1Q '04 (Final) Y/Y 2003 2002 2001
Output per Hour 2.9% 3.7% 4.7% 4.5% 4.3% 2.6%
Compensation 4.9% 4.0% 4.8% 4.0% 3.2% 4.1%
Unit Labor Costs 1.9% 0.3% 0.2% -0.3% -1.1% 1.5%
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