4Q2018 Final: Headline Productivity Improved But Roughly The Same As Unit Labor Cost Growth

A simple summary of the headlines for this release is that costs and productivity rose around the same amount in 4Q2018.

Analyst Opinion of Productivity and Costs

The preliminary release was affected by the government shutdown so the final release now provides the first glimpse of productivity in 4Q2018. Note from BLS:

This is the first publication of fourth quarter and annual average 2018 measures of labor productivity and costs for the business and nonfarm business sectors, reflecting the Feb. 28, 2019 release of source data on output and compensation by the U.S. Department of Commerce. Also, data in this release reflect the annual benchmark revision of BLS Current Employment Statistics program data on private nonfarm employment and hours, and historical revision of those data

The overall view this quarter is that productivity is up 1.9% from the same quarter one year ago, while unit costs are up 1.0%.

The market was expecting from Econoday:

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Please note that the following graphs are for a sub-group of the report nonfarm > business.

Seasonally Adjusted Year-over-Year Change in Output of Business Sector

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Seasonally Adjusted Year-over-Year Change of Output per Hour for the Business Sector

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All this is happening while business sector unit labor costs increased.

Seasonally Adjusted Year-over-Year Rate of Change of Unit Labor Costs

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The headlines from the press release:

Nonfarm business sector labor productivity increased 1.9 percent in the fourth quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 3.1 percent and hours worked increased 1.2 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2017 to the fourth quarter of 2018, productivity increased 1.8 percent, reflecting a 3.7-percent increase in output and a 1.9-percent increase in hours worked. Annual average productivity increased 1.3 percent from 2017 to 2018.

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