U.S. Productivity Revised Slightly Higher in Q3
by:Tom Moeller
|in:Economy in Brief
Summary
- Nonfarm business productivity grew slightly after two straight quarters of decline.
- Compensation growth weakened modestly, and still low.
- Unit labor cost growth revised down.
Nonfarm business sector productivity improved 0.8% (-1.3% y/y) during Q3, revised from 0.3%, following unrevised declines of 4.1% and 5.9% in the prior two quarters. A 0.6% rise was expected in the Action Economics Forecast Survey. The y/y decline remained the third consecutive shortfall, the first such performance since 1982.
The upward revision to productivity reflected a 3.3% gain in output, revised from 2.8%, after a 1.2% decline in Q2. Hours worked rose 2.5%, revised from 2.4%, after a 2.9% rise in Q2.
Hourly compensation growth picked up to 3.2% (4.0% y/y), revised from 3.8%, from 2.3% in Q2 which was revised from 4.5%. Adjusted for the strong 3.6% gain (7.1% y/y) in the implicit price deflator, real compensation per hour declined 2.3% (-4.0% y/y) in Q3, revised from -1.7%, following a 7.4% decline in Q2, revised from -5.5%.
As productivity growth was revised up and compensation growth was revised down, unit labor cost growth was revised lower in Q3 to 2.4% from 3.5%. This remained below the 6.7% Q2 surge which was revised from 8.9%. Nevertheless the 5.3% y/y increase last quarter was markedly increased from 3.2% during all of last year. A 3.2% quarterly rise for Q3 had been expected in the Action Economics survey.
In the manufacturing sector, output per hour fell 2.9% (-1.1% y/y), revised from +1.3%, after rising 2.8% in Q2. Output increased 0.6% (3.4% y/y) and hours worked improved 3.6% (4.5% y/y). Hourly compensation increased a marginally revised 2.7% (4.0% y/y). Factory sector unit labor cost thus rose 5.8% (5.2% y/y), revised from 3.8%, after a 0.7% Q2 increase.
The productivity and labor cost data are available in Haver's USECON database. The expectations figures are in the AS1REPNA database.
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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