Recent Updates

  • US: New Residential Construction (Oct)
  • Kuwait: PPI (Q3)
  • Israel: IP (Sep)
  • Turkey: Non-Domestic PPI (Oct)
  • Germany: Producer Price Indexes (Oct), Migration (Jun)
  • Taiwan: Export Orders (Oct), External Debt, BOP (Q3)
  • GERMANR: Building Permits by State (Sep)
  • France: Labor Force Survey (Q3), Central Government Negotiable Debt, Imported Raw Materials Prices (Oct)
  • more updates...

Economy in Brief

Strong Second Quarter U.S. Productivity; Unit Labor Costs Decline
by Gerald D. Cohen  August 15, 2018

Output per hour in the nonfarm business sector grew at a healthier-than expected 2.9% seasonally adjusted annual rate in Q2'18 (1.3% year-on-year), following a slightly downwardly revised 0.3% gain in Q1. In Q4'17 productivity declined at a 0.3% pace (was +0.3%). The consensus in the Action Economics Forecast Survey looked for an increase of 2.5% in Q2. As a result of last month's benchmark revisions to GDP, productivity was revised for previous years, with 2017 slightly lower (1.1% vs. 1.3%) and 2016 and 2015 a touch higher (0.1% vs. unchanged and 1.3% vs 1.2%).

Unit labor costs fell at a weaker-than expected 0.9% rate in Q2'18 (1.9% y/y) following an upwardly revised 3.4% gain in Q1 (was 2.9%). The Action Economics Survey expected an unchanged reading in the second quarter. Costs were revised meaningfully higher in 2017 (2.2% vs. 0.4%), slightly lower in 2016 (0.9% vs. 1.1%) and remained at 1.8% in 2015. Compensation increased 2.0% in Q2'18 (3.2% y/y), following an upwardly revised 3.7% gain in the first quarter (was 3.3%).

In the manufacturing sector, productivity grew at just a 0.9% pace in Q2'18 (-0.2% y/y) following a 1.0% decline in Q1 (was -1.2%). The fourth quarter's advance was revised slightly higher to 4.4%. Output increased at a 1.9% rate in Q2 (1.8% y/y) matching Q1's upwardly revised gain of 1.9%. Hours worked grew 1.0% in Q2 following 2.9% growth in Q1.

Unit labor costs in the factory sector rose at a 0.6% rate in Q2 (2.7% y/y), after an upwardly revised 5.5% increase in Q1 (was 5.2%). While output in the manufacturing sector was unaffected by the benchmark revisions, compensation was updated. As a result, unit labor costs in 2017 were revised meaningfully higher (2.6% vs. 1.0%). Costs in 2016 were revised slightly lower (0.3% vs. 0.4%), while 2015 remained at 4.1%.

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, %) Q2'18 Q1'18 Q4'17 Q2'18 Y/Y 2017 2016 2015
Nonfarm Business Sector
Output per Hour (Productivity) 2.9 0.3 -0.3 1.3 1.1 0.1 1.3
Compensation per Hour 2.0 3.7 1.9 3.2 3.4 1.1 3.1
Unit Labor Costs -0.9 3.4 2.3 1.9 2.2 0.9 1.8
Manufacturing Sector
Output per Hour (Productivity) 0.9 -1.0 4.4 -0.2 0.7 0.3 -1.5
Compensation per Hour 1.5 4.4 1.6 2.5 3.3 0.6 2.5
Unit Labor Costs 0.6 5.5 -2.7 2.7 2.6 0.3 4.1
close
large image