Productivity growth in the nonfarm business sector last quarter was revised to -0.2% at an annual rate (+1.5%) y/y from -0.3%, following a 2.5% Q2 rise. It was the first decline in productivity since Q4'15. Expectations had been for a 0.1% easing in the Action Economics Forecast Survey. The decline in productivity reflected a 2.3% rise (2.3% y/y) in real output that was accompanied by a 2.5% gain (0.9% y/y) in hours-worked.

Compensation growth was revised significantly to 2.3% (3.7% y/y) from 3.3% reported last month. Growth during Q2 also was sharply reduced to 2.5% from 4.9%. The weakness in productivity combined with less compensation growth lessened the rise in unit labor costs to 2.5% from 3.6%. During the second quarter, the revision reduced the gain to 0.1% from 2.4%. A 3.4% increase had been expected for the third quarter.

In the manufacturing sector, some revisions were notable. Productivity rose 0.1% (-0.1% y/y), revised from -0.1%. That followed a 2.5% Q2 fall which was revised from -2.4%. The decline reflected a 1.3% rise (-0.5% y/y) in real output that was accompanied by a 1.2% gain (-0.4% y/y) in hours-worked. Unit labor costs in the factory sector strengthened 3.0% (4.4% y/y). That was revised from 3.6% (4.3% y/y) after a 5.2% jump in Q2, revised from 6.9%. Compensation in the factory sector rose 3.1% (4.3% y/y), revised from 3.5%. The Q2 increase of 2.6% was revised from 4.4%.

The productivity & cost figures are available in Haver's USECON database.