Recent Updates

  • US: Employment Situation (May)
  • Lithuania: Foreign Reserves (May-Prelim), Macroeconomic Projections (Q2)
  • US: Establishment Survey Detail (May)
  • Canada: Labor Force Survey (May)
  • more updates...

Economy in Brief

U.S. Productivity Growth Firm, Unit Labor Costs Contained
by Tom Moeller May 7, 2008

Nonfarm labor productivity rose 2.2% last quarter after 1.8% growth during 4Q07. The latest gain was slightly stronger than the expected 1.8% figure and at 3.2%, the year-to-year rise in productivity was the firmest since early 2004.

Productivity's strength stemmed from a 1.8% (-0.6% y/y) decline in total hours worked which was the fourth decline in the last five quarters. That decline was accompanied by a 0.4% (2.6% y/y) rise in output which was hardly improved from the 0.2% increase during 4Q07.

Compensation per hour rose a firm 4.4% rate last quarter. The year-to-year growth decelerated, however, to 3.4% from 4.9% during all of last year. Outsized quarterly growth in compensation late in '06 and early in '07, between 6% and 12%, drove the growth in 2007 compensation up.

Unit labor costs growth was contained, as a result of the firm productivity gain, to 2.2% versus 2.8% growth during 4Q'07. Year-to- year, the growth in costs fell to a meager 0.2%, the slowest rate of growth since a slight decline early in 2004. Unit nonlabor payments (which account for roughly one third of total costs) did rise 2.2% (3.5% y/y) after a slight decline in 4Q.

In the factory sector, productivity rose at a steady 4.1% (4.1% y/y) rate. Unit labor costs did rise 2.5% on a quarterly basis but earlier quarterly declines held the annual change to a negative -1.3%.

Productivity, Energy Prices, and the Great Moderation: a New Link is from the Federal Reserve Bank of Atlanta and it can be found here .

Nonfarm Business Sector (SAAR, %) Q1 '08 Q4 '07 Y/Y 2007 2006 2005
Output per Hour 2.2 1.8 3.2 1.8 1.0 1.9
Compensation per Hour 4.4 4.6 3.4 4.9 3.9 4.0
Unit Labor Costs 2.2 2.8 0.2 3.1 2.9 2.0
large image