2017 Economic Calendar
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Productivity and Costs  
Released On 2/2/2017 8:30:00 AM For Q4(p):2016
PriorPrior RevisedConsensusConsensus RangeActual
Nonfarm productivity - Q/Q change - SAAR3.1 %3.5 %1.2 %0.5 % to 2.6 %1.3 %
Unit labor costs - Q/Q change - SAAR0.7 %0.2 %1.8 %1.0 % to 2.5 %1.7 %

It took more hours to produce at a slower rate, that's an unfavorable mix for productivity which rose at only a 1.3 percent annualized rate in the fourth quarter vs an upward revised 3.5 percent in the third quarter. Output rose at a 2.2 percent pace in the quarter, down from the third quarter's strong 4.2 percent. Hours worked rose at a 0.9 percent rate vs the third quarter's very lean 0.6 percent.

Less output punch together with more hours is also a negative combination for unit labor costs which rose at a 1.7 percent rate vs only 0.2 percent in the third quarter. Year-on-year, labor costs are up 1.9 percent which is nearly double the rate for productivity where year-on-year growth is only 1.0 percent.

Low productivity is a stubborn weakness of the economy, the result in part of a shrinking pool of available workers but also reflecting lack of investment in new equipment.

Consensus Outlook
Non-farm productivity jumped out of its slump in the third quarter as output accelerated and hours worked slowed. Output, however, in the fourth quarter was not as strong as the third, pointing to slowing for productivity and increases for labor costs. Forecasters see nonfarm productivity rising 1.2 percent vs a 3.1 percent gain in the third quarter. Unit labor costs are expected to increase 1.8 percent vs 0.7 percent.

Productivity measures the growth of labor efficiency in producing the economy's goods and services. Unit labor costs reflect the labor costs of producing each unit of output. Both are followed as indicators of future inflationary trends.  Why Investors Care
Nonfarm productivity growth has remained healthy during this expansion, but it has prevented employment from growing very fast and this hurt income growth to some extent. Unit labor costs tend to fall when productivity growth accelerates and then rises as productivity growth abates.
Data Source: Haver Analytics

2017 Release Schedule
Released On: 2/23/85/46/58/99/711/212/6
Release For: Q4(p):2016Q4(r):2016Q1(p):2017Q1(r):2017Q2(p):2017Q2(r):2017Q3(p):2017Q3(r):2017

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