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Economy in Brief

U.S. Worker Productivity Declines Again
by Tom Moeller  May 6, 2015

Nonfarm productivity fell at a 1.9% annual rate last quarter (+0.6% y/y), about the same as during a little-revised Q4. Harsh winter weather and the strike at West coast ports constrained real output. It slipped at a 0.2% rate (+3.5% y/y), after rising 2.6%, while hours worked gained 1.7% (2.9% y/y) following a 4.9% rise. Compensation per hour increased a 3.1% rate (1.7% y/y), the strongest rise in a year. When adjusted for lower prices it improved at a 6.2% rate (1.3% y/y), the largest increase since Q4 2012. The decline in productivity caused unit labor costs to rise at a 5.0% rate (1.1% y/y), the firmest increase in a year. A 1.7% decline in productivity was expected in the Action Economics Forecast Survey. Unit labor costs were expected to rise at a 4.1% rate.

Manufacturing sector worker productivity declined at a 1.1% rate last quarter (+1.4% y/y) after an unrevised 0.1% dip. Output fell 1.2% (+3.8% y/y), with the weather and the strike, following a 4.3% gain. Hours worked edged 0.1% lower (+2.3% y/y) following a 4.4% Q4 increase. Worker compensation per hour increased a steady 1.5% (0.8% y/y). Adjusted for price deflation, compensation gained 4.6% (0.8% y/y) after a 2.2% rise. Unit labor costs increased 2.7% (-0.7% y/y), the strongest gain in a year.

Today's presentation by Fed Chair Janet L. Yellen titled "Finance and Society" is available here.

The productivity & cost figures are available in Haver's USECON database. The expectations figure is from Action Economics and is the AS1REPNA database.

Productivity & Costs (SAAR,%) Q1'15 Q4'14 Q3'14 Q1 Y/Y 2014 2013 2012
Nonfarm Business Sector
Output per Hour (Productivity) -1.9 -2.1 3.9 0.6 0.7 0.9 1.0
Compensation per Hour 3.1 1.9 2.8 1.7 2.5 1.1 2.7
Unit Labor Costs 5.0 4.2 -1.0 1.1 1.8 0.3 1.7
Manufacturing Sector
Output per Hour (Productivity) -1.1 -0.1 3.5 1.4 2.2 1.9 1.0
Compensation per Hour 1.5 1.4 2.1 0.8 2.3 0.5 1.8
Unit Labor Costs 2.7 1.5 -1.3 -0.7 0.1 -1.4 0.8
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