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Economy in Brief

U.S. Productivity Revised Upward and Cost Pressures Are Lowered
by Tom Moeller  June 5, 2017

Nonfarm output per hour remained unchanged during Q1'17 (1.2% y/y) revised from the preliminary report of a 0.6% decline. A 0.1% dip had been expected in the Action Economics Forecast Survey. Output grew an upwardly revised 1.7% (2.5% y/y) and hours-worked advanced 1.7% (1.3% y/y). Compensation improved 2.2% (2.3% y/y), revised from 2.4%. Revisions further indicate, however, that compensation declined 3.0% during Q4'16 instead of last month's report of a 3.1% rise. As a result, last quarter's 2.2% rise in unit labor costs (revised from 3.0%) followed a 4.6% decline during Q4, revised from +1.3%. A 2.5% Q1 increase had been expected.

Factory sector productivity improved a little-revised 0.5% (0.3% y/y) after a 2.0% rise. Output increased 2.6% (0.9% y/y) while hours worked rose 2.1% (0.6% y/y). Compensation increased 2.9% (3.2% y/y), revised from a 4.2% gain reported last month. Compensation in Q4'16 is now indicated to have declined 1.5%, a revision from last month's report of a 4.2% increase. Unit labor costs gained 2.4% (2.9% y/y) last quarter, revised from 2.1%. Unit costs during Q4'16, however, are now shown to have declined at a 3.4% rate versus last month's indication of a 2.2% increase.

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, %) Q1'17 Q4'16 Q3'16 Q1'17 Y/Y 2016 2015 2014
Nonfarm Business Sector
Output per Hour (Productivity) 0.0 1.8 3.3 1.2 0.2 0.9 0.8
Compensation per Hour 2.2 -3.0 4.1 2.3 2.5 3.0 2.8
Unit Labor Costs 2.2 -4.6 0.7 1.1 2.2 2.0 2.0
Manufacturing Sector
Output per Hour (Productivity) 0.5 2.0 -0.5 0.3 0.2 -0.6 0.1
Compensation per Hour 2.9 -1.5 4.1 3.2 2.6 2.4 2.8
Unit Labor Costs 2.4 -3.4 4.7 2.9 2.4 3.0 2.7
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