U.S. Nonfarm Labor Productivity Revised Up for Q2
by:Sandy Batten
|in:Economy in Brief
Summary
- Productivity jumped 3.3% saar in Q2, up markedly from 2.4% in the advance report.
- This is the largest quarterly rise in productivity since Q4 2023.
- Growth in nonfarm output was revised up to 4.4% from 3.7% previously while growth of hours worked was revised down to 1.1% from 1.3%.
- Compensation growth was revised up but the large upward revision to productivity still enabled growth of unit labor costs to be revised down.
In the second estimate, nonfarm business labor productivity in Q2 jumped 3.3%q/q saar, up from the 2.4% increase in the advance report and a sharp rebound from the 1.8% quarterly decline in Q1. The revised Q2 reading was the strongest quarterly growth since Q4 2023. The Action Economics Forecast Survey expected a slight upward revision to 2.6% quarterly growth. Compared with a year ago, productivity growth picked up to 1.5% from 1.2% in Q1.
Nonfarm business output growth was revised up to 4.4% from 3.7% in the advance report and up markedly from a 0.6% quarterly decline in Q1. Growth of hours worked was revised down to 1.1% from 1.3%, about the same as the 1.2% increase in Q1. Compensation growth was revised up to 4.3% from 4.0% in the advance report, but a slowdown from the 5.0% quarterly gain in Q1 and 5.5% surge in last year’s Q4. The marked upward revision to output growth more than offset the upward revision to compensation. Consequently, unit labor cost growth slowed to 1.0% from 1.6% in the advance report and a 6.9% quarterly surge in Q1. Compared to a year ago, growth of unit labor costs picked up to 2.5% from 2.0% in Q1.
Factory sector productivity growth in Q2 was also revised up, to 2.5% from 2.1% in the advance report but a slowdown from 3.1% in Q1. Growth of factory output was revised up slightly to 2.4% from 2.3%, while hours worked were revised down significantly to a 0.1% quarterly decline from a 0.3% quarterly increase in the advance report. Factory compensation growth in Q2 was revised up to 4.5% from 3.8% previously. The upward revision to compensation overwhelmed the upward revision to factory productivity. As a result, growth in factory unit labor costs was revied up to 2.0% from 1.7% previously but still down from the 3.1% quarterly increase posted in Q1.
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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