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Economy in Brief

U.S. Productivity Growth Revised Up
by Tom Moeller March 3, 2005

Non-farm labor productivity growth for 4Q04 was revised upward to 2.1%, reflecting an upward revision to output growth. Nevertheless, productivity growth for the full year of 4.0% was the lowest since 2001. The late year slowdown reduced 4Q/4Q growth to 2.8%. Consensus expectations had been for a revision to 1.4% growth for 4Q. Figures were revised back to 2000.

Output growth was revised up as expected to 3.7% (4.4% y/y) from 2.8% and reflected an accounting for higher exports to Canada. Growth in hours worked was revised down to 1.6% from 1.9%.

The upward revision to productivity lowered the estimate of unit labor cost growth to 1.3% from 2.3%. Annual growth of 0.4% followed two years of decline. Compensation growth was revised up to 3.4% (4.2% y/y) from 3.1%.

Productivity in the manufacturing sector was revised slightly higher to 5.8% (5.2% y/y) from 5.6%. Unit labor cost growth in the factory sector held at 0.4% (-0.5% y/y) but compensation growth was revised up.

International Risk-Sharing and the Transmission of Productivity Shocks from the Board of Governors of the Federal Reserve System is available here.

Non-farm Business Sector (SAAR) 4Q '04 (Revised) 4Q '04 (Prelim.) 3Q '04 Y/Y 2004 2003 2002
Output per Hour 2.1% 0.8% 1.3% 2.8% 4.0% 4.4% 4.3%
Compensation 3.4% 3.1% 5.4% 4.2% 4.4% 4.0% 3.2%
Unit Labor Costs 1.3% 2.3% 4.0% 1.4% 0.4% -0.4% -1.1%
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