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Economy in Brief

U.S. Productivity Growth Revised Up; Unit Labor Costs Fell
by Tom Moeller September 4, 2008

Labor productivity in the nonfarm business sector rose a revised 4.3% last quarter. The increase was larger than expected growth of 3.4% and it was double the preliminary estimate of a 2.2% increase.

The upward revision was due to a near-doubling of output growth to 3.4% and a slightly larger 0.8% decline in hours worked.

Growth in compensation per hour was little-changed at 3.7% and that about equaled the 1Q increase.

Unit labor cost growth was revised to show a slight 0.5% decline rather than the 1.3% increase estimated earlier. Year-to-year that left costs up just 0.6% from one year earlier.

In the factory sector productivity growth was revised down and it showed a 2.2% decline (+2.4% y/y). Productivity rose 3.4% last year. Unit labor cost growth surged a little-revised 6.2% (1.4% y/y) as compensation rose 3.9% (3.8% y/y).

In the nonfinancial corporate sector, productivity surged 5.6% and the y/y gain rose to 2.3% after a 1.9% increase last year.Compensation in the corporate sector rose 3.7% (3.8% y/y), a gain which left unit labor costs to decline 1.8% (+1.5% y/y).

Nonfarm Business Sector (SAAR, %) 2Q '08 1Q '08 Y/Y 2007 2006 2005
Output per Hour 4.3 2.6 3.4 1.4 1.0 1.8
Compensation per Hour 3.7 3.8 4.0 4.1 3.8 4.0
Unit Labor Costs -0.5 1.2 0.6 2.7 2.8 2.2
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