Global| Sep 06 2018Second Quarter U.S. Productivity Unrevised; Unit Labor Costs Decline
Summary
Output per hour in the nonfarm business sector grew at an unrevised 2.9% seasonally adjusted annual rate in Q2'18 (1.3% year-on-year), following a 0.3% gain in Q1. In Q4'17 productivity declined at a 0.3% pace. The consensus in the [...]
Output per hour in the nonfarm business sector grew at an unrevised 2.9% seasonally adjusted annual rate in Q2'18 (1.3% year-on-year), following a 0.3% gain in Q1. In Q4'17 productivity declined at a 0.3% pace. The consensus in the Action Economics Forecast Survey looked for an increase of 3.0% in Q2. Nonfarm business output rose at a slightly faster 5.0% pace (3.5% y/y) in the second quarter, but this was offset by the small upward revision to hours which increased 2.0% (2.2% y/y).
Unit labor costs fell at slightly faster 1.0% rate in the second quarter (1.9% y/y) following a 3.4% gain in Q1. The Action Economics Survey expected an unrevised 0.9% decline the second quarter. The downward revision to costs resulted from compensation increasing 1.9% (vs. 2.0%) in Q2 (3.2% y/y), after 3.8% growth in the first quarter.
In the manufacturing sector, productivity increased at an upwardly revised 1.5% pace (was 0.9%) in the second quarter (unchanged from a year ago) following a 0.8% decline in Q1. Output increased at a faster 3.0% rate (was 1.9%) in Q2 (2.1% y/y) after a 2.0% gain in Q1. Hours worked grew 1.5% in Q2 (2.2% y/y) following 2.9% growth in Q1.
Unit labor costs in the factory sector declined at a 0.2% rate in Q2 (2.5% y/y), a downward revision from the 0.6% previously reported gain. In the first quarter costs grew an unrevised 5.5%. Compensation grew 1.3% in Q2 (2.5% y/y) after a 4.6% gain in Q1.
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, %) | Q2'18 | Q1'18 | Q4'17 | Q2'18 Y/Y | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 2.9 | 0.3 | -0.3 | 1.3 | 1.1 | 0.1 | 1.3 |
| Compensation per Hour | 1.9 | 3.8 | 1.9 | 3.2 | 3.4 | 1.1 | 3.1 |
| Unit Labor Costs | -1.0 | 3.4 | 2.3 | 1.9 | 2.2 | 0.9 | 1.8 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 1.5 | -0.8 | 4.4 | 0.0 | 0.7 | 0.3 | -1.5 |
| Compensation per Hour | 1.3 | 4.6 | 1.6 | 2.5 | 3.3 | 0.6 | 2.5 |
| Unit Labor Costs | -0.2 | 5.5 | -2.7 | 2.5 | 2.6 | 0.3 | 4.1 |
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
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