U.S. labor productivity drops less than initially estimated in the third quarter

The revised data from the U.S. Labour Department showed on Tuesday that nonfarm business sector labor productivity in the United States decreased 0.2 percent q-o-q in the third quarter of 2019, as output advanced 2.3 percent q-o-q and hours worked rose 2.5 percent q-o-q (seasonally adjusted). That was above initial estimate of a decline of 0.3 percent q-o-q but below economists’ forecast for a drop of 0.1 percent q-o-q, and marked the first decrease in productivity since the fourth quarter of 2015. In the second quarter, labor productivity climbed 2.5 percent q-o-q.

In y-o-y terms, the labor productivity rose 1.5 percent in the third quarter, reflecting a 2.3-percent jump in output and a 0.9-percent advance in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the third quarter rose 2.5 percent q-o-q compared to an initial estimate of a 3.6 percent q-o-q advance and a 2.4 percent q-o-q gain in the prior quarter.

Economists had forecast a 3.3 percent q-o-q boost in third-quarter unit labor costs.

Unit labor costs quarterly increase reflected a 2.3-percent q-o-q increase in compensation per hour and a 0.2-percent q-o-q fall in productivity.

Compared to the corresponding period of 2018, unit labor costs rose 2.2 percent.