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Economy in Brief

U.S. Productivity Growth Lifted by Revisions; Unit Labor Costs Also Strengthened
by Tom Moeller  December 2, 2015

Nonfarm productivity during Q3'15 grew 2.2% at a seasonally adjusted annual rate, revised from 1.6%. The increase followed an unrevised 3.5% rise in Q2. The revised Q3 increase matched expectations in the Action Economics Forecast Survey. Real output growth of 1.8% (2.5% y/y) was revised from 1.2%. Hours worked eased 0.3% (+1.9% y/y), revised from -0.5%. Compensation per hour grew 4.0% (3.6% y/y) which was changed from 3.0%. The Q2 increase, however, was revised up even more sharply to 5.6% from 1.7%. As a result, unit labor cost growth last quarter was raised to 1.8% (3.0% y/y) from 1.4%, but the Q2 increase of 2.0% was lifted even more sharply from a 1.8% decline. A revised 1.0% rise in Q3 costs was expected.

Manufacturing sector productivity surged a little-revised 5.1% (1.5% y/y) during Q3, following a 2.2% increase. This remained the strongest gain in four years. Real factory-sector output grew 3.2% (2.0% y/y) but hours worked declined 1.8% (+0.4% y/y). Compensation per hour strengthened 7.5% (3.7% y/y), revised from 5.9%, but the 5.5% rise in Q2 was revised from no change. The Q3 rise was the firmest rise since Q1'14. As a result, unit labor cost growth of 2.3% (2.1% y/y) was revised from 0.8%. That followed a 3.3% Q2 gain which was revised from -2.0%.

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.

The Fed's latest Beige Book covering regional economic conditions is available here.

Productivity & Costs (SAAR, %) Q3'15 Q2'15 Q1'15 Q3 Y/Y 2014 2013 2012
Nonfarm Business Sector
Output per Hour (Productivity) 2.2 3.5 -1.1 0.6 0.7 0.0 0.9
Compensation per Hour 4.0 5.6 1.5 3.6 2.7 1.1 2.7
Unit Labor Costs 1.8 2.0 2.6 3.0 2.0 1.1 1.7
Manufacturing Sector
Output per Hour (Productivity) 5.1 2.2 -0.6 1.5 1.3 0.7 0.7
Compensation per Hour 7.5 5.5 -2.2 3.7 2.7 0.2 1.8
Unit Labor Costs 2.3 3.3 -1.6 2.1 1.4 -0.5 1.0
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