U.S. productivity growth rises above expectations in Q4 2018

U.S. productivity growth picked up a bit in the fourth quarter of 2018. Measures as nonfarm output per hour, productivity growth rose 1.9 percent quarter-on-quarter, as compared with consensus expectations of 1.5 percent. The fourth quarter nonfarm output rose 3.1 percent, while hours worked rose by a more modest 1.2 percent leading to the rebound in productivity growth. Unit labor costs rose 2 percent, after having grown 1.6 percent in the third quarter.

Revisions made to the third quarter data showed that productivity grew at a slightly slower rate, while labor costs were up by more than initially recorded, a now familiar dynamic of faster rising unit labor costs compared with productivity growth.

On a year-on-year basis, productivity growth accelerated to 1.8 percent, its highest reading since the first quarter of 2015. Unit labor costs were up 1 percent year-on-year, decelerating compared with the first half of 2018.

“Annual productivity growth improved in the latest quarter, but the broader trend in this series has been subdued throughout this recovery compared with its historical trajectory”, noted Barclays in a research report.

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