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Economy in Brief

U.S. Worker Productivity is Revised Down but Compensation & Unit Labor Costs Decline Significantly 
by Tom Moeller  June 5, 2013

Nonfarm business sector productivity growth during Q1'13 was revised slightly downward to 0.5% (SAAR) from 0.7% reported initially. That was a rebound from the 1.7% decline during Q4'12. It left the y/y gain of 0.9% on a par with the slow growth rates of 2011 and 2012. Real output rose at a 2.1% rate (2.4% y/y) while hours worked rose 1.6% (1.5% y/y). The revised compensation per hour and unit cost figures, however, were revised substantially. Compensation's initial 1.2% rise was taken down and now shows a 3.8% decline (+2.0% y/y). This combination of improved productivity and lower compensation caused unit labor costs to fall at a 4.3% annual rate (+1.1% y/y) in Q1'13. The offset to this favorable story is that Q4'12 compensation was revised up substantially to 9.9% from 2.7%. As a result, Q4's rise in unit costs was increased to 11.8% from 4.4%. 

The factory sector figures also were updated. The current 3.5% quarterly gain in output per hour was little-changed and left the y/y increase at 1.6%, on a par with the prior two years. Output rose 5.3% (2.5% y/y) while hours worked increased 1.8% (0.9% y/y). Compensation fell 6.9% (+4.5% y/y) instead of rising 3.3% as indicated initially. That dropped unit labor costs by 10.0% (+2.8% y/y) instead of slipping 0.5% as reported initially.

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

Drilling Down into Core Inflation: Goods versus Services from the Federal Reserve Bank of New York is available here.

 

Productivity & Costs (SAAR,%) Q1'13 Q4'12 Q3'12 Q1 Y/Y 2012 2011 2010
Nonfarm Business Sector
Output per Hour (Productivity) 0.5 -1.7 3.1 0.9 0.7 0.6 3.1
Compensation per Hour -3.8 9.9 1.2 2.0 1.9 2.6 2.1
Unit Labor Costs -4.3 11.8 -1.9 1.1 1.2 2.0 -1.0
Manufacturing Sector
Output per Hour 3.5 2.4 -0.3 1.6 1.9 1.4 6.4
Compensation per Hour -6.9 16.7 0.6 4.5 3.2 2.8 1.2
Unit Labor Costs -10.0 14.0 0.8 2.8 1.3 1.4 -5.0
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