Updated: 07-Sep-23 09:34 ET
 |
 |
Updated: 07-Sep-23 09:34 ET |
|

Highlights
- The revised Q2 productivity report featured a downward revision in productivity to 3.5% (Briefing.com consensus 3.7%) from the preliminary estimate of 3.7% and an upward revision in unit labor costs to 2.2% (Briefing.com consensus 1.6%) from the preliminary estimate of 1.6%.
Key Factors
- Output increased 1.9% and hours worked decreased 1.5%. That was the first decline in hours worked since the second quarter of 2020 and was the result of a 1.5% decline in average weekly hours.
- The 2.2% increase in unit labor costs resulted from a 5.7% increase in hourly compensation and a 3.5% increase in productivity.
- Manufacturing sector labor productivity increased 2.9% versus the preliminary estimate of 4.0%, as output increased 0.8% and hours worked decreased 2.1%. Unit labor costs in the total manufacturing sector increased 4.9% versus the preliminary estimate of 3.6%, driven by an 8.0% increase in hourly compensation and a 2.9% increase in productivity.
- From the same quarter a year ago, nonfarm business sector labor productivity increased 1.3%, reflecting a 2.5% increase in output and a 1.2% increase in hours worked. That is the first increase in the four-quarter productivity measure since the fourth quarter of 2021.
Big Picture
- The key takeaway from the report is that unit labor costs weren't as low as previously reported, so they look disappointing at the headline level; however, they still fit the bill of disinflation given that unit labor costs were up 2.5% a year ago.
Category |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Nonfarm Business Sector |
|
|
|
|
|
Productivity Q/Q |
3.5% |
-1.2% |
1.6% |
1.2% |
-3.7% |
Unit Labor Costs Q/Q |
1.6% |
3.2% |
-2.2%% |
6.9% |
6.6% |
Productivity Y/Y |
1.3% |
-0.8% |
-1.8% |
-1.5% |
-2.5% |
Unit Labor Costs Y/Y |
2.5% |
3.6% |
4.9% |
6.4% |
7.0% |