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Economy in Brief

U.S. Labor Productivity Growth Improves
by Tom Moeller  November 3, 2011

Worker productivity grew at the fastest rate last quarter since Q1'10. The 3.1% gain followed two quarterly declines. Nevertheless, the y/y increase held low at 1.1%, about where it's been all year. That compares to 4.1% growth during 2010. The Q3 increase exceeded Consensus expectations for 2.5% growth. Output rose at a 3.8% rate (2.5% y/y) and hours worked grew at a 0.6% rate (1.4% y/y), the weakest since Q1 of last year.

Compensation growth decelerated to 0.6%, the weakest since Q4 of last year. That weakness, with improved productivity, pushed down unit labor costs at a 2.4% rate (+1.2% y/y), the first decline since Q4'10. The moderate 1.2% y/y increase followed declines in both 2009 and 2010.

Factory sector productivity also bounced back last quarter. The 5.4% increase (3.0% y/y) was its greatest since Q4 2009. It resulted from a 4.7% gain (4.1% y/y) in real output and a 0.8% decline (+1.1% y/y) in hours worked. Compensation ticked up at just a 0.6% rate (2.5% y/y) so factory sector unit labor costs fell 4.6% (-0.5% y/y).

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

How Do Businesses Recruit? from the Federal Reserve Bank of Philadelphia is available here.

Productivity & Costs (SAAR,%) Q3'11 Q2'11 Q1'11 Q3 Y/Y 2010 2009 2008
Nonfarm Business Sector
Output per Hour (Productivity) 3.1 -0.1 -0.6 1.1 4.1 2.3 0.6
Compensation per Hour 0.6 2.7 5.6 2.3 2.1 1.6 3.3
Unit Labor Costs -2.4 2.8 6.2 1.2 -2.0 -0.7 2.8
Manufacturing Sector
Output per Hour 5.4 -2.3 4.2 3.0 5.9 -0.4 -0.4
Compensation per Hour 0.6 3.0 4.1 2.5 1.6 4.5 4.3
Unit Labor Costs -4.6 5.5 -0.2 -0.5 -4.2 4.0 4.8
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