Global| Jun 07 2016U.S. Productivity Declines for a Second Quarter and Cost Pressures Build
by:Tom Moeller
|in:Economy in Brief
Summary
Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y) following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been expected in the Action Economics Forecast Survey. It was the fourth [...]
Nonfarm output per hour during Q1'16 fell 1.0% at an annual rate (+0.6% y/y) following a 1.7% Q4'15 shortfall, revised from -2.2%. A 1.5% decline had been expected in the Action Economics Forecast Survey. It was the fourth productivity decline in the last six quarters. It occurred as a diminished 0.4% rise in output (+2.2% y/y) was outpaced by a 1.5% (1.6% y/y) rise in hours-worked. Productivity's decline was accompanied by a strengthened 3.0% rise (2.8% y/y) in compensation, the quickest rise since Q2. That combination of faster compensation growth and declining productivity raised unit labor costs 4.1% (2.3% y/y), the strongest gain since Q4'14. A 3.5% rise had been expected.
In the manufacturing sector, productivity rebounded 1.9% (1.5% y/y) following a 1.0% decline, revised from -0.7%. Output improved 0.7% both q/q and y/y, while hours-worked declined 1.1% (-0.8% y/y). Compensation growth weakened to 0.6%, but the y/y advance of 3.1% was the strongest since Q4'14. The combination of stronger productivity and weaker compensation growth caused unit labor costs to decline 1.2%, offsetting a little-revised 3.6% gain. That pushed y/y growth to 1.6%, below last year's 1.9% rise and 2.8% in 2014.
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.
Housing's Role in the Slow Economic Recovery from the Federal Reserve Bank of Philadelphia is available here.
| Productivity & Costs (SAAR, %) | Q1'16 | Q4'15 | Q3'15 | Q1'16 Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | -1.0 | -1.7 | 2.0 | 0.6 | 0.7 | 0.8 | 0.0 |
| Compensation per Hour | 3.0 | 0.9 | 2.3 | 2.8 | 2.8 | 2.8 | 1.1 |
| Unit Labor Costs | 4.1 | 2.7 | 0.4 | 2.3 | 2.1 | 2.0 | 1.1 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 1.9 | -1.0 | 3.7 | 1.5 | 0.2 | -0.1 | 0.7 |
| Compensation per Hour | 0.6 | 2.5 | 4.0 | 3.1 | 2.2 | 2.7 | 0.2 |
| Unit Labor Costs | -1.2 | 3.6 | 0.3 | 1.6 | 1.9 | 2.8 | -0.5 |
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.
