Global| Dec 06 2018U.S. Productivity Revised Slightly Higher in Q3; Unit Labor Costs Lower
Summary
Output per hour in the nonfarm business sector was revised up to a 2.3% gain at a seasonally adjusted annual rate in Q3'18 (1.3% year-over-year), from the previously reported 2.2% increase. In Q2 productivity growth remained at a 3.0% [...]
Output per hour in the nonfarm business sector was revised up to a 2.3% gain at a seasonally adjusted annual rate in Q3'18 (1.3% year-over-year), from the previously reported 2.2% increase. In Q2 productivity growth remained at a 3.0% rate. The consensus from the Action Economics Forecast Survey looked for a Q3 gain of 2.3%. Third quarter output and hours worked were unrevised at 4.1% (3.7% y/y) and 1.8% (2.3% y/y) respectively.
Unit labor costs were revised substantially lower to 0.9% in Q3 from 1.2% and -2.8% in Q2 (was -1.0%). These changes decreased the third quarter year-on-year gain to 1.2% from 1.5%. A 1.0% quarterly pace in Q3 had been expected by the Action Economics survey. These revisions were predominantly the result of slower compensation growth for both quarters: 3.1% (2.2% y/y) in Q3 and flat in Q2.
In the manufacturing sector, productivity was revised meaningfully higher to a 1.0% annualized gain Q3 (was 0.5%) and 1.4% y/y. The Q2 reading was unchanged at 1.2%. Output increased at an upwardly revised 4.1% pace in Q3 (3.6% y/y), while hours worked grew a slightly faster 3.1% (2.1% y/y).
Unit labor costs in the factory sector declined at a 1.2% rate in Q3 (-1.2% y/y), following a 6.1% drop. Compensation per hour edged down 0.2% (+0.2% y/y) after falling 5.0%.
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, %) | Q3'18 | Q2'18 | Q1'18 | Q3'18 Y/Y | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||||
| Output per Hour (Productivity) | 2.3 | 3.0 | 0.3 | 1.3 | 1.1 | 0.1 | 1.3 |
| Compensation per Hour | 3.1 | 0.0 | 3.8 | 2.2 | 3.4 | 1.1 | 3.1 |
| Unit Labor Costs | 0.9 | -2.8 | 3.4 | 0.9 | 2.2 | 0.9 | 1.8 |
| Manufacturing Sector | |||||||
| Output per Hour (Productivity) | 1.0 | 1.2 | -0.8 | 1.4 | 0.7 | 0.3 | -1.5 |
| Compensation per Hour | -0.2 | -5.0 | 4.6 | 0.2 | 3.3 | 0.6 | 2.5 |
| Unit Labor Costs | -1.2 | -6.1 | 5.5 | -1.2 | 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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