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Economy in Brief

U.S. Productivity Declines; Unit Labor Costs Accelerate
by Tom Moeller  May 4, 2017

Growth in nonfarm output per hour during Q1'17 eased at a 0.6% annual rate (+1.1% y/y) following a 1.8% Q4 increase. No change in productivity had been expected in the Action Economics Forecast Survey. Output grew 1.0% (2.4% y/y) and hours worked advanced 1.6% (1.3% y/y). Compensation improved 2.4% (3.9% y/y) after a 3.1% rise. As a result, unit labor costs jumped 3.0% (2.8% y/y), the quickest increase in three quarters. A 2.5% increase had been expected.

Factory sector productivity improved 0.4% (0.3% y/y) after a 2.0% rise. Output increased 2.8% (0.9% y/y) while hours worked rose 2.4% (0.7% y/y). Compensation increased 2.5% (4.6% y/y), the weakest rise in a year. Unit labor costs gained 2.1% (4.3% y/y), also the weakest gain in four quarters.

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, %) Q1'17 Q4'16 Q3'16 Q1'17 Y/Y 2016 2015 2014
Nonfarm Business Sector
Output per Hour (Productivity) -0.6 1.8 3.3 1.1 0.2 0.9 0.8
Compensation per Hour 2.4 3.1 4.1 3.9 2.9 2.9 2.8
Unit Labor Costs 3.0 1.3 0.7 2.8 2.6 2.0 2.0
Manufacturing Sector
Output per Hour (Productivity) 0.4 2.0 -0.5 0.3 0.2 -0.6 0.1
Compensation per Hour 2.5 4.2 4.1 4.6 3.0 2.4 2.8
Unit Labor Costs 2.1 2.2 4.7 4.3 2.8 3.0 2.7
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