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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 8, 2020
• Growth in output per hour remains firm for second straight quarter.
• Unit labor cost decline is lessened.
Nonfarm business sector productivity increased 4.6% (SAAR) during Q3'20, revised from 4.9%, during Q3'20 following a 10.6% Q2 increase. A 4.9% gain had been expected in the Action Economics Forecast Survey. The two increases raised y/y productivity growth to 4.0%, the swiftest since Q1 2010. Real output improved an upwardly revised 56.2% (-5.8% y/y) as it bounced back from a 46.5% decline. Hours-worked strengthened 30.3% (-6.7% y/y) after falling 37.8%, which was lessened from 42.9%. Strength in productivity lowered unit labor costs by 6.6% (+2.5% y/y) which was revised from -8.9%. An 8.9% decline had been expected. Hourly compensation declined 2.3% (+8.2% y/y), revised from -4.4%, after strengthening 24.3% in Q2, revised from 20.0%.
Factory sector productivity increased a record 19.9% (1.0% y/y), revised from 19.0%, as it bounced back from a 14.0% Q2 decline, revised from -14.3%. Durable manufacturing productivity surged 47.0% last quarter (0.8% y/y) following a 26.9% decline while nondurable manufacturing productivity improved 0.7% (0.5% y/y). Total manufacturing unit labor costs declined 12.1% (+8.9% y/y), revised from -18.2% during the third quarter after rising 44.8% in Q2, revised from 28.4%. Compensation increased 5.3% (10.0% 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) | 4.6 | 10.6 | -0.3 | 4.0 | 1.7 | 1.4 | 1.2 |
Compensation per Hour | -2.3 | 24.3 | 9.2 | 8.2 | 3.6 | 3.4 | 3.5 |
Unit Labor Costs | -6.6 | 12.3 | 9.6 | 2.5 | 1.9 | 1.9 | 2.2 |
Manufacturing Sector | |||||||
Output per Hour (Productivity) | 19.9 | -14.0 | 1.6 | 1.0 | 0.1 | 0.3 | -0.4 |
Compensation per Hour | 5.3 | 24.5 | 6.0 | 10.0 | 2.9 | 2.1 | 3.2 |
Unit Labor Costs | -12.1 | 44.8 | 4.3 | 8.9 | 2.8 | 1.8 | 3.6 |