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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller June 6, 2019
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.
Productivity & Costs (SAAR, %) | Q1'19 | Q4'18 | Q3'18 | Q1'19 Y/Y | 2018 | 2017 | 2016 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | 3.4 | 1.3 | 1.9 | 2.4 | 1.3 | 1.2 | 0.2 |
Compensation per Hour | 1.8 | 0.9 | 3.5 | 1.5 | 2.6 | 3.4 | 1.1 |
Unit Labor Costs | -1.9 | -0.4 | 1.6 | -0.8 | 1.2 | 2.2 | 0.9 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | 0.4 | 1.0 | 0.6 | 1.2 | 0.8 | 1.2 | -0.1 |
Compensation per Hour | 2.4 | 3.4 | 2.8 | 1.1 | 1.6 | 3.3 | 0.6 |
Unit Labor Costs | 2.0 | 2.4 | 2.1 | -0.1 | 0.8 | 2.1 | 0.7 |