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Economy in Brief

U.S. Labor Productivity Is Revised Downward
by Tom Moeller  June 6, 2012

Labor productivity for Q1'12 was weaker than reported initially. However, the -0.9% (AR) revised figure was accompanied by a bigger downward revision to compensation growth to 0.4%. As a result, growth in unit labor costs was lessened to 1.3% from 2.0% reported last month. This easing in cost pressures follows a marked acceleration during all of last year. For 2011, weaker productivity growth of 0.6% and higher compensation growth of 2.5% raised unit labor costs by 1.9% following an outright decline of 2.0% in 2010.

In the factory sector, the productivity picture is brighter due to the continued payoff from investment in new technologies. Last quarter's productivity was lessened modestly to 5.2% from 5.9%, but that was an improvement following the 0.6% uptick in Q4'11. At the same time, growth in compensation last quarter also was lessened to zero. As a result, unit labor costs fell at a revised, faster 4.9% rate, the swiftest decline in two years. These figures follow the 1.0% decline in unit labor costs during all of last year after the 4.7% decline in 2010.

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

Productivity & Costs (SAAR,%) Q1'12 (Revised) Q1'12 Q4'11 Q3'11 Q1 Y/Y 2011 2010 2009
Nonfarm Business Sector
Output per Hour (Productivity) -0.9 -0.5 1.2 1.8 0.4 0.6 4.0 2.4
Compensation per Hour 0.4 1.5 3.9 5.7 1.3 2.5 1.9 1.7
Unit Labor Costs 1.3 2.0 2.7 3.9 0.9 1.9 -2.0 -0.7
Manufacturing Sector
Output per Hour 5.2 5.9 0.6 5.5 2.3 2.5 6.6 0.6
Compensation per Hour 0.0 1.5 -3.7 3.2 -0.7 1.5 1.6 4.6
Unit Labor Costs -4.9 -4.2 -4.2 -2.2 -2.9 -1.0 -4.7 4.0
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