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Economy in Brief

U.S. Productivity Growth Is Little Changed
by Tom Moeller  March 5, 2020

Productivity in the nonfarm business sector during Q4'19 increased 1.2% (SAAR), close to expectations, after a little-changed 0.3% Q3 decline. The Q4 gain was revised from 1.4%. Earlier figures also were revised. The latest increase raised productivity by 1.8% during the last four quarters. Output rose 2.4% (2.6% y/y) while hours-worked increased 1.2% (0.8% y/y).

Compensation increased 2.1% (3.5% y/y), revised from 2.8%. It followed a 0.1% easing during Q3, revised from +2.3%.. Adjusted for price changes, compensation rose 0.4% (1.1% y/y). Unit labor costs increased 0.9% during Q4, revised from 1.4%. Third quarter growth of 0.2% was revised from 2.5%. A 1.4% increase was expected. The gain left the y/y rise steady at 1.7%.

In the manufacturing sector, productivity declined at a 0.8% annual rate, off for the third straight quarter. It was revised from -1.2%. The decline lowered factory sector productivity by 0.6% during the last four quarters, the weakest performance since Q3'17. Output eased 0.4% (-1.1% y/y) while hours worked edged 0.4% higher (-0.5% y/y.

Compensation in the factory sector strengthened 2.8%, revised from 4.6%. During the last four quarters, compensation rose 3.1%. Adjusted for price inflation, compensation edged 0.4% higher q/q and a lessened 1.1% y/y. The compensation increase, combined with the decline in productivity, raised unit labor costs in the factory sector by 3.6% (3.7% y/y).

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

Productivity & Costs (SAAR, %) Q4'19 Q3'19 Q2'19 Q4'19 Y/Y 2019 2018 2017
Nonfarm Business Sector
Output per Hour (Productivity) 1.2 -0.3 2.6 1.8 1.9 1.4 1.3
Compensation per Hour 2.1 -0.1 2.7 3.5 3.6 3.2 3.5
Unit Labor Costs 0.9 0.2 0.1 1.7 2.0 1.8 2.1
Manufacturing Sector
Output per Hour (Productivity) -0.8 -0.5 -2.3 -0.6 0.1 0.4 -0.4
Compensation per Hour 2.8 -1.2 2.8 3.1 3.2 2.2 3.6
Unit Labor Costs 3.6 -0.7 5.2 3.7 3.1 1.8 4.0
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