Productivity Up 0.4%, Well Under Expectations of 0.7%, Labor Costs Up 2.9%
- Nonfarm business sector labor productivity increased 0.4 percent during the first quarter of 2018 as output increased 2.7 percent and hours worked increased 2.3 percent.
- From the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent, reflecting a 3.6-percent increase in output and a 2.3-percent increase in hours worked.
- Manufacturing sector labor productivity decreased 1.2 percent in the first quarter of 2018, as output increased 1.7 percent and hours worked increased 2.9 percent.
- Productivity declined 0.8 percent in the durable manufacturing sector, as output rose 3.3 percent and hours worked increased 4.2 percent. In the non-durable goods manufacturing sector, a 0.9-percent decrease in productivity reflected no change in output and a 0.9-percent increase in hours worked.
Unit Labor Costs
- Unit labor costs in the nonfarm business sector increased 2.9 percent in the first quarter of 2018, reflecting a 3.3-percent increase in hourly compensation and a 0.4-percent increase in productivity. Unit labor costs increased 1.3 percent over the last four quarters.
- BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.
It appears the marginal employee is not all that productive.
Mike "Mish" Shedlock