Global| Mar 04 2021U.S. Productivity's Decline Lessened in Q4'20; Reverses Q3 Increase
by:Tom Moeller
|in:Economy in Brief
Summary
• Nonfarm worker productivity remains deepest drop in forty years. • Compensation increases moderately. • Unit labor costs surge shaved. Revisions to nonfarm business sector productivity indicated a 4.2% decline during Q4'20 (SAAR, [...]
• Nonfarm worker productivity remains deepest drop in forty years.
• Compensation increases moderately.
• Unit labor costs surge shaved.
Revisions to nonfarm business sector productivity indicated a 4.2% decline during Q4'20 (SAAR, +2.4% y/y) versus the 4.8% weakening reported initially. The decline followed a 4.2% rise during Q3, revised from 5.1%. That followed an 11.1% Q2 increase, revised from 10.6%. A 4.6% decline had been expected in the Action Economics Forecast Survey. The latest remained the largest quarterly decline since Q2 1981. Annual productivity growth of 2.5% was the strongest for any year since 2010. Real output improved a little-revised 5.5% last quarter (-2.6% y/y) following an unchanged 44.1% Q3 surge. Hours-worked strengthened 10.1% last quarter (-4.9% y/y), revised from 10.7%, after increasing 38.3% in Q3. The decline in productivity raised unit labor costs by 6.0% (4.2% y/), revised from 6.8%. It offset a 9.6% Q3 decline, revised from -7.0%. A 6.5% rise had been expected for Q4. Hourly compensation rose a little-revised 1.5% (6.7% y/y) after falling 5.8%, revised from -2.2%.
Factory sector productivity increased 5.0% during Q4 (2.8% y/y), revised from 3.0%, following a record 20.7% Q3 gain, revised from 20.2%. Durable manufacturing productivity rose 6.4% (3.3% y/y) after surging 48.2% while nondurable manufacturing productivity rose 2.8% (1.6% y/y). Total manufacturing unit labor costs declined 8.8% (-0.1% y/y), revised from -2.4%, following a 27.4% drop, revised from -12.4%, during the third quarter. Compensation fell 4.2% last quarter (+2.7% y/y), revised from +0.5%, after a 12.4% Q3 shortfall, revised from +5.3%.
The productivity and labor cost figures are available in Haver's USECON database.
| Productivity & Costs (SAAR, %) | Q4'20 | Q3'20 | Q2'20 | Q4'20 Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -4.2 | 4.2 | 11.1 | 2.4 | 2.5 | 1.8 | 1.4 |
| Compensation per Hour | 1.5 | -5.8 | 24.3 | 6.7 | 6.4 | 3.7 | 3.3 |
| Unit Labor Costs | 6.0 | -9.6 | 11.9 | 4.2 | 3.8 | 1.9 | 1.9 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 5.0 | 20.7 | -13.3 | 2.8 | 0.3 | 0.3 | 0.4 |
| Compensation per Hour | -4.2 | -12.4 | 25.0 | 2.7 | 4.8 | 3.1 | 2.1 |
| Unit Labor Costs | -8.8 | -27.4 | 44.3 | -0.1 | 4.4 | 2.8 | 1.7 |
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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