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Last Update: 03-May-12 09:01 ET
Productivity-Prel
Highlights
- Nonfarm business productivity declined 0.5% in the first quarter after increasing 1.2% in Q4 2011. The Briefing.com consensus expected nonfarm productivity to decline 0.8%.
Key Factors
- Output increased 2.7% in Q1 2012, down from a 3.7% increase in the fourth quarter. Hours worked, however, increased 3.2%, well above the 2.4% increase last quarter and the strongest quarterly increase since Q2 2010.
- The greater increase in hours worked relative to output caused the decline in productivity.
- Unit labor costs increased 2.0%, but the gain was a product of more hours worked than an increase in hourly compensation. Real hourly compensation declined 0.9%.
Big Picture
- Productivity gains help keep cost-push inflation pressures from rising wages in check. Over the long term, it is productivity gains that provide the increase in output that have led to the consistent gains in living standards in free market economies.
| Category | Q1 | Q4 | 2011 Q3 | 2011 Q2 | 2011 Q1 |
|---|---|---|---|---|---|
| Nonfarm Business Sector | |||||
| Productivity Q/Q | -0.5% | 1.2% | 1.8% | -0.3% | -1.0% |
| Unit Labor Costs Q/Q | 2.0% | 2.7% | 3.9% | -0.1% | 6.2% |
| Productivity Y/Y | 0.5% | 0.4% | 0.5% | 0.6% | 0.9% |
| Unit Labor Costs Y/Y | 2.1% | 3.1% | 2.0% | 1.0% | 1.4% |
