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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller December 10, 2019
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.
Productivity & Costs (SAAR, %) | Q3'19 | Q2'19 | Q1'19 | Q3'19 Y/Y | 2018 | 2017 | 2016 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | -0.2 | 2.5 | 3.5 | 1.5 | 1.3 | 1.3 | 0.3 |
Compensation per Hour | 2.3 | 2.5 | 9.4 | 3.7 | 3.1 | 3.5 | 1.1 |
Unit Labor Costs | 2.5 | 0.1 | 5.7 | 2.2 | 1.8 | 2.1 | 0.8 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | 0.1 | -2.5 | 1.2 | -0.1 | 0.7 | 1.2 | -0.1 |
Compensation per Hour | 3.1 | 2.6 | 8.2 | 4.3 | 2.2 | 3.5 | 0.5 |
Unit Labor Costs | 3.0 | 5.2 | 6.9 | 4.4 | 1.4 | 2.3 | 0.6 |