Revised labor productivity growth last quarter was reduced, as expected, based on last week's lowered estimate of real GDP growth. Nonfarm business sector productivity fell 1.8% (AR) after the initial estimate of a 0.9% decline. It was the first productivity decline since 4Q08. Nevertheless, productivity's 3.7% rise during the last four quarters remained up from growth rates during the last seven years. New technologies, improved work techniques and improved labor skill-sets continue to pay dividends.

Last quarter's decline in productivity was the function of the sharp drop in output growth to 1.6% (revised from 2.6%) and a little-revised tripling to 3.5% (-0.0%) in growth in hours worked. The combination overwhelmed the modest, unrevised, quarterly decline in compensation costs of 0.7% and caused unit labor costs to rise a stronger 1.1% (initially 0.2%) following three consecutive quarterly declines. The unrevised four-quarter decline in costs of 2.8% still was nearly the largest on record.

The factory sector figures were little revised. Worker productivity growth remained robust at 4.1% (7.5% y/y), up from a 1.6% gain during 1Q. The pickup occurred as output rose at an accelerated 8.4% rate (8.4% y/y) and growth in hours-worked rose just 4.1% (0.8% y/y) following a 5.3% 1Q increase. Compensation fell for the second consecutive quarter (-0.3% y/y). The combination of the rise in productivity and the slip in compensation lowered unit labor costs at a 5.9% rate (-7.3% y/y), the largest drop on record.

The productivity & cost figures are available in Haver's USECON database.