Global| Feb 05 2015U.S. Worker Productivity Deteriorates Pushing Unit Labor Costs Higher
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm productivity declined at a 1.8% annual rate last quarter and was unchanged y/y. The figure followed an upwardly revised 3.7% increase in Q3. For all of last year, worker productivity rose 0.8% on average, about the same as it [...]
Nonfarm productivity declined at a 1.8% annual rate last quarter and was unchanged y/y. The figure followed an upwardly revised 3.7% increase in Q3. For all of last year, worker productivity rose 0.8% on average, about the same as it did in the prior two years. Real output increased at a 3.2% rate last quarter (3.1% y/y) while hours worked gained 5.1% (3.1% y/y). Compensation per hour increased a diminished 0.9% (1.9% y/y) but when adjusted for lower prices, it improved 2.1% (0.7% y/y). The deterioration in productivity caused unit labor costs to jump 2.7% in Q4 (1.9% y/y), reversing it Q3 gain. The Q4 productivity decline compared to expectations for a 0.8% rise in the Action Economics Forecast Survey. A 1.0% rise in unit labor costs was expected.
Manufacturing sector worker productivity rose at a lessened 1.3% rate (2.8% y/y) after a 3.2% rise. For all of last year, productivity grew 2.5% on average after a 2.0% rise in 2013. Output grew 5.7% (4.8% y/y) after a 4.8% gain, while hours worked improved 4.3% (1.9% y/y) following a 1.5% Q3 increase. Worker compensation per hour increased at a steady 1.5% rate (2.4% y/y). Adjusted for price inflation, compensation gained 2.8% (1.2% y/y). Unit labor costs improved 0.2% (-0.4% 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) | -1.8 | 3.7 | 2.9 | 0.0 | 0.8 | 0.9 | 1.0 |
| Compensation per Hour | 0.9 | 1.3 | -0.9 | 1.9 | 2.3 | 1.1 | 2.7 |
| Unit Labor Costs | 2.7 | -2.3 | -3.7 | 1.9 | 1.5 | 0.2 | 1.7 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 1.3 | 3.2 | 3.7 | 2.8 | 2.5 | 2.0 | 1.0 |
| Compensation per Hour | 1.5 | 1.4 | -1.9 | 2.4 | 2.5 | 0.6 | 1.7 |
| Unit Labor Costs | 0.2 | -1.7 | -5.4 | -0.4 | -0.0 | -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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