Global| May 07 2014U.S. Worker Productivity Declines; Output is Depressed
by:Tom Moeller
|in:Economy in Brief
Summary
Worker productivity declined last quarter at the same time that adverse winter weather held down economic activity. Nonfarm business sector productivity fell at a 1.7% annual rate (+1.4% y/y) during Q1'14 following 2.3% growth during [...]
Worker productivity declined last quarter at the same time that adverse winter weather held down economic activity. Nonfarm business sector productivity fell at a 1.7% annual rate (+1.4% y/y) during Q1'14 following 2.3% growth during Q4, revised from last month's estimate of a 1.8% rise. Real output growth of 0.3% (3.2% y/y) was accompanied by a 2.0% increase (1.7% y/y) in hours worked. Compensation increased 2.4% (2.3% y/y) but when adjusted for inflation it increased 0.5% (0.9% y/y). This combination of firm compensation and reduced productivity caused unit labor costs to surge 4.2% (0.9% y/y), the swiftest growth since Q4'12. The rise followed two quarters of decline. The drop in Q1 productivity disappointed expectations for a 0.3% rise in the Action Economics Forecast Survey. A 2.3% rise in unit labor costs was expected.
In the aggregate, Q1's productivity decline occurred outside of manufacturing. In the factory sector, worker productivity increased at a 3.3% rate (2.2% y/y), the quickest rise since Q2'13. Output improved 1.8% (2.4% y/y) after a 4.7% gain, while hours worked declined 1.4% (+0.2% y/y) following a 3.4% jump. Worker compensation increased at a 3.3% rate (2.0% y/y), the strongest rise since Q4'12. Adjusted for price inflation, compensation moved 1.4% higher (0.6% y/y) after little change during Q4. Unit labor costs edged up 0.1% (-0.2% y/y) and have been roughly unchanged for over a year.
The Economic Outlook is the title of today's testimony by Fed Chair Janet L. Yellen and it is available here.
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,%) | Q1'14 | Q4'13 | Q3'13 | Q1 Y/Y | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -1.7 | 2.3 | 3.5 | 1.4 | 0.5 | 1.5 | 0.5 |
| Compensation per Hour | 2.4 | 1.9 | 1.3 | 2.3 | 1.6 | 2.6 | 2.5 |
| Unit Labor Costs | 4.2 | -0.4 | -2.1 | 0.9 | 1.1 | 1.2 | 2.0 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 3.3 | 1.3 | 0.5 | 2.2 | 1.8 | 1.8 | 1.0 |
| Compensation per Hour | 3.3 | 1.3 | 0.5 | 2.0 | 0.9 | 1.9 | 1.3 |
| Unit Labor Costs | 0.1 | 0.1 | -0.1 | -0.2 | -0.9 | 0.1 | 0.4 |
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.
