U.S. Nonfarm Labor Productivity for Q1 Revised Weaker
by:Sandy Batten
|in:Economy in Brief
Summary
- Productivity fell 1.5% q/q saar in Q1, down from a 0.8% decline in the advance report.
- The previously reported decline in output in Q1 was little changed while hours worked were revised up.
- Compensation remained elevated, reflected in a marked acceleration in unit labor costs.
In the second estimate, nonfarm labor productivity in Q1 fell 1.5% q/q saar, weaker than the previously report 0.8% quarterly decline. This was the weakest quarterly report since Q2 2022. The Action Economics Forecast Survey had expected no revision. Output was little changed from the advance report, falling 0.2% q/q versus -0.3% previously. The downward revision mostly reflected an upward revision to hours worked to +1.3% q/q from 0.6% previously. Compared with a year ago, productivity growth slowed to 1.3% from 2.1% y/y in Q4.
Compensation per hour increased an upwardly revised 5.0% q/q saar in Q1, up from 4.8% previously reported but down from 5.5% in Q4. Compared with a year ago, compensation growth slowed to 3.2% from 4.4% in Q4. The combination of falling productivity and elevated compensation pushed up unit labor costs 6.6% q/q saar from 5.7% previously reported and 3.8% in Q4. Even with the pickup in Q1, the y/y rate of advance in unit labor costs slowed to 1.9% in Q1 from 2.3% in Q4.
Factory sector productivity surged a still strong 4.4% q/q saar in the second estimate, but down slightly from the previously reported 4.5% increase. Factory output growth slowed to 4.8% from 5.1% previously while hours worked growth slowed to 0.4% from 0.5%. Manufacturing compensation growth was revised up to 6.4% from 6.2% previously. Consequently, the quarterly rise in manufacturing unit labor costs in Q1 increased to 2.0% from 1.6% in the first estimate but the same pace as in Q4.
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
AuthorMore in Author Profile »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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