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Economy in Brief

U.S. Productivity Growth Improves & Lowers Unit Labor Costs
by Tom Moeller  December 5, 2012

Nonfarm business sector productivity for Q3'12 was revised up to 2.9% (1.7% y/y) from last month's estimate of a 1.9% gain which matched the Q2 rise. Growth was its fastest in two years. The latest increase reflected a 4.2% (3.5% y/y) gain in output and a 1.3% (1.8% y/y) rise in hours worked. The increases were accompanied by a 0.9% (1.8% y/y) rise in compensation. A a result of this faster gain in productivity and a slower rise in compensation, unit labor costs fell at a 1.9% (+1.5% y/y) annual rate.

In the factory sector, the picture was not as constructive. Productivity fell at a 0.7% (+1.3% y/y) rate as the 0.7% (4.0% y/y) decline in output was accompanied by no change (2.6% y/y) in hours worked. Since compensation rose at a 2.4% (2.9% y/y) rate, unit labor costs rose at a 3.2% (1.5% y/y) rate. That gain was the quickest in three years and helped erode corporate profitability.

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

 

Productivity & Costs (SAAR,%) Q3'12 Q2'12 Q1'12 Q3 Y/Y 2011 2010 2009
Nonfarm Business Sector
Output per Hour (Productivity) 2.9 1.9 -0.5 1.7 0.7 3.1 2.9
Compensation per Hour 0.9 1.3 5.8 1.8 2.7 2.0 1.4
Unit Labor Costs -1.9 -0.5 6.4 0.1 2.0 -1.0 -1.5
Manufacturing Sector
Output per Hour -0.7 -0.1 5.5 1.3 2.5 6.4 0.1
Compensation per Hour 2.4 9.0 6.7 2.9 2.6 1.1 4.1
Unit Labor Costs 3.2 9.0 1.1 1.5 0.1 -5.0 4.0
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