US Macro Updates

The One Stop Portal for US Macroeconomic Data. Simplified and Summarized! 

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

6th Jun 2024

Unit Labour Costs and Productivity

Key takeaway: The BLS revised its Q1 2024 labour productivity and unit labour cost data on 6th June 2024. Non-farm business sector labor productivity was revised down from  0.3% to 0.2% in 1Q. Firstly, the revision was quite minor. Hence the summary takeaway is unchanged that the Q1 productivity number was substantially lower than the 3.0-5.0% that we have seen through the last 3 quarters of 2023. Output increase was revised from 1.3% to 0.9% and hours worked increase was revised from 1.0% to 0.6%. Productivity has been of keen interest in recent months especially because it has been surging compared to pre-pandemic averages and helping bring down unit costs and consequently inflation. Hence, a significantly lower productivity print is concerning from an inflation perspective. Given the lower labour productivity, unit labour costs had also also posted an unfavourable reading for 1Q 2024. Unit labour costs were revised down from 4.7% to 4.0%. Once again, even though the revised number was substantially lower, it was still meaningfully high. To put this in context, last 2 quarter readings on Unit labour costs were +0.4% and -1.2%. During the current business cycle, starting in the 4th quarter of 2019, labour productivity has grown at an annual rate of 1.5%. This is similar to the 1.5% seen in the previous cycle from 4Q 2007 till 4Q 2019 and is below the long term rate of 2.1%. While productivity had been surging in recent quarters and has printed a muted number this quarter, it is worth re-emphasizing that these measurements tend to be volatile in the short run and it can be best observed only in the very long run. For instance, hourly compensation growth for Q4 2023 was revised down from 3.5% to 0.6% causing unit labour costs to be revised substantially from 0% to -2.8%.    

2nd May 2024

Key takeaway: The BLS released its Q1 2024 labour productivity and unit labour cost data on 2nd May 2024. Non-farm business sector labor productivity increased only 0.3% in 1Q. Firstly, this productivity number is substantially lower than the 3.0-5.0% that we have seen through the last 3 quarters of 2023. Second, it is also lower than consensus expectations of 0.8%. Output increased 1.3% and hours worked increased only 1.0%. Productivity has been of keen interest in recent months especially because it has been surging compared to pre-pandemic averages and helping bring down unit costs and consequently inflation. Hence, a significantly lower productivity print is concerning from an inflation perspective. Similarly, given the lower labour productivity, unit labour costs also posted an unfavourable reading for 1Q 2024. Unit labour costs increased a relatively muted 4.7% in Q1 against consensus expectations of 3.6%. To put this in context, last 2 quarter readings on Unit labour costs were +0.4% and -1.2%. Hourly compensation grew 5.0%. During the current business cycle, starting in the 4th quarter of 2019, labour productivity has grown at an annual rate of 1.5%. This is similar to the 1.5% seen in the previous cycle from 4Q 2007 till 4Q 2019 and is below the long term rate of 2.1%. While productivity had been surging in recent quarters and has printed a muted number this quarter, it is worth re-emphasizing that these measurements tend to be volatile in the short run and it can be best observed only in the very long run.    

7th Mar 2024

Key takeaway: The BLS released revised Q4 2023 labour productivity and unit labour cost data on 7th Mar 2024. Non-farm business sector labor productivity was unchanged in the revised report at 3.2%. Unit labour costs were revised slightly down from 0.5% to 0.4%. Even with the minimal revisions, the underlying story remains the same. Productivity has been of keen interest in recent months especially because it has been surging compared to pre-pandemic averages and helping bring down unit costs and consequently inflation. However, while productivity has been surging in recent months it is very important to note that productivity is difficult to count and the reported numbers tend to be volatile. The effects of productivity are best noticed over the long run. Take 3rd quarter data for instance. While initial reports had suggested that non farm labour productivity had increased at an above 5% annualized rate, the data was revised subsequently to 4.7%. Similarly, Hourly compensation was also revised upwards from 3.8% to 4.8% for 3rd quarter 20223, resulting in unit labour costs changing from a 1.1% decrease in the initial releases to a o.1% increased in the revised release. On an annual basis, labour productivity grew 1.3% in 2023 compared to a decrease of 1.9% in 2022 and a 2.5% increase in 2019. Similarly, on an annual basis, unit labour costs increase 3.0% in 2023 compared to 5.7% in 2022 and 1.7% in 2019.   

1st Feb 2024

Key takeaway: The BLS released its Q4 2023 labour productivity and unit labour cost data on 1st Feb 2024. Non-farm business sector labor productivity increased 3.2% in 4Q. This makes it the 3rd quarter running when productivity numbers have come in strong. Output increased 3.7% and hours worked increased only 0.4%. Productivity has been of keen interest in recent months especially because it has been surging compared to pre-pandemic averages and helping bring down unit costs and consequently inflation. Similarly, unit labour costs also posted a favourable reading for 4Q 2023. Unit labour costs increased a relatively muted 0.5% in Q4 against consensus expectations of 1.3%. Hourly compensation grew 3.7%. This release was yet another addition in the long list of recent economic indicators that have been suggesting a soft landing. There are a few more points to note though about this Productivity data release, especially for the full year of 2023. Labour productivity for the full year of 2023 increased 1.2% which is still lower than the 2.3% seen in 2019 before the pandemic. Similarly, on an annual basis, unit labour costs grew at a higher rate of 2.9% in 2023 compared to 1.6% in 2019. While productivity is surging in recent months and quarters, it measurements tends to be volatile in the short run and it can be best observed only in the very long run.    

6th Dec 2023

Key takeaway: The BLS released revised Q3 2023 labour productivity and unit labour cost data on 6th Dec 2023. Non-farm business sector labor productivity was revised further up from 4.7% to 5.2%. And unit labour costs were revised further down from -0.8% to -1.2%. Both readings were very favourable for risk markets in general. Productivity, as a topic, has gained significant attention in recent months especially as the world watches whether we will have a repeat scenario of a soft landing similar to the mid nineties. The key protagonist of that nineties soft landing movie was Productivity. Productivity gain at 5.2% is a solid number. Especially when you consider that in the current business cycle which started from the 4th quarter of 2019, labor productivity has grown at an annual rate of 1.4% only. Unit labour costs decreased  a revised 1.2% in Q3. This number was also significantly lower than the past 4 quarter average of +1.6%. Large improvements in productivity can help sustain headline wage growth and yet keen inflation down. Improving productivity and decreasing unit labour costs was a very significant development in a week that generally featured positive news (from a risk markets perspective) on all fronts – yields collapsing, jobs reports moderating, ISMs resilient, etc.   

2nd Nov 2023

Key takeaway: Non-farm business sector labor productivity increased a substantial 4.7% in the third quarter of 2023. That was significantly above consensus expectations for a productivity increase of 4.1%. Output increased by 5.9% and hours worked increased by 1.1%, resulting in a substantial productivity gain. Compared to the year ago quarter, productivity increased 2.2%. This was a very significant development in a week that generally featured positive news (from a risk markets perspective) on all fronts – yields collapsing, jobs report moderating, ISMs moderating, etc. Similar to the positive news on productivity, Unit labor costs in the non-farm business sector also decreased 0.8% in the third quarter of 2023 against consensus expectations for an increase of 0.7%. Nominal wages reflected by hourly compensation increased 3.9%. But the large gain in productivity ensured unit labour costs remained low. According to the BLS, during the current business cycle which started from the 4th quarter of 2019, labor productivity has grown at an annual rate of 1.4% only, reflecting a 2.0% annual growth in output and a 0.7% annual rise in hours worked. This 1.4% rate is historically a low productivity rate compared to the long term historical average (since 1947) of 2.1%. The last point to note is that this data tends to be volatile and is often revised significantly.  

7th Sep 2023

Key takeaway: The BLS released revised Q2 2023 labour productivity and unit labour cost data on 7th Sep 2023. Non-farm business sector labor productivity for Q2 was revised downwards from 3.7% in the preliminary estimate to 3.5%. Even with the revision, a 3.5% increase in productivity is a healthy number. Output increased by 1.9% and hours worked actually decreased by 1.5%, resulting in a substantial productivity gain. The decline in hours worked is the first since the second quarter of 2020 (peak covid). While the productivity gain is impressive, the lower hours worked are not a great indicator of positive momentum in the economy. Compared to the year ago quarter, productivity also increased 1.3%. On the other hand, Unit labor costs in the non-farm business sector were revised upwards for Q2 – from an initial estimate of 1.6% to a revised estimate of 2.2%. Nominal wages showed an increase of 5.7% in hourly compensation, which was offset by the improvement in productivity. According to the BLS, during the current business cycle which started from the 4th quarter of 2019, labor productivity has grown at an annual rate of 1.3% only, reflecting a 2.0% annual growth in output and a 0.6% annual rise in hours worked. This 1.3% rate is historically a low productivity rate compared to the long term historical average (since 1947) of 2.1%. The last point to note is that this data tends to be volatile and is often revised significantly.  

3rd Aug 2023

Key takeaway: Non-farm business sector labor productivity increased 3.7% in the second quarter of 2023. That was significantly above consensus expectations for a productivity increase of 2.0%. Output increased by 2.4% and hours worked actually decreased by 1.3%, resulting in a substantial productivity gain. Compared to the year ago quarter, productivity also increased 1.3%. Similar to the positive news on productivity, Unit labor costs in the non-farm business sector increased by a lower than expected 1.6% in the second quarter of 2023. Consensus expectations were for an increase of 2.6%. However, nominal wages showed an increase of 5.5% in hourly compensation, which was offset by the improvement in productivity. According to the BLS, during the current business cycle which started from the 4th quarter of 2019, labor productivity has grown at an annual rate of 1.4% only, reflecting a 2.0% annual growth in output and a 0.7% annual rise in hours worked. This 1.4% rate is historically a low productivity rate compared to the long term historical average (since 1947) of 2.1%. The last point to note is that this data tends to be volatile and is often revised significantly.  

1st Jun 2023

Key takeaway: The BLS released revised Q1 2023 labour productivity and unit labour cost data on 1 Jun 2023. The preliminary estimates had shown Non-farm business sector labor productivity decreased 2.7% in the first quarter of 2023. That number was revised down to 2.1%. Output was revised from 0.2% up to 0.5% up. And hours worked were revised from an increase of 3.0% to an increase of 2.6%. Compared to the year ago quarter, the revised numbers showed productivity decreased 0.8% as output increased 1.4% and hours worked increased 2.2%. Unit labor costs in the non-farm business sector was revised from an increase of 6.3% to an increase of 4.2% in the first quarter of 2023. Despite the revised the summary remains that the sharp decrease in productivity and the increase in unit labor costs only underscores the inflation challenge facing the Fed. However, in a significant development, the BLS revised 4th quarter 2022 unit labour costs from and increase of 3.3% to a decrease of 2.2%. These numbers do tend to be volatile. But this is nonetheless an important revision since it shows unit labor costs falling instead of rising in 4Q 2022. If real hourly compensation was lower than the market previously thought, it might suggest that the real purchasing power and savings of the consumers might deplete faster than currently presumed.  

4th May 2023

Key takeaway: Non-farm business sector labor productivity decreased 2.7% in the first quarter of 2023. Output increased by 0.2% and hours worked increased by 3.0%. Compared to the year ago quarter, productivity also decreased 0.9% as output increased 1.3% and hours worked increased 2.3%. Unit labor costs in the non-farm business sector increased 6.3% in the first quarter of 2023, reflecting a 2.3% increase in hourly compensation and a 2.7% decrease in productivity. The sharp decrease in productivity and the increase in unit labor costs only underscores the inflation challenge facing the Fed. According to the BLS, during the current business cycle which started from the 4th quarter of 2019, labor productivity has grown at an annual rate of 1.1% only, reflecting a 1.9% annual growth in output and a 0.8% annual rise in hours worked. This 1.1% rate is historically a low productivity rate. No previous business cycle had lower productivity growth except for a brief 6 quarter cycle from 1980 Q1 to 1981 Q3, when productivity grew 1.0%. 

Unit Labor Costs measure the annualized change in the price businesses pay for labor, excluding the farming industry. The Bureau of Labor Statistics calculates unit labor costs as the ratio of hourly compensation to labor productivity. Productivity is a measure of economic performance that compares the amount of goods and services produced (output) with the amount of inputs used to produce those goods and services. In the context of this data, the BLS calculates Labor Productivity or Output per hour, by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors and unpaid family workers. Data on Productivity and Costs is released by the Bureau of Labor Statistics every quarter. Typically a preliminary read is released in the first week of the 2nd month of the subsequent quarter with the final reading coming later in the first week of the 3rd month.

Unit Labor Costs and Productivity – BLS