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Economy in Brief

U.S. Productivity Improves Following Two Quarters of Decline
by Tom Moeller  August 11, 2015

Nonfarm productivity increased 1.3% during Q2'15 (SAAR, 0.3% y/y), about as expected, following a 1.1% decline earlier this year, revised from -3.1%. Productivity fell a little-changed 2.2% in Q4'14. Last year's 0.7% rise was unrevised but no change in 2013 was pulled down from 0.9%. Data were revised back to 2012. Real output improved at a 2.8% rate last quarter (2.8% y/y) following 0.5% rise. Hours worked gained 1.5% (2.6% y/y), about the same as during Q1. Compensation per hour increased at a 1.8% rate (2.4% y/y) after a 1.1% gain. When adjusted for higher prices, compensation declined 1.1% (+2.3% y/y). The increase in productivity caused unit labor costs to notch higher at a 0.5% rate (2.1% y/y), also near expectations. That followed increases of 2.3% and 5.7% during the prior two quarters. The downward revision to productivity in 2013 fostered a 1.1% gain in unit labor costs, revised from 0.2%.

Manufacturing sector worker productivity increased at a 2.5% rate (1.1% y/y) following an unrevised 0.6% dip. The 1.3% increase during all of last year was changed from 2.2% and the 0.7% rise in 2013 compared to 1.9% estimated earlier. Real output increased at a 1.5% rate (2.3% y/y), following a 0.5% dip. Hours worked moved 1.0% lower (+1.2% y/y) following a minimal 0.1% improvement. Worker compensation per hour rose at a 0.2% rate (1.3% y/y) after a 1.7% decline. Adjusted for prices, compensation declined at a 2.7% rate (1.3% y/y), after a 1.3% increase. Unit labor costs declined at a 2.3% annual rate (+0.2% y/y), down for the fourth quarter in the last five.

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

Productivity & Costs (SAAR,%) Q2'15 Q1'15 Q4'14 Q2 Y/Y 2014 2013 2012
Nonfarm Business Sector
Output per Hour (Productivity) 1.3 -1.1 -2.2 0.3 0.7 0.0 0.9
Compensation per Hour 1.8 1.1 3.4 2.4 2.7 1.1 2.7
Unit Labor Costs 0.5 2.3 5.7 2.1 2.0 1.1 1.7
Manufacturing Sector
Output per Hour (Productivity) 2.5 -0.6 -0.4 1.1 1.3 0.7 0.7
Compensation per Hour 0.2 -1.7 4.3 1.3 2.7 0.2 1.8
Unit Labor Costs -2.3 -1.1 4.7 0.2 1.4 -0.5 1.0
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