Briefing.com: Productivity-Prel

Updated: 07-Sep-23 09:34 ET

Q2 Productivity-Prel

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.