• Growth in output per hour remained firm for second straight quarter.

• Unit labor costs decline, reversing Q2 rise.

Nonfarm business sector productivity increased 4.9% (SAAR) during Q3'20 following a 10.6% Q2 increase, revised from 10.1%. A 4.7% gain had been expected in the Action Economics Forecast Survey. The two increases raised y/y productivity growth to 4.1%, the swiftest since Q1 2010. Real output improved 43.5% (-3.4% y/y) as it bounced back from a 36.8% decline. Hours worked strengthened 36.8% (-7.2% y/y) after falling 42.9%. Strength in productivity lowered unit labor costs by 8.9% (+2.5% y/y), reversing an 8.5% Q2 gain, revised from 9.0%. A 9.7% decline had been expected. Hourly compensation declined 4.4% (+6.7% y/y) after rising 20.0% in Q2.

Factory sector productivity increased a record 19.0% (0.7% y/y) as it bounced back from a 14.3% Q2 decline, revised from -14.6%. Durable manufacturing productivity surged 44.2%last quarter (0.4% y/y) following a 26.9% decline while nondurable manufacturing productivity improved 1.2% (0.5% y/y). Total manufacturing unit labor costs declined 18.2% (+3.8% y/y) during the third quarter after rising 28.4% in Q2, revised from 29.1%. Compensation fell 2.6% (+4.6% y/y) following three quarters of strong growth.

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