Q4 Productivity-Prel
Updated 09-Mar-10 19:36 ET
Highlights
- Nonfarm business productivity was revised up from 6.2% to 6.9% in the final Q4 2009 report.
- The consensus expected a much smaller increase to 6.3%.
Key Factors
- The revision was due to output being revised up from 7.2% to 7.6%, while hours were revised down from 1.0% to 0.6%.
- Competition from the large pool of unemployed successfully kept wage growth down. Employees were lax in demanding higher wages for the increase in productivity as real hourly compensation was revised down from -1.9% to -2.8%.
- On the other hand, firms were able to reap the benefits as unit labor costs were revised down from -4.4% to -5.9%. The consensus expected a downward revision of only 0.1 percentage points.
-
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 |
2009 Q4 |
2009 Q3 |
2009 Q2 |
2009 Q1 |
2008 Q4 |
| Nonfarm Business Sector |
|
|
|
|
|
| Productivity Q/Q |
6.9% |
7.8% |
7.6% |
0.9% |
2.2% |
| Unit Labor Costs Q/Q |
-5.9% |
-7.6% |
0.1% |
-5.0% |
2.2% |
| Productivity Y/Y |
5.8% |
4.6% |
2.9% |
1.8% |
1.4% |
| Unit Labor Costs Y/Y |
-4.7% |
-2.7% |
0.5% |
0.0% |
1.7% |
