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

2nd Nov 2023

Unit Labour Costs and Productivity

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