U.S. Productivity Strength Revised Up in Q3
by:Tom Moeller
|in:Economy in Brief
Summary
- Increase in productivity is largest in three years; compensation growth slows.
- Unit labor costs decline following two quarters of increase.
- Decline in factory sector productivity bolsters unit labor costs.
Nonfarm business productivity increased 5.2% (SAAR), revised from 4.7%, during Q3. The 2.4% y/y increase compared to a 2.0% decline during all of 2022. The quarterly gain followed a 3.6% Q2 increase according to the Bureau of Labor Statistics. Expectations had been for a 4.9% rise in the Action Economics Forecast Survey. The latest increase was the largest since Q3’20.
Hours-worked in the nonfarm business sector rose 0.9% (0.8% y/y), revised from 1.1%, after falling 1.5% in Q2.
Hourly compensation strengthened an unrevised 3.9% last quarter (4.0% y/y) after a 6.2% Q2 gain. Adjusted for price inflation, real compensation per hour rose 0.3% (0.4% y/y) after increasing a downwardly revised 3.4% in Q2.
Productivity strength caused unit labor costs to decline 1.2% (+1.6% y/y), revised from 0.8%, after a 2.6% Q2 gain, revised from 3.2%. The Action Economics Forecast Survey called for a 1.0% quarterly fall in unit labor costs.
In the manufacturing sector, output per hour fell 0.8% last quarter (-0.7% y/y), revised from -0.7%, after increasing 3.3% in Q2, revised from 3.1%. Manufacturing output eased a little-revised 0.3% (-0.8% y/y) following a 1.1% rise in Q2. Hours-worked rose 0.5% (-0.1% y/y) after falling 2.1% in Q2.
Compensation per hour in manufacturing strengthened 5.4% (4.4% y/y), revised from 6.2%, following an 8.1% Q2 increase, revised from 9.7%. Real compensation rose a lessened 1.8% (0.9% y/y) after gaining 5.2% in Q2, revised from 6.8%. As a result, unit labor costs in manufacturing surged 6.2% (5.2% y/y), revised from 7.0%, after a 4.7% Q2 rise, revised from 6.3%.
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.
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