Global| Feb 01 2018U.S. Productivity Eases; Unit Labor Costs Increase
by:Tom Moeller
|in:Economy in Brief
Summary
Output per hour in the nonfarm business sector slipped at a 0.1% annual rate during Q4'17 following a 2.7% Q3 rise, revised from 3.0%. It was the first decline in productivity since Q1'16. A 1.2% rise had been expected in the Action [...]
Output per hour in the nonfarm business sector slipped at a 0.1% annual rate during Q4'17 following a 2.7% Q3 rise, revised from 3.0%. It was the first decline in productivity since Q1'16. A 1.2% rise had been expected in the Action Economics Forecast Survey. Output rose at a 3.2% rate (3.2% y/y) after a 4.0% increase during Q3, while hours-worked strengthened 3.3%% (2.1% y/y). During all of 2017, productivity increased 1.2%, up from the 0.7% average during the last five years.
Unit labor costs increased at a 2.0% rate (1.3% y/y) after a 0.1% slip, revised from -0.2%. A 0.9% rise had been expected. During the last five years, unit labor costs rose 1.2% on average. Compensation costs increased 1.8% (2.4% y/y) following an unrevised 2.7% gain. During the last five years, compensation costs have risen at a 1.9% rate on average.
In the manufacturing sector, productivity surged at a 5.7% annual rate last quarter following a 4.9% decline, revised from -4.4%. Output surged 7.3% last quarter (1.7% y/y) while hours-worked lengthened 1.5% (1.6% y/y). During all of last year, factory sector productivity rose 0.7% compared to a 0.4% five-year average.
Unit labor costs in the factory sector declined at a 3.7% rate (+1.1% y/y) following a 5.4% rise. During all of last year unit labor costs rose 0.9% compared to a 1.1% increase during the last five years. Compensation per hour grew 1.8% (2.2% y/y) following a 0.2% rise. During the last five years, compensation costs rose 1.6% on average.
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, %) | Q4'17 | Q3'17 | Q2'17 | Q4'17 Y/Y | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -0.1 | 2.7 | 1.5 | 1.1 | 1.2 | -0.1 | 1.3 |
| Compensation per Hour | 1.8 | 2.7 | 0.3 | 2.4 | 1.5 | 1.0 | 3.1 |
| Unit Labor Costs | 2.0 | -0.1 | -1.2 | 1.3 | 0.2 | 1.1 | 1.8 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 5.7 | -4.9 | 3.6 | 1.1 | 0.7 | 0.4 | 0.2 |
| Compensation per Hour | 1.8 | 0.2 | 2.3 | 2.2 | 1.6 | 0.7 | 2.5 |
| Unit Labor Costs | -3.7 | 5.4 | -1.2 | 1.1 | 0.9 | 0.3 | 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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