Global| Mar 05 2009U.S. 4Q Worker Productivity Revised Down Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
During last year's fourth quarter, labor productivity in the nonfarm business sector fell 0.4% (AR), revised down sharply from last month's indication of a 3.2% increase. The downward revision to 4Q08, however, was offset by upward [...]
During last year's fourth quarter, labor productivity in the nonfarm business sector fell 0.4% (AR), revised down sharply from last month's indication of a 3.2% increase. The downward revision to 4Q08, however, was offset by upward revisions to prior quarters and for the year, growth was left unchanged at 2.8%, double the gain during all of 2007. The 4Q decline fell short of Consensus expectations for a revision to a 1.5% increase.
Growth in 4Q compensation totaled 5.3% which was upwardly revised from the 5.0% gain indicated last month. That increase bought annual growth in compensation to 3.7% from 4.1% in 2007. Annually, growth in compensation has been quite stable at or slightly below 4% since 2001.
Growth in unit labor costs accelerated sharply last quarter as a result of the productivity revision. It was raised to 5.7% from the 1.8% gain indicated initially. However, though that increase raised growth for the whole year to 0.9% from the 0.5% increase indicated last month, it was still near the weakest in five years.
The downward revision to productivity growth stemmed from a deepened decline in output, now pegged at -8.7%. For the year, however, growth in output was left about unchanged at 0.8% which was the weakest since the recession of 2001. Hours worked fell by an unrevised 8.4% rate last quarter and 1.9% for the full year.
In the factory sector, productivity declined at a little revised 4.0% rate last quarter which was deeper than the rate of decline during the prior two quarters. For the year as a whole, however, manufacturing productivity did rise 1.5%. A decline of 2.5% is in the offing for 2009 due to the recession. Unit labor cost growth in the factory sector surged at a little revised 14.7% rate last quarter as a result of the sharp decline in productivity and it rose at a quickened 2.6% rate for the year. Compensation growth about doubled last quarter to 10.1% and it rose a quickened 4.1% for the whole year.
The productivity & cost figures are available in Haver's USECON database.
Discussion of “Oil and the Macroeconomy: Lessons for Monetary Policy" by San Francisco Fed President Janet L. Yellen is available here.
| Nonfarm Business Sector (SAAR, %) | 4Q '08 | 3Q '08 | Y/Y | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| Output per Hour | -0.4 | 2.2 | 2.2 | 2.8 | 1.4 | 0.9 |
| Compensation per Hour | 5.3 | 5.7 | 4.1 | 3.7 | 4.1 | 3.8 |
| Unit Labor Costs | 5.7 | 3.5 | 1.8 | 0.9 | 2.7 | 2.8 |
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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