Global| Aug 08 2008U.S. 2Q Productivity Growth Weakened, Costs Still Under Control
by:Tom Moeller
|in:Economy in Brief
Summary
Labor productivity in the nonfarm business sector rose 2.2% at an annual rate last quarter. The increase fell short of Consensus expectations for a 2.5% rise while growth during 1Q and for all of last year was revised down. Output [...]
Labor productivity in the nonfarm business sector rose 2.2% at an annual rate last quarter. The increase fell short of Consensus expectations for a 2.5% rise while growth during 1Q and for all of last year was revised down.
Output growth last quarter did nearly double from 1Q to a still-modest 1.7% but the y/y rate of increase fell by roughly one percentage point to 1.8%. That was accompanied by a drop in total hours worked at a 0.5% annual rate (-1.0% y/y) which was one-third the 1Q rate of decline.
Growth in compensation per hour did slow to 3.6% from gains during the prior two quarters that were revised up. However, the y/y gain picked up moderately to 4.3% and that exceeded the accelerated rate of increase for all of last year.
Unit labor cost growth fell to 1.3% after the 2.5% gain during 1Q. Year-to-year growth in costs did pick up modestly, however, to 1.5% but that remained down compared to recent years.
In the factory sector, productivity fell at a 1.4% rate during 2Q (2.6% y/y) and the decline lowered year-to-year gain to its weakest since 1Q of last year. The deceleration occurred as y/y output growth slowed to roughly zero. As a result, unit labor costs rose at a 6.1% rate (1.9% y/y) and that q/q increase was the fastest since late 2006.
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| Nonfarm Business Sector (SAAR, %) | 2Q '08 | 1Q '08 | 4Q '07 | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|---|
| Output per Hour | 2.2 | 2.6 | 0.8 | 2.8 | 1.4 | 1.0 | 1.7 |
| Compensation per Hour | 3.6 | 5.2 | 5.4 | 4.3 | 4.1 | 3.8 | 4.0 |
| Unit Labor Costs | 1.3 | 2.5 | 4.5 | 1.5 | 2.7 | 2.8 | 2.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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