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Economy in Brief

U.S. Productivity Steadies; Unit Labor Costs Rise
by Tom Moeller  March 7, 2018

Output per hour in the nonfarm business sector remained stable (revised from -0.1%) during Q4'17 following a 2.6% Q3 rise. A 0.1% slip had been expected in the Action Economics Forecast Survey. Output rose at a 3.2% rate (3.2% y/y) after a 4.0% increase during Q3, while hours-worked strengthened 3.3%% (2.1% y/y). During all of 2017, productivity increased 1.2%, up from the 0.7% average during the last five years. Data were revised back to 2013 with the latest release.

Unit labor costs increased at a 2.5% rate (1.7% y/y), revised from 2.0%, after a 1.0% gain. A 2.1% rise had been expected. Compensation costs increased 2.4% (2.9% y/y), revised from 1.8%, following a 3.6% gain.

In the manufacturing sector, productivity surged at an unrevised 6.0% annual rate last quarter following a 4.7% decline. Output surged 6.6% (1.6% y/y) while hours-worked improved 0.5% (1.0% y/y).

Unit labor costs in the factory sector declined at a 3.3% rate (+1.3% y/y), revised from -3.7%, following a 5.8% increase. Compensation per hour grew 2.5% (2.4% y/y) following a 0.7% rise.

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, %) Q4'17 Q3'17 Q2'17 Q4'17 Y/Y 2017 2016 2015
Nonfarm Business Sector
Output per Hour (Productivity) 0.0 2.6 1.7 1.1 1.2 0.0 1.2
Compensation per Hour 2.4 3.6 0.5 2.9 1.6 1.1 3.1
Unit Labor Costs 2.5 1.0 -1.2 1.7 0.4 1.1 1.8
Manufacturing Sector
Output per Hour (Productivity) 6.0 -4.7 3.6 1.1 0.6 0.4 0.3
Compensation per Hour 2.5 0.7 2.3 2.4 1.6 0.7 2.5
Unit Labor Costs -3.3 5.8 -1.2 1.3 1.0 0.3 2.2
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