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by Tom Moeller February 7, 2013
Nonfarm business sector productivity for Q4'12 declined 2.0% (SAAR, +0.6% y/y) and reversed virtually all of the 3.2% increase during Q3, revised from 2.9%. A 1.0% decline has been expected. That left the 1.0% gain for all of last year down sharply from the roughly 3.0% annual increases during the two years immediately following the last recession. Lower productivity growth last quarter was accompanied by a quickened 2.4% rise (2.6% y/y) in compensation per hour. Nevertheless, for all of last year compensation growth slowed to 1.7%, its weakest since 2009. This combination of lower productivity and high compensation caused unit labor costs to jump at a 4.5% annual rate (1.9% y/y). Declines during the prior two quarters, however, left the full year increase at a modest 0.7%.
In the factory sector, the productivity picture was more encouraging. The modest 0.5% rise (1.3% y/y) in productivity reversed the Q3 decline. Nevertheless, the 2.0% full year increase was down from 2.5% in 2011 and 6.4% in 2010. Compensation growth decelerated to 1.0% (4.7% y/y) but the four quarter increase surged to 4.7%, its fastest since Q2'09. The full year 2.4% rise followed a 2.6% gain in 2011, both of which were slower than the 8.0% increase in 2003. The improvement in productivity dropped the gain in unit labor costs to 0.4%, its weakest in a year. As a result, the full year gain in costs was a modest 0.4%.
The productivity & cost figures are available in Haver's USECON database.
Productivity & Costs (SAAR,%) | Q4'12 | Q3'12 | Q2'12 | Q4 Y/Y | 2012 | 2011 | 2010 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | -2.0 | 3.2 | 1.9 | 0.6 | 1.0 | 0.7 | 3.1 |
Compensation per Hour | 2.4 | 0.8 | 1.3 | 2.6 | 1.7 | 2.7 | 2.0 |
Unit Labor Costs | 4.5 | -2.3 | -0.5 | 1.9 | 0.7 | 2.0 | -1.0 |
Manufacturing Sector | |||||||
Output per Hour | 0.5 | -0.9 | 0.0 | 1.3 | 2.0 | 2.5 | 6.4 |
Compensation per Hour | 1.0 | 2.3 | 9.0 | 4.7 | 2.4 | 2.6 | 1.1 |
Unit Labor Costs | 0.4 | 3.2 | 9.0 | 3.4 | 0.4 | 0.1 | -5.0 |