Productivity measures the growth of labor efficiency in producing the economy's goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends. Why Investors Care
| Released on 6/4/08 For Q1 Revised 2008 | |||||||||||||||||||||||||
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Highlights
First quarter productivity was revised up moderately while labor costs were unrevised. First quarter productivity was revised up to an annualized 2.6 percent from the initial estimate of 2.2 percent and slightly beat market expectations of 2.5 percent. Inflation pressures from labor costs are unchanged as unit labor costs for the first quarter were unrevised at an annualized 2.2, but came in higher than the consensus projection for a 1.9 percent rise. The bottom line is that companies are keeping a rein on labor costs and are still investing in cost cutting technology and both factors are helping to support profits in a tough economy.
Year-on-year, productivity was up 3.3 percent in the first quarter, compared to up 2.9 percent the previous quarter. Year-on-year, unit labor costs in the first quarter stood at up 0.7 percent, down from up 1.4 percent in the fourth quarter. Year-on-year, compensation per hour in the first quarter was up 4.0 percent, compared to up 4.4 percent in the fourth quarter.
Nonfarm productivity in the first quarter improved to an annualized 2.2 percent increase, following a 1.8 percent gain in the fourth quarter. Unit labor costs moderated with a 2.2 percent annualized increase, following a 2.8 percent gain in the fourth quarter. There is a lot of overlap in source data for the output component of productivity and real GDP, and first quarter GDP has been revised up to an annualized 0.9 percent and is somewhat higher than fourth quarter GDP growth of 0.6 percent. This suggests slight improvement for productivity in the first quarter.
Nonfarm Productivity Consensus Forecast for final Q1 08: +2.5 percent
Range: +1.8 to +2.7 percent
Unit Labor Costs Consensus Forecast for final Q1 08: +1.9 percent rate
Range: +1.8 to +2.7 percent rate
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Nonfarm productivity growth has remained healthy during this expansion, but it has prevented employment from growing very fast and this hurt income growth to some extent. Unit labor costs tend to fall when productivity growth accelerates and then rises as productivity growth abates. |
| 2008 Release Schedule | ||||||||||||||||||
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