U.S. Productivity Rebounds Strongly in Q2
by:Tom Moeller
|in:Economy in Brief
Summary
- Compensation surges, more than doubling Q1 rise.
- Unit labor cost increase is strongest in three quarters.
- Strength in factory compensation accompanies productivity rebound.
Nonfarm business productivity increased 3.7% (SAAR) during Q2 following a 1.2% decline in Q1, revised from -2.1% according to the Bureau of Labor Statistics. The 1.3% y/y rise follows five consecutive quarters of negative y/y comparisons. Expectations were for a 2.2% rise in the Action Economics Forecast Survey.
Hours-worked in the nonfarm business sector fell at a 1.3% rate (+1.2% y/y) last quarter, after increasing an unrevised 2.6% in Q1.
Hourly compensation surged 5.5% (3.7% y/y) after increasing an unrevised 2.1% in Q1. Adjusted for price inflation, real compensation per hour rose 2.7% (-0.3% y/y) after declining 1.6% in Q1.
As the gain in compensation outpaced the rise in productivity, unit labor costs increased 1.6% (2.4% y/y) after a 3.3% Q1 gain, revised from 4.2%. The Action Economics Forecast Survey called for a 2.5% increase.
In the manufacturing sector, output per hour rose 4.0% (-1.0% y/y) after falling 1.8% in Q1, revised from -2.5%. Manufacturing output rose 1.9% (-0.4% y/y) following a 0.3% easing in Q1. Hours-worked fell 2.0% (+0.6% y/y) after increasing 1.5% in Q1.
Compensation per hour in manufacturing strengthened 7.8% (3.9% y/y) following a 0.6% increase in Q1. Real compensation rose 4.9% (-0.1% y/y) after falling 3.1% in Q1. As a result, unit labor costs in manufacturing rose 3.6% (4.9% y/y) after a 2.4% Q1 rise, revised from 3.1%.
The productivity and labor cost data are available in Haver’s USECON database. The Action Economics expectations figures are in the AS1REPNA database.
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.
