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Economy in Brief

U.S. Productivity Growth Revised Up; Unit Labor Costs Rose Moderately
by Tom Moeller June 4, 2008

Labor productivity in the nonfarm business sector rose a revised 2.6% last quarter, as expected. That increase was stronger than the 2.2% growth estimated last month and was up from 1.8% growth during 4Q07.

The upward revision was due to an upward revision to output growth to a still low 0.7% from 0.4%. That was accompanied by an unrevised 1.8% decline in total hours worked.

Growth in compensation per hour rose was revised up to 4.9% from 4.4%. The increase, nevertheless, lowered the year-to-year rise to 4.0%, down from 5.8% as of 3Q '07.

Unit labor cost growth was left unrevised at 2.2% after a revised 4.7% surge during 4Q '07. Year-to- year, the growth in costs fell to a modest 0.7%, the slowest rate of growth since a slight decline early in 2004.

In the nonfinancial corporate sector, productivity rose a firm 4.6% (3.0% y/y). That annual increase was the quickest since the end of 2004 while quarterly strength reflected a 3.2% rise in output but a 1.4% decline in hours worked.

Compensation in the corporate sector again was firm and increased 5.9%, a rise which left unit labor costs to increase 1.2% (1.1% y/y).

In the factory sector, productivity rose a somewhat lessened 3.6% (4.0% y/y). Unit labor cost growth was revised up to 4.2% on a quarterly basis but earlier quarterly declines reduced the year-to-year change to -0.2%.

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 (Revised) Q1 '08 Q4 '07 Y/Y 2007 2006 2005
Output per Hour 2.6 2.2 1.8 3.3 1.8 1.0 1.9
Compensation per Hour 4.9 4.4 6.6 4.0 5.1 3.9 4.0
Unit Labor Costs 2.2 2.2 4.7 0.7 3.2 2.9 2.0
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