U.S. productivity growth remains unchanged in Q2 2018

Productivity growth in the U.S. remained the same in the second quarter. Nonfarm output per hour rose 2.9 percent quarter-on-quarter in the June quarter, unchanged from the initial estimate. The rebound compared to the weak growth rate of the first quarter of 0.3 percent was driven largely by a solid rebound in output growth, which rose 5 percent, compared with 2.6 percent in the first quarter.

Employee hours’ growth eased slightly to 2 percent in the second quarter, a slowdown from 2.3 percent growth seen in the first quarter. In all, solid output growth in the first quarter, along with a slowdown in the rate of hours worked, helped stimulate labor productivity.

Compensation per hour rose 1.9 percent sequentially and adjusted for inflation edged higher by 0.2 percent. Unit labor costs dropped 1 percent, the lowest reading since the third quarter of 2014. On a year-on-year basis, productivity growth rose 1.3 percent, about where it has been on average for most of the recovery. Unit labor costs were up 1.9 percent year-on-year in the first quarter, and compensation per hour rose 3.2 percent year-on-year, a stronger signal than getting from average hourly earnings, stated Barclays.

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