Output per hour in the nonfarm business sector grew 1.9% (SAAR) in Q4'18, an increase fairly stable with the Q3 gain. During the last four quarters, productivity growth picked up to 1.8%, the quickest rate of increase in three years. A 1.6% Q4 rise had been expected in the Action Economics Forecast Survey. The latest increase reflected a 3.1% rise (3.7% y/y) in real output and a 1.2% increase (1.9% y/y) in hours worked.

The gain in productivity was accompanied by a 2.0% increase in unit labor costs. It followed a 1.6% rise in Q3. The 1.0% gain for the full year compared to a 2.2% increase during 2017. A 1.7% Q4 rise had been expected. Compensation growth remained solid at 3.9% (2.8% y/y) after a 3.5% rise.

In the manufacturing sector, productivity increased 2.0% (1.0% y/y), the quickest rate of growth in four quarters. It reflected a 2.7% rise (2.9% y/y) in real output accompanied by a 0.8% gain (1.9% y/y) in hours worked.

Unit labor costs in the factory sector increased 2.2% (0.8% y/y), following a 1.8% gain. The y/y rise compared to a 5.0% peak in early 2015. Compensation per hour strengthened 4.3% (1.8% y/y), the strongest increase since Q1'18.

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.