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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller November 5, 2020
• 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.
Productivity & Costs (SAAR, %) | Q3'20 | Q2'20 | Q1'20 | Q3 Y/Y | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
Nonfarm Business Sector | |||||||
Output per Hour (Productivity) | 4.9 | 10.6 | -0.3 | 4.1 | 1.7 | 1.4 | 1.2 |
Compensation per Hour | -4.4 | 20.0 | 9.2 | 6.7 | 3.6 | 3.4 | 3.5 |
Unit Labor Costs | -8.9 | 8.5 | 9.6 | 2.5 | 1.9 | 1.9 | 2.2 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | 19.0 | -14.3 | 1.6 | 0.7 | 0.1 | 0.3 | -0.4 |
Compensation per Hour | -2.6 | 10.1 | 6.0 | 4.6 | 2.9 | 2.1 | 3.2 |
Unit Labor Costs | -18.2 | 28.4 | 4.2 | 3.8 | 2.8 | 1.8 | 3.6 |