Global| Feb 04 2016U.S. Productivity Decline Lifts Unit Labor Costs
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm output per hour declined 3.0% at an annual rate (+0.3% y/y) during Q4'15 following a 2.1% Q3 increase. A 1.8% decline had been expected in the Action Economics Forecast Survey. It was the third decline in the last five [...]
Nonfarm output per hour declined 3.0% at an annual rate (+0.3% y/y) during Q4'15 following a 2.1% Q3 increase. A 1.8% decline had been expected in the Action Economics Forecast Survey. It was the third decline in the last five quarters and left growth during all of last year at 0.6%, roughly the same as in 2014. The decline occurred as output nudged 0.1% higher (1.9% y/y) while hours worked gained 3.3% (1.5% y/y). Compensation grew 1.3% and 3.0% for the full year, up from 1.1% in 2013. Weakness in productivity and strength in compensation combined to raise unit labor costs 4.5% (2.8% y/y), the quickest growth in a year. During all of 2015, unit labor cost growth of 2.4% was the strongest since 2007.
In the manufacturing sector, the story was much the same. Productivity eased 0.4% last quarter (+1.5% y/y). For the full year, productivity growth was steady at 1.3%. Output edged 0.5% higher in Q4 (1.1% y/y) and hours worked grew 0.9% (-0.4% y/y). Compensation growth weakened, however, to 3.2% versus much stronger growth in the earlier two quarters. The combination of weaker productivity and moderate compensation growth raised unit labor costs by 3.6%, the fastest rise in a year. For the full year, growth in unit labor costs was steady at 1.3%.
The productivity & cost figures are available in Haver's USECON database. The expectations figures are from the Action Economics Forecast Survey and are found in the AS1REPNA database.
| Productivity & Costs (SAAR, %) | Q4'15 | Q3'15 | Q2'15 | Q4 Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -3.0 | 2.1 | 3.5 | 0.3 | 0.6 | 0.7 | 0.0 |
| Compensation per Hour | 1.3 | 4.1 | 5.6 | 3.1 | 3.0 | 2.7 | 1.1 |
| Unit Labor Costs | 4.5 | 1.9 | 2.0 | 2.8 | 2.4 | 2.0 | 1.1 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | -0.4 | 5.0 | 2.2 | 1.5 | 1.3 | 1.3 | 0.7 |
| Compensation per Hour | 3.2 | 7.4 | 5.5 | 3.4 | 2.6 | 2.7 | 0.2 |
| Unit Labor Costs | 3.6 | 2.3 | 3.2 | 1.9 | 1.3 | 1.4 | -0.5 |
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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