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Economy in Brief

U.S. Productivity Rose 3.1% in Q3
by Tom Moeller  December 6, 2016

Growth in nonfarm output per hour during Q3'16 was unrevised at 3.1% (SAAR, 0.0% y/y) following a 0.2% Q2 decline. A 3.3% increase had been expected in the Action Economics Forecast Survey. It remained the strongest rise in two years. Output rose at a 3.6% rate (1.6% y/y) while hours worked lengthened 0.5% (1.7% y/y). The gain in productivity was accompanied by a 3.8% increase (3.0% y/y) in compensation, which was weaker than the upwardly revised 6.1% Q2 gain. The 3.0% y/y rise left it roughly equal to the gains during all of 2015 and 2014. Unit labor costs increased an upwardly revised 0.7% (3.0% y/y), down sharply from the 6.2% Q2 jump. A 0.2% rise had been expected.

In the manufacturing sector, productivity growth was revised lower to 0.4% (SAAR, 0.0% y/y) from 1.0%, after a 0.5% decline. So far this year, growth has averaged 0.5%, up slightly versus the last few years. Factory output rose 0.6% (-0.1% y/y) and hours worked rose 0.3% (-0.1% y/y). Compensation improved at a 3.7% rate (3.7% y/y) following an upwardly revised 8.0% jump. The increase lifted unit labor costs by 3.3% (3.6% y/y), the strongest of last three years.

The productivity & cost figures are available in Haver's USECON database. The expectations figures are from the Action Economics Forecast Survey and are found in the AS1REPNA database.

Productivity & Costs (SAAR, %) Q3'16 Q2'16 Q1'16 Q3'16 Y/Y 2015 2014 2013
Nonfarm Business Sector
Output per Hour (Productivity) 3.1 -0.2 -0.6 0.0 0.9 0.8 0.3
Compensation per Hour 3.8 6.1 -0.9 3.0 2.9 2.8 1.2
Unit Labor Costs 0.7 6.2 -0.3 3.0 2.0 2.0 0.9
Manufacturing Sector
Output per Hour (Productivity) 0.4 -0.5 1.4 0.0 0.3 0.1 0.2
Compensation per Hour 3.7 8.0 -4.8 3.7 2.5 2.8 0.2
Unit Labor Costs 3.3 8.5 -6.1 3.6 2.2 2.7 0.0
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