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Economy in Brief

U.S. Productivity Growth Slows, Lifting Unit Labor Costs
by Tom Moeller  November 1, 2018

Output per hour in the nonfarm business sector grew 2.2% (SAAR, 1.3% y/y) in Q3'18 following a 3.0% gain in Q2. A 2.0% rise had been expected in the Action Economics Forecast Survey. Nonfarm business output rose 4.1% (3.7% y/y) following a 5.0% increase while hours-worked improved 1.8% (2.4% y/y) after a 2.0% gain.

Unit labor costs rose 1.2% (1.5% y/y) last quarter and reversed a 1.0% Q2 decline. A 1.1% increase had been expected. Compensation grew 3.5% (2.8% y/y) following a 1.9% increase.

In the manufacturing sector, productivity edged 0.5% higher (1.3% y/y) after a 1.2% rise. Output increased 3.4% both q/q and y/y after a 2.6% gain. Hours-worked grew 2.9% (2.1% y/y) following a 1.4% rise.

Unit labor costs in the factory sector rose 0.9% both q/q and y/y after a 0.1% uptick. Compensation grew 1.5% in Q3 (2.2% y/y) after a 1.3% improvement.

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, %) Q3'18 Q2'18 Q1'18 Q3'18 Y/Y 2017 2016 2015
Nonfarm Business Sector
Output per Hour (Productivity) 2.2 3.0 0.3 1.3 1.1 0.1 1.3
Compensation per Hour 3.5 1.9 3.8 2.8 3.4 1.1 3.1
Unit Labor Costs 1.2 -1.0 3.4 1.5 2.2 0.9 1.8
Manufacturing Sector
Output per Hour (Productivity) 0.5 1.2 -0.8 1.3 0.7 0.3 -1.5
Compensation per Hour 1.5 1.3 4.6 2.2 3.3 0.6 2.5
Unit Labor Costs 0.9 0.1 5.5 0.9 2.6 0.3 4.1
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