Global| Dec 10 2019U.S. Productivity Weakness Revised Little; Unit Labor Costs Still Firm
by:Tom Moeller
|in:Economy in Brief
Summary
Productivity growth in the nonfarm business sector last quarter was revised to -0.2% at an annual rate (+1.5%) y/y from -0.3%, following a 2.5% Q2 rise. It was the first decline in productivity since Q4'15. Expectations had been for a [...]
Productivity growth in the nonfarm business sector last quarter was revised to -0.2% at an annual rate (+1.5%) y/y from -0.3%, following a 2.5% Q2 rise. It was the first decline in productivity since Q4'15. Expectations had been for a 0.1% easing in the Action Economics Forecast Survey. The decline in productivity reflected a 2.3% rise (2.3% y/y) in real output that was accompanied by a 2.5% gain (0.9% y/y) in hours-worked.
Compensation growth was revised significantly to 2.3% (3.7% y/y) from 3.3% reported last month. Growth during Q2 also was sharply reduced to 2.5% from 4.9%. The weakness in productivity combined with less compensation growth lessened the rise in unit labor costs to 2.5% from 3.6%. During the second quarter, the revision reduced the gain to 0.1% from 2.4%. A 3.4% increase had been expected for the third quarter.
In the manufacturing sector, some revisions were notable. Productivity rose 0.1% (-0.1% y/y), revised from -0.1%. That followed a 2.5% Q2 fall which was revised from -2.4%. The decline reflected a 1.3% rise (-0.5% y/y) in real output that was accompanied by a 1.2% gain (-0.4% y/y) in hours-worked. Unit labor costs in the factory sector strengthened 3.0% (4.4% y/y). That was revised from 3.6% (4.3% y/y) after a 5.2% jump in Q2, revised from 6.9%. Compensation in the factory sector rose 3.1% (4.3% y/y), revised from 3.5%. The Q2 increase of 2.6% was revised from 4.4%.
The productivity & cost figures are available in Haver's USECON database.
| Productivity & Costs (SAAR, %) | Q3'19 | Q2'19 | Q1'19 | Q3'19 Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -0.2 | 2.5 | 3.5 | 1.5 | 1.3 | 1.3 | 0.3 |
| Compensation per Hour | 2.3 | 2.5 | 9.4 | 3.7 | 3.1 | 3.5 | 1.1 |
| Unit Labor Costs | 2.5 | 0.1 | 5.7 | 2.2 | 1.8 | 2.1 | 0.8 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 0.1 | -2.5 | 1.2 | -0.1 | 0.7 | 1.2 | -0.1 |
| Compensation per Hour | 3.1 | 2.6 | 8.2 | 4.3 | 2.2 | 3.5 | 0.5 |
| Unit Labor Costs | 3.0 | 5.2 | 6.9 | 4.4 | 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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