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Economy in Brief

U.S. Productivity Growth Strengthens
by Tom Moeller  November 3, 2016

Growth in nonfarm output per hour during Q3'16 improved to 3.1% (0.0% y/y) after a 0.2% Q2 decline, revised from -0.6%. A 1.8% increase had been expected in the Action Economics Forecast Survey. It was the strongest rise in two years. Output rose 3.4% (1.6% y/y) while hours worked lengthened 0.3% (1.7% y/y). The gain in productivity was accompanied by a 3.4% increase in compensation, which was weaker than the 3.7% Q2 gain. The 2.3% y/y rise left it slightly below the gains during all of 2015 and 2014. Unit labor costs edged 0.3% higher (2.3% y/y), down sharply from the 3.9% Q2 jump. A 1.2% rise had been expected.

In the manufacturing sector, productivity improved 1.0% (0.2% y/y) after a 0.5% decline. So far this year, growth has averaged 0.6%, up slightly versus the last few years. Compensation improved 3.2% (3.1% y/y) following a 6.2% jump. That increase lifted unit labor costs by 2.2% (2.9% y/y), roughly in line with the last two years.

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.

U.S. Productivity Growth Flowing Downstream from the Federal Reserve Bank of Dallas is available here.

Productivity & Costs (SAAR, %) Q3'16 Q2'16 Q1'16 Q3'16 Y/Y 2015 2014 2013
Nonfarm Business Sector
Output per Hour (Productivity) 3.1 -0.2 -0.6 0.0 0.9 0.8 0.3
Compensation per Hour 3.4 3.7 -0.9 2.3 2.9 2.8 1.2
Unit Labor Costs 0.3 3.9 -0.3 2.3 2.0 2.0 0.9
Manufacturing Sector
Output per Hour (Productivity) 1.0 -0.5 1.4 0.2 0.3 0.1 0.2
Compensation per Hour 3.2 6.2 -4.8 3.1 2.5 2.8 0.2
Unit Labor Costs 2.2 6.8 -6.1 2.9 2.2 2.7 0.0
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