Global| Nov 06 2019U.S. Productivity Slips; Unit Labor Costs Remain Firm
by:Tom Moeller
|in:Economy in Brief
Summary
Productivity in the nonfarm business sector eased 0.3% at an annual rate (+1.4% y/y) during Q3'19 following a 2.5% Q2 rise, revised from 2.3%. It was the first decline in productivity since Q4'15. Expectations had been for a 0.9% rise [...]
Productivity in the nonfarm business sector eased 0.3% at an annual rate (+1.4% y/y) during Q3'19 following a 2.5% Q2 rise, revised from 2.3%. It was the first decline in productivity since Q4'15. Expectations had been for a 0.9% rise in the Action Economics Forecast Survey. The decline reflected a 2.1% rise (2.3% y/y) in real output that was accompanied by a lesser 2.4% gain (0.9% y/y) in hours-worked.
The weakness in productivity raised unit labor costs by a 3.6% rate after a 2.4% rise, revised from 2.6%. A 2.2% increase had been expected. The 3.1% y/y gain was accelerated from 1.0% y/y in Q4'18, and the quickest since Q1'14. Compensation per hour rose 3.3% last quarter (4.5% y/y) after a 4.9% Q2 rise.
In the manufacturing sector, productivity eased 0.1% both q/q and y/y. That followed a 2.4% Q2 fall which was revised from -2.2%. The decline reflected a 1.1% rise (-0.5% y/y) in real output that was accompanied by a 1.3% gain (-0.4% y/y) in hours-worked. Unit labor costs in the factory sector strengthened 3.6% (4.9% y/y) after a 6.9% jump. Compensation in the factory sector rose 3.5% (4.8% y/y) following a 4.4% increase.
The productivity & cost figures are available in Haver's USECON database.
Is Rising Concentration Hampering Productivity Growth? from the Federal Reserve Bank of San Francisco can be found here.
| Productivity & Costs (SAAR, %) | Q3'19 | Q2'19 | Q1'19 | Q3'19 Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -0.3 | 2.5 | 3.5 | 1.4 | 1.3 | 1.3 | 0.3 |
| Compensation per Hour | 3.3 | 4.9 | 9.4 | 4.5 | 3.1 | 3.5 | 1.1 |
| Unit Labor Costs | 3.6 | 2.4 | 5.7 | 3.1 | 1.8 | 2.1 | 0.8 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | -0.1 | -2.4 | 1.2 | -0.1 | 0.7 | 1.2 | -0.1 |
| Compensation per Hour | 3.5 | 4.4 | 8.2 | 4.8 | 2.2 | 3.5 | 0.5 |
| Unit Labor Costs | 3.6 | 6.9 | 6.9 | 4.9 | 1.4 | 2.3 | 0.6 |
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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