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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Sandy Batten September 3, 2020
• Output per hour growth revised up on a smaller fall in output than initially estimated.
• The rise in unit labor costs revised down on stronger productivity and slightly weaker compensation growth.
In the second quarter of 2020, nonfarm business sector productivity increased 10.1% q/q SAAR--a 2.8%-point upward revision from the preliminary estimate of 7.3%. This was due mainly to a 1.8%-point upward revision to output. Unit labor costs increased 9.0% q/q, a smaller increase than previously reported (12.2%). This downward revision was largely due to the upward revision to productivity. Hourly compensation was revised down 0.4%-point, from a 20.4% increase to a 20.0% increase.
Manufacturing sector productivity for the second quarter of 2020 was revised up to a decrease of 14.6% q/q SAAR from a previously-reported decrease of 15.5%. Durable manufacturing productivity was also revised up, to a decline of 26.9%; nondurable manufacturing productivity was revised down slightly, to a decline of 5.1%. Total manufacturing unit labor costs increased 29.1% in the second quarter of 2020, rather than increasing 31.1% as previously reported.
The 10.1% q/q increase in nonfarm business sector labor productivity in Q2 was the largest quarterly increase since the first quarter of 1971, when output per hour increased 12.3%. The declines in both output and hours worked in the second quarter of 2020 were the largest in these series, which begins in 1947 Q1. The 20.0% increase in hourly compensation in Q2 was the largest increase in the series which also begins in 1947. Moreover, labor's share--the percentage of current-dollar output that accrues to workers in the form of compensation--increased to 59.8% in the second quarter, the highest level since 2008 Q4 (60.1%).
The productivity and labor cost figures are available in Haver's USECON database.
Productivity & Costs (SAAR, %) | Q2'20 (Rev) | Q2'20 | Q1'20 | Q2 Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | 10.1 | 7.3 | -0.3 | 2.8 | 1.7 | 1.4 | 1.2 |
Compensation per Hour | 20.0 | 20.4 | 9.2 | 7.8 | 3.6 | 3.4 | 3.5 |
Unit Labor Costs | 9.0 | 12.2 | 9.6 | 4.9 | 1.9 | 1.9 | 2.2 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | -14.6 | -15.5 | 1.7 | -3.7 | 0.1 | 0.3 | -0.4 |
Compensation per Hour | 10.3 | 10.7 | 6.0 | 4.8 | 2.9 | 2.1 | 3.2 |
Unit Labor Costs | 29.1 | 31.1 | 4.2 | 8.9 | 2.8 | 1.8 | 3.6 |