New Report: Mixed Sentiments in Labor Productivity with Bullish Indicators Outweighing the Bearish Ones
COVID and work from home caused the largest decline in productivity since 1974
Overall, the sentiment seems to be somewhat mixed, with both bullish and bearish indicators
The nonfarm business sector labor productivity increased by 1.7% in the fourth quarter of 2022, driven by a 3.1% increase in output and a 1.4% increase in hours worked. However, the annual average productivity decreased by 1.7% from 2021 to 2022, which is the largest decline since 1974.
The nonfinancial corporate sector productivity increased by 0.6% in the third quarter of 2022, instead of decreasing by 1.6% as previously reported. Unit labor costs were revised up by 1.8 percentage points to an increase of 7.1%.
The labor productivity has grown at an annualized rate of 1.4% since the last business cycle peak in the fourth quarter of 2019.
The BLS Current Employment Statistics program provides monthly survey data on the number of jobs held by and hours paid to wage and salary workers in nonfarm establishments. The CES program has updated the national nonfarm payroll series to the 2022 North American Industry Classification System.
Bullish Sentiments
Nonfarm business sector labor productivity increased by 1.7% in the fourth quarter of 2022, driven by a 3.1% increase in output.
Nonfinancial corporate sector productivity increased by 0.6% in the third quarter of 2022.
Labor productivity has grown at an annualized rate of 1.4% since the last business cycle peak in the fourth quarter of 2019.
Labor productivity and hourly compensation have been increasing.
Unit labor costs and prices have been increasing at a slower rate.
Bearish Sentiments
Annual average productivity decreased by 1.7% from 2021 to 2022, which is the largest decline since 1974.
Unit labor costs were revised up by 1.8 percentage points to an increase of 7.1%.
In the fourth quarter of 2022, unit labor costs increased by 2.6%.
In the third quarter of 2020, unit labor costs increased by 38.2%.
There has been significant volatility in the data over the past few quarters, particularly in the third quarter of 2020.
Summarized Main Points
Nonfarm business sector labor productivity increased by 1.7% in Q4 2022, driven by a 3.1% increase in output and a 1.4% increase in hours worked.
However, the annual average productivity decreased by 1.7% from 2021 to 2022, which is the largest decline since 1974.
The nonfinancial corporate sector productivity increased by 0.6% in Q3 2022, instead of decreasing by 1.6% as previously reported.
Unit labor costs were revised up by 1.8 percentage points to an increase of 7.1%.
Labor productivity has grown at an annualized rate of 1.4% since the last business cycle peak in Q4 2019.
In 2022, labor productivity increased by 1.7% annually, while hourly compensation increased by 2.3%. Unit labor costs and prices increased by 4.0% and 2.4%, respectively.
In Q4 2022, labor productivity increased by 1.8%, while hourly compensation and unit labor costs increased by 0.7% and 2.6%, respectively. Unit nonlabor prices and productions increased by 4.4% and 2.4%, respectively.
Tweetsift’s Conclusion
The overall sentiment seems to be more bullish than bearish.
While there are some negative indicators such as the decline in annual average productivity and the increase in unit labor costs and prices, the increase in labor productivity and hourly compensation are positive indicators.
Additionally, the fact that labor productivity and hourly compensation have been increasing while unit labor costs and prices have been increasing at a slower rate suggests a positive trend.
However, it is important to note that the data also shows significant volatility over the past few quarters, particularly in the third quarter of 2020 because of COVID.