Global| Jun 03 2021U.S. Productivity Remains Strong in Q1
Summary
• Upward revisions in output and compensation. • Unit labor costs are revised up sharply. • Continued surge in compensation per hour. The first revision of nonfarm business sector productivity kept the Q1 rise unchanged at 5.4% (SAAR, [...]
• Upward revisions in output and compensation.
• Unit labor costs are revised up sharply.
• Continued surge in compensation per hour.
The first revision of nonfarm business sector productivity kept the Q1 rise unchanged at 5.4% (SAAR, 4.1% y/y), following a decline of 3.8% (SAAR, +2.6% y/y) in Q4'20. Recall, productivity growth had reached 11.2% in Q2 last year, leaving the increase in productivity for the full year at 2.5%, the largest annual increase since 2010.
Q1'21 real output was revised up to a rise of 8.6% (1.1% y/y) from 8.4% (1.1% y/y) in the preliminary report and following an unrevised 5.8% (-2.6% y/y) rise in Q4. Hours worked rose 3% (-2.9% y/y), slightly up from the earlier reported 2.9% rise in Q1 and following the 10% jump in Q4. Unit labor costs were revised sharply up to a rise of 1.7% (4.1% y/y) in Q1 from an earlier reported decline of 0.3% (1.6% y/y). Q4 was also revised considerably, to a surge of 14.0% (6.1% y/y) versus the prior reported rise of 5.6% (4.1%) rise in Q4. Compensation per hour rose 7.2% (8.3% y/y) in Q1, up sharply from the earlier reported rise of 5.1% (5.8% y/y) and following an upwardly revised 9.7% (8.8% y/y) rise in Q4 from 1.6% (6.7% y/y).
Productivity in the manufacturing sector was revised to show a decline of 1.7% (+1.8% y/y) versus an increase of 0.1% (+2.2% y/y) reported earlier and following a 4.4% (2.7% y/y) advance in Q4, revised from 4.5%. Durable goods manufacturing productivity rose 1.1% (4.0% y/y) revised from up 0.7% (3.9% y/y) and following a 5.6% (3.1% y/y) rise in Q4, revised slightly from 5.5%, while nondurable manufacturing productivity actually fell 3.7% (-1.0% y/y) in Q1, revised from an advance of 0.3% (+0.1% y/y). Q4 was revised slightly to a rise of 2.3% (1.5% y/y) from 2.4%. Total manufacturing unit labor costs jumped 10.7% (5.1% y/y), revised up sharply from the 4.6% (0.1% y/y) rise reported earlier. They were revised up sharply in Q4 as well to a rise of 5.1% (3.5% y/y) from the originally reported 8.2% (+0.1% y/y) decline. Compensation per hour in the manufacturing sector rose 8.9% (7.0% y/y), up sharply from the earlier report of a 4.6% (+2.4% Y/Y) rise. Q4 was also revised up sharply to a 9.8% (6.3% y/y) advance from a 4.1% decline (+2.7% y/y).
Compensation and labor costs figures are available in Haver's USECON database.
| Productivity & Costs (SAAR, %) | Q1'21 | Q4'20 | Q3'20 | Q1'21 Y/Y | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 5.4 | -3.8 | 4.2 | 4.1 | 2.5 | 1.8 | 1.4 |
| Compensation per Hour | 7.2 | 9.7 | -5.8 | 8.3 | 7.0 | 3.7 | 3.3 |
| Unit Labor Costs | 1.7 | 14.0 | -9.6 | 4.1 | 4.3 | 1.9 | 1.9 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | -1.7 | 4.4 | 20.7 | 1.8 | -0.1 | -1.4 | -0.1 |
| Compensation per Hour | 8.9 | 9.8 | -12.4 | 7.0 | 5.6 | 3.1 | 2.1 |
| Unit Labor Costs | 10.7 | 5.1 | -27.4 | 5.1 | 5.8 | 4.6 | 2.2 |
Kathleen Stephansen, CBE
AuthorMore in Author Profile »Kathleen Stephansen is a Senior Economist for Haver Analytics and an Independent Trustee for the EQAT/VIP/1290 Trust Funds, encompassing the US mutual funds sponsored by the Equitable Life Insurance Company. She is a former Chief Economist of Huawei Technologies USA, Senior Economic Advisor to the Boston Consulting Group, Chief Economist of the American International Group (AIG) and AIG Asset Management’s Senior Strategist and Global Head of Sovereign Research. Prior to joining AIG in 2010, Kathleen held various positions as Chief Economist or Head of Global Research at Aladdin Capital Holdings, Credit Suisse and Donaldson, Lufkin and Jenrette Securities Corporation.
Kathleen serves on the boards of the Global Interdependence Center (GIC), as Vice-Chair of the GIC College of Central Bankers, is the Treasurer for Economists for Peace and Security (EPS) and is a former board member of the National Association of Business Economics (NABE). She is a member of Chatham House and the Economic Club of New York. She holds an undergraduate degree in economics from the Universite Catholique de Louvain and graduate degrees in economics from the University of New Hampshire (MA) and the London School of Economics (PhD abd).
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