Revised Third Quarter 2017 Productivity and Unit Labor Costs

After more data were collected from the Bureau of Labor Statistics, a revised report on third-quarter 2017 productivity and unit labor costs was released.  Productivity was unchanged in the revision, and unit labor costs figures were revised marginally.  Output per labor hour held steady at 3.0 percent in the revision, but this is nearly double the pace in the prior quarter.  Unit labor costs were less expensive than first thought, unchanged versus the second quarter (originally up 0.5 percent). 

Despite an unchanged statistic (it remained 3.0 percent), both components of productivity were upwardly revised.  Output increased 4.1 percent on an annualized basis (originally 3.8 percent).  Hours worked were updated to reflect a 1.1 percent increase (originally 0.8 percent).  Since the increases were equal on both sides of the ratio, productivity’s rate of change was not altered.

Unit labor costs were downwardly revised after more data were gathered.  Hourly compensation increased less than first counted, adding 2.7 percent instead of the original estimate of 3.5 percent.  This caused unit labor costs to fall 0.2 percent (originally +0.5 percent).  Versus a year ago, unit labor costs are 0.7 percent lower.

Productivity continues be a positive for our economy.  The inputs to America’s economy (technology, materials, skills, and labor hours) are producing more goods and services in a manner which should not put much, if any, upward pressure on inflation.  Along with other indicators Atlas observes (e.g., employment, retail sales, and ISM data), productivity suggests the economy is in a bit of a sweet spot right now.