Global| Mar 05 2015U.S. Worker Productivity Decline is Deepened thus Raising Unit Labor Costs
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm productivity slipped at a 2.2% annual rate last quarter, revised from -1.8%. The decline followed a 3.9% 3Q rise. For all of last year, worker productivity rose 0.7% on average. Real output increased at a downwardly revised [...]
Nonfarm productivity slipped at a 2.2% annual rate last quarter, revised from -1.8%. The decline followed a 3.9% 3Q rise. For all of last year, worker productivity rose 0.7% on average. Real output increased at a downwardly revised 2.6% rate last quarter (2.9% y/y) while hours worked gained 4.9% (3.0% y/y). Compensation per hour increased a 1.9% rate (2.5% y/y) but when adjusted for lower prices, it improved 3.1% (1.3% y/y). The decline in productivity caused unit labor costs to jump at an upwardly-revised 4.1% rate (2.6% y/y) after declines during the prior two quarters. The Q4 productivity decline compared to expectations for a 2.4% drop in the Action Economics Forecast Survey. A 3.3% rise in unit labor costs was expected.
Manufacturing sector worker productivity slipped at a 0.1% rate (+2.4% y/y), revised from +1.3%, after a 3.5% rise. For all of last year, productivity grew 2.2% after a 1.9% increase in 2013. Output grew 4.3% last quarter (4.5% y/y) after a 4.9% gain, while hours worked improved 4.4% (2.0% y/y) following a 1.4% Q3 increase. Worker compensation per hour increased at a 1.4% rate (2.4% y/y). Adjusted for price inflation, compensation gained 2.7% (1.2% y/y). Unit labor costs increased an upwardly-revised 1.5% (0.0% y/y) following two quarters of sharp decline.
The productivity & cost figures are available in Haver's USECON database. The expectations figure is from Action Economics and is the AS1REPNA database.
| Productivity & Costs (SAAR,%) | Q4'14 | Q3'14 | Q2'14 | Q4 Y/Y | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -2.2 | 3.9 | 2.9 | -0.1 | 0.7 | 0.9 | 1.0 |
| Compensation per Hour | 1.9 | 2.8 | -0.9 | 2.5 | 2.5 | 1.1 | 2.7 |
| Unit Labor Costs | 4.1 | -1.0 | -3.7 | 2.6 | 1.8 | 0.3 | 1.7 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | -0.1 | 3.5 | 3.7 | 2.4 | 2.2 | 1.9 | 1.0 |
| Compensation per Hour | 1.4 | 2.1 | -1.9 | 2.4 | 2.3 | 0.5 | 1.8 |
| Unit Labor Costs | 1.5 | -1.3 | -5.4 | 0.0 | 0.1 | -1.4 | 0.8 |
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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