- Second quarter (Q2) productivity increased 2.9% (Briefing.com consensus 2.0%), which was the strongest increase since the first quarter of 2015. The uptick in Q2 productivity was the result of output increasing 4.8% and hours worked increasing 1.9%.
- Q2 unit labor costs, however, decreased 0.9% (Briefing.com consensus +0.5%), reflecting a 2.0% increase in hourly compensation and a 2.9% increase in productivity.
- From the second quarter of 2017 to the second quarter of 2018, productivity increased a modest 1.3%.
- Manufacturing sector labor productivity increased 0.9% in the second quarter while unit labor costs jumped 0.6%.
- Q1 Productivity was revised down to show a 0.3% increase versus a previously reported 0.4% increase. Unit labor costs were revised up to 3.4% from a previously reported 2.9% increase.
- The average annual rate of productivity growth from 2007 to 2017 -- representing the current business cycle -- was revised up 0.1 to 1.3%. That compares to a rate of 2.7% for the prior cycle that ran from 2001 to 2007.
- The key takeaway from the report is that labor costs look to be in check, which will facilitate a gradual tightening path for the Federal Reserve.
|Nonfarm Business Sector|
|Unit Labor Costs Q/Q||-0.9%||3.4%||2.3%||2.8%||-0.3%|
|Unit Labor Costs Y/Y||1.9%||2.0%||2.2%||2.5%||2.0%|