Global| Sep 02 2004U.S. Productivity & Unit Labor Cost Growth Revised Down, Corporate Costs Up
by:Tom Moeller
|in:Economy in Brief
Summary
Non-farm labor productivity growth last quarter was revised lower to 2.5% from 2.9% estimated last month. Consensus expectations for 2.7% growth. The downward revision reflected slower output growth, now set at 3.5% (5.8% y/y) versus [...]
Non-farm labor productivity growth last quarter was revised lower to 2.5% from 2.9% estimated last month. Consensus expectations for 2.7% growth.
The downward revision reflected slower output growth, now set at 3.5% (5.8% y/y) versus 3.8% estimated earlier. Growth in hours worked by all persons (employment times hours) was revised up slightly to 1.0% 91.2% y/y) from 0.8%.
Despite the revision to productivity, growth in unit labor costs was revised down slightly to a still-elevated 1.8% from 1.9%. Compensation growth was lowered to 4.3% from 4.9%.
In the nonfinancial corporate sector, productivity grew just 1.4% (3.9% y/y) following a slim 0.2% gain in 1Q and 6.6% growth in 2003. Compensation grew 4.0% (4.1% y/y). Slower productivity growth raised unit labor costs by 2.6% (0.2% y/y) following a 2.1% gain in 1Q and several quarters of decline. During the last ten years there has been an inverse 87% correlation between the y/y growth unit labor costs and the growth in nonfinancial corporate profits.
Productivity in the manufacturing sector was revised lower to 6.9% (5.8% y/y) from 7.5%. Unit labor costs in the factory sector were, however, revised to a 3.5% (-2.5% y/y) decline versus the 2.2% reported initially.
| Non-farm Business Sector (SAAR) | 2Q '04 (Revised) | 2Q '04 (Prelim) | 1Q '04 (Final) | Y/Y | 2003 | 2002 | 2001 |
|---|---|---|---|---|---|---|---|
| Output per Hour | 2.5% | 2.9% | 3.7% | 4.6% | 4.5% | 4.3% | 2.6% |
| Compensation | 4.3% | 4.9% | 4.0% | 4.2% | 4.0% | 3.2% | 4.1% |
| Unit Labor Costs | 1.8% | 1.9% | 0.3% | -0.3% | -0.3% | -1.1% | 1.5% |
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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