Global| Nov 05 2020U.S. Productivity Strength During Q3'20 Drives Unit Labor Costs Lower
by:Tom Moeller
|in:Economy in Brief
Summary
• Growth in output per hour remained firm for second straight quarter. • Unit labor costs decline, reversing Q2 rise. Nonfarm business sector productivity increased 4.9% (SAAR) during Q3'20 following a 10.6% Q2 increase, revised from [...]
• Growth in output per hour remained firm for second straight quarter.
• Unit labor costs decline, reversing Q2 rise.
Nonfarm business sector productivity increased 4.9% (SAAR) during Q3'20 following a 10.6% Q2 increase, revised from 10.1%. A 4.7% gain had been expected in the Action Economics Forecast Survey. The two increases raised y/y productivity growth to 4.1%, the swiftest since Q1 2010. Real output improved 43.5% (-3.4% y/y) as it bounced back from a 36.8% decline. Hours worked strengthened 36.8% (-7.2% y/y) after falling 42.9%. Strength in productivity lowered unit labor costs by 8.9% (+2.5% y/y), reversing an 8.5% Q2 gain, revised from 9.0%. A 9.7% decline had been expected. Hourly compensation declined 4.4% (+6.7% y/y) after rising 20.0% in Q2.
Factory sector productivity increased a record 19.0% (0.7% y/y) as it bounced back from a 14.3% Q2 decline, revised from -14.6%. Durable manufacturing productivity surged 44.2%last quarter (0.4% y/y) following a 26.9% decline while nondurable manufacturing productivity improved 1.2% (0.5% y/y). Total manufacturing unit labor costs declined 18.2% (+3.8% y/y) during the third quarter after rising 28.4% in Q2, revised from 29.1%. Compensation fell 2.6% (+4.6% y/y) following three quarters of strong growth.
The productivity and labor cost figures are available in Haver's USECON database.
| Productivity & Costs (SAAR, %) | Q3'20 | Q2'20 | Q1'20 | Q3 Y/Y | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 4.9 | 10.6 | -0.3 | 4.1 | 1.7 | 1.4 | 1.2 |
| Compensation per Hour | -4.4 | 20.0 | 9.2 | 6.7 | 3.6 | 3.4 | 3.5 |
| Unit Labor Costs | -8.9 | 8.5 | 9.6 | 2.5 | 1.9 | 1.9 | 2.2 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 19.0 | -14.3 | 1.6 | 0.7 | 0.1 | 0.3 | -0.4 |
| Compensation per Hour | -2.6 | 10.1 | 6.0 | 4.6 | 2.9 | 2.1 | 3.2 |
| Unit Labor Costs | -18.2 | 28.4 | 4.2 | 3.8 | 2.8 | 1.8 | 3.6 |
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.
More Economy in Brief
