U.S. Productivity Strengthens in Q3
by:Tom Moeller
|in:Economy in Brief
Summary
- Increase in productivity is largest in three years; compensation improves.
- Unit labor costs ease following two quarters of increase.
- Decline in factory sector productivity bolsters unit labor costs.
Nonfarm business productivity increased 4.7% (SAAR) during Q3 following a 3.6% Q2 increase, revised from 3.7% according to the Bureau of Labor Statistics. Expectations had been for a 4.2% rise in the Action Economics Forecast Survey. The latest increase was the largest since Q3’20 and it helped boost the annual gain to 2.2%.
Hours-worked in the nonfarm business sector rose 1.1% (0.8% y/y) after falling 1.5% in Q2, revised from -1.3%.
Hourly compensation strengthened 3.9% last quarter (4.2% y/y) after a 6.9% Q2 gain, revised from 5.5%. Adjusted for price inflation, real compensation per hour rose 0.3% (0.6% y/y) after increasing 4.1% in Q2.
Productivity strength caused unit labor costs to decline 0.8% (+1.9% y/y) after a 3.2% Q2 gain, revised from 1.6%. The Action Economics Forecast Survey called for a 0.6% increase.
In the manufacturing sector, output per hour fell 0.7% both q/q and y/y after rising 3.1% in Q2, revised from 4.0%. Manufacturing output eased 0.1% (-0.8% y/y) following a 1.0% rise in Q2. Hours-worked rose 0.7% (-0.1% y/y) after falling 2.1% in Q2.
Compensation per hour in manufacturing strengthened 6.2% (5.0% y/y) following a 9.7% increase in Q2. Real compensation rose 2.5% (1.4% y/y) after gaining 6.8% in Q2. As a result, unit labor costs in manufacturing surged 7.0% (4.8% y/y) after a 6.3% Q2 rise, revised from 3.6%.
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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