Global| Jun 04 2010U.S. Worker Productivity Revised Down But Cost Decline Still near Record
by:Tom Moeller
|in:Economy in Brief
Summary
Slower growth in real GDP last quarter accompanied more of a slowdown in worker productivity than reported last month. Nonfarm business sector grew 2.8% (AR) versus the initial estimate of 3.6%, down from 6.3% during 4Q. Nevertheless, [...]
Slower growth in real GDP last quarter accompanied more of a slowdown in worker productivity than reported last month. Nonfarm business sector grew 2.8% (AR) versus the initial estimate of 3.6%, down from 6.3% during 4Q. Nevertheless, the 6.1% surge in U.S. worker productivity during the last four quarters matched the strongest since early-1962. New technologies, improved work techniques and improved labor skill-sets have paid off. Productivity last quarter fell short of Consensus expectations for a 3.4% rise.p
The slowdown in 1Q productivity occurred as real output growth slowed to 4.0% (3.0% y/y) from 7.0% during 4Q. That was met by an upwardly-revised gain in hours worked of 1.1% (-3.0% y/y) from 0.7% in 4Q. Growth in compensation costs also accelerated to 1.5% (1.6% y/y) after declines in three of the prior four quarters. Four-quarter growth in compensation was nearly the slowest since 1995.
The rate of decline in 1Q unit labor costs eased to 1.3% as compensation picked up. Regardless, the four-quarter decline in costs of 4.2% was near the largest on record.
In the factory sector alone, worker productivity growth also slowed sharply to a downwardly-revised 1.5% (7.2% y/y) versus 6.5% during 4Q '09. The slowdown occurred as output rose an accelerated 7.2% (3.2% y/y) but growth in hours-worked picked up to 5.6% (-3.8% y/y) following a slight 4Q decline. Compensation fell negligibly but the y/y change of 1.8% was stronger than reported initially. It remained, however, near the weakest since 2006. The combination of the rise in productivity and the slip in compensation dropped unit labor costs by a lessened 1.5%.
The productivity & cost figures are available in Haver's USECON database.
Yesterday's comments by Fed Chairman Ben S. Bernanke on Small Business Financing can be found here.
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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