Global| Jun 06 2019U.S. Productivity Growth Revised Down; Labor Costs Nevertheless Decline
by:Tom Moeller
|in:Economy in Brief
Summary
Output per hour in the nonfarm business sector grew 3.4% (SAAR) during Q1'19, revised from 3.6% reported last month. The increase followed an unrevised 1.3% gain in Q4'18. It remained the strongest increase since Q3'14. During the [...]
Output per hour in the nonfarm business sector grew 3.4% (SAAR) during Q1'19, revised from 3.6% reported last month. The increase followed an unrevised 1.3% gain in Q4'18. It remained the strongest increase since Q3'14. During the last four quarters, productivity growth picked up to 2.4%, the quickest rate of increase since Q3'10. A 3.5% Q1 rise had been expected in the Action Economics Forecast Survey. The latest increase reflected a 3.9% rise (3.9% y/y) in real output and a 0.5% gain (1.5% y/y) in hours worked.
The strength in productivity drove unit labor costs 1.9% lower (-0.8% y/y), revised from -0.9%. That followed a 0.4% easing during Q4'18, revised from a 2.5% rise. It was the weakest four-quarter performance since a y/y decline of 0.7% in Q4'13. A 0.8% decline had been expected for last quarter. Compensation growth accelerated to 1.8% (1.5% y/y), revised from 2.6%. The Q4'18 rise was revised down sharply to 0.9% from 3.9%. Slower growth lessened the four-quarter gain to 1.5%, down from a peak of 4.0% y/y in Q3'17.
In the manufacturing sector, productivity increased 0.4% last quarter (1.2% y/y), revised from 1.7%. It followed a 1.0% rise during Q4'18, revised from 1.1%. That reflected a 2.0% decline (+1.6% y/y) in real output accompanied by a 2.4% fall (+0.7% y/y) in hours worked.
Unit labor costs in the factory sector increased 2.0% in Q1'19, revised from 0.8%. It followed a 2.4% Q4 rise, revised from 3.2%. The y/y decline of 0.1% compared to a 4.9% peak in Q3'15. Compensation per hour increased an unrevised 2.4% in Q4'19 following a 3.4% gain during Q4'18, revised from 4.3%. Four-quarter growth in compensation of 1.1% was below the 3.8% high during Q3'17.
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, %) | Q1'19 | Q4'18 | Q3'18 | Q1'19 Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 3.4 | 1.3 | 1.9 | 2.4 | 1.3 | 1.2 | 0.2 |
| Compensation per Hour | 1.8 | 0.9 | 3.5 | 1.5 | 2.6 | 3.4 | 1.1 |
| Unit Labor Costs | -1.9 | -0.4 | 1.6 | -0.8 | 1.2 | 2.2 | 0.9 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 0.4 | 1.0 | 0.6 | 1.2 | 0.8 | 1.2 | -0.1 |
| Compensation per Hour | 2.4 | 3.4 | 2.8 | 1.1 | 1.6 | 3.3 | 0.6 |
| Unit Labor Costs | 2.0 | 2.4 | 2.1 | -0.1 | 0.8 | 2.1 | 0.7 |
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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