Output per hour in the nonfarm business sector grew 3.4% (SAAR) during Q1'19, revised from 3.6% reported last month. The increase followed an unrevised 1.3% gain in Q4'18. It remained the strongest increase since Q3'14. During the last four quarters, productivity growth picked up to 2.4%, the quickest rate of increase since Q3'10. A 3.5% Q1 rise had been expected in the Action Economics Forecast Survey. The latest increase reflected a 3.9% rise (3.9% y/y) in real output and a 0.5% gain (1.5% y/y) in hours worked.

The strength in productivity drove unit labor costs 1.9% lower (-0.8% y/y), revised from -0.9%. That followed a 0.4% easing during Q4'18, revised from a 2.5% rise. It was the weakest four-quarter performance since a y/y decline of 0.7% in Q4'13. A 0.8% decline had been expected for last quarter. Compensation growth accelerated to 1.8% (1.5% y/y), revised from 2.6%. The Q4'18 rise was revised down sharply to 0.9% from 3.9%. Slower growth lessened the four-quarter gain to 1.5%, down from a peak of 4.0% y/y in Q3'17.

In the manufacturing sector, productivity increased 0.4% last quarter (1.2% y/y), revised from 1.7%. It followed a 1.0% rise during Q4'18, revised from 1.1%. That reflected a 2.0% decline (+1.6% y/y) in real output accompanied by a 2.4% fall (+0.7% y/y) in hours worked.

Unit labor costs in the factory sector increased 2.0% in Q1'19, revised from 0.8%. It followed a 2.4% Q4 rise, revised from 3.2%. The y/y decline of 0.1% compared to a 4.9% peak in Q3'15. Compensation per hour increased an unrevised 2.4% in Q4'19 following a 3.4% gain during Q4'18, revised from 4.3%. Four-quarter growth in compensation of 1.1% was below the 3.8% high during Q3'17.

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.