Haver Analytics
Haver Analytics
| Jun 06 2024

Q1 U.S. Productivity Growth Revised Slightly Lower

  • Output per hour rose 0.2% in Q1 versus first reported 0.3%.
  • Output growth and hours worked growth each revised lower.
  • Gain in unit labor costs revised to 4.0% from 4.7%.

The initially reported 0.3% q/q (SAAR) increase in nonfarm business sector productivity was revised to 0.2% in the second estimate. This was a sharp slowdown from gains of 3.5% in Q4 2023 (unrevised) and 4.6% in Q3 2023. The Action Economics Forecast Survey had looked for a downward revision to 0.2%. Nonfarm business output increased 0.9% in Q1, down from the previously reported 1.3%, reflecting the downward revision reported last week for Q1 real GDP. However, the 1.0% initially reported increase in hours worked was revised down to 0.6%. Hence, the only modest downward revision to productivity.

Growth in compensation was revised down to 4.2% from 5.0% in the first estimate. However, this was still a sharp acceleration from 0.6% in last year’s Q4, which was revised down markedly from the previously reported 3.5% quarterly gain. Consequently, the rise in unit labor costs was revised down to 4.0% from 4.7% in the advance report, but a big increase from the 2.8% quarterly decline in Q4, which was revied down meaningfully from the previously reported unchanged reading. The Action Economics Forecast Survey had expected no revision to Q1 unit labor costs.

In the manufacturing sector, productivity in Q1 was revised to unchanged versus a 0.2% quarterly gain reported previously. Output was revised down to a 0.2% quarterly decline from unchanged previously reported while the initially reported 0.2% q/q decline in hours worked was unrevised. Manufacturing hourly compensation growth slowed to 3.1% from the initially reported 3.4% with manufacturing unit labor cost growth slowing slightly to 3.1% from the previously reported 3.2%.

The productivity and labor cost data are available in Haver’s USECON database. The Action Economics expectations figures are in the AS1REPNA database.

  • Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia.   Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan.   In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association.   Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.  

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