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Economy in Brief

U.S. Productivity Growth Accelerates; Unit Labor Costs Decline
by Tom Moeller  December 6, 2017

Output per hour in the nonfarm business sector grew at an unrevised 3.0% annual rate (1.5% y/y) in the third quarter following a 1.5% Q2 gain. It was the quickest productivity increase in three years. A 3.3% rise had been expected in the Action Economics Forecast Survey. Output rose 4.1% (3.0% y/y) while hours-worked gained 1.1% (1.5% y/y).

Unit labor costs declined 0.2%, revised from +0.5%, following a 1.2% fall. A 0.2% rise had been expected. Compensation costs increased 2.7% last quarter (0.8% y/y), revised from 3.5%, after a 0.3% gain.

In the manufacturing sector, productivity declined 4.4% (+0.3% y/y) last quarter, revised from -5.0%, following a 3.6% Q2 rise. Output fell 1.1% (+1.5% y/y) while hours-worked lengthened 3.5% (1.2% y/y).

Unit labor costs in the factory sector strengthened 4.8% during Q3 (0.3% y/y) following a 1.2% decline.  Compensation per hour grew 0.2% (0.6% y/y) following a 2.3% rise.

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, %) Q3'17 Q2'17 Q3'17 Y/Y 2016 2015 2014
Nonfarm Business Sector
Output per Hour (Productivity) 3.0 1.5 1.5 -0.1 1.3 1.0
Compensation per Hour 2.7 0.3 0.8 1.0 3.1 2.9
Unit Labor Costs -0.2 -1.2 -0.7 1.1 1.8 1.9
Manufacturing Sector
Output per Hour (Productivity) -4.4 3.6 0.3 0.2 -0.6 0.1
Compensation per Hour 0.2 2.3 0.6 0.7 2.5 2.8
Unit Labor Costs 4.8 -1.2 0.3 0.6 3.1 2.7
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