Productivity increases 1.7% in Q4 2022; unit labor costs increase 3.2% (annual rates)

[mahatmakanejeeves]

Productivity increases 1.7% in Q4 2022; unit labor costs increase 3.2% (annual rates)

Productivity increased 1.7 percent in the nonfarm business sector in the fourth quarter of 2022; unit labor costs increased 3.2 percent (seasonally adjusted annual rates). In manufacturing, productivity decreased 2.7 percent and unit labor costs increased 7.7 percent.

[progree]

1. Some interesting additional excerpts

[in the 4th quarter] unit labor costs increased 3.2 percent (seasonally adjusted annual rates)

The PCE increased 3.2%, the CPI increased 3.4% (In both cases, December over September, then annualized). So unit labor costs aren't exceeding the general rate of inflation.

This 1.7-percent increase in labor productivity for the fourth quarter of 2022 is 1.3 percentage points below the preliminary estimate of a 3.0-percent increase.

That's quite a downward revision in estimates.

From the same quarter a year ago, nonfarm business sector labor productivity decreased 1.8 percent, reflecting a 0.7-percent increase in output and a 2.6-percent increase in hours worked. (See table A1.) Annual average productivity decreased 1.7 percent from 2021 to 2022. This is the largest annual decline in the measure since 1974, when productivity also decreased 1.7 percent. (See table C1.)

Unit labor costs increased 6.3 percent over the last four quarters. (See tables A1 and 2.)

The PCE increased 5.3%, the CPI increased 6.4%. So unit labor costs aren't exceeding the general rate of inflation.

. . . Real hourly compensation, which takes into account consumer prices, increased 0.7 percent in the fourth quarter, and declined 2.4 percent over the last four quarters.

Ugh

. . . Labor productivity has grown at an annualized rate of 1.4 percent since the last business cycle peak in the fourth quarter of 2019--the last quarter before the COVID-19 pandemic and ensuing recession--reflecting a 2.1-percent rate of growth in output and a 0.7-percent rate of growth in hours worked over that three-year period.

So at least we've managed a 1.4% annualized increase since the pre-Covid peak. That's good considering.