Wednesday, November 07, 2007

U.S. Productivity Growth Is The Highest in 4 Years, Real Compensation Up by 2.7%

According to the BLS's report today, productivity in the nonfarm business sector grew by 4.9% in the third quarter, the largest gain in four years - since the third quarter of 2003. The 4.9% productivity growth was well above Wall Street's expectation of 3.4% growth, was also more than twice the average productivity growth over the last 25 years of 2.07% (see chart above, click to enlarge).

The BLS also reported that real compensation, adjusted for inflation, rose 2.7% in the third quarter, well above the average of 2.08% over the last ten years.

4 Comments:

At 11/07/2007 11:05 AM, Anonymous holymoly said...

Maybe productivity (=output per hour) increased because hours worked decreased a half point (See Series PRS85006032).

I also note that productivity increased 5.6% in the first quarter of the 2001 recession.

 
At 11/07/2007 11:25 AM, Anonymous bob wright said...

But if output increased while hours worked decreased, isn't that a good thing?

It took us less time to produce more.

Sounds like more leisure time to me.

Time to crack open another Bell's.

 
At 11/07/2007 5:45 PM, Blogger Walt G. said...

Productivity increased and workers shared in the gain with their employers by increased real compensation. It sounds all good and right to me.

 
At 11/07/2007 8:33 PM, Anonymous holymoly said...

Well, if the output was going to inventory, then, no -- output increasing and hours decreasing is not necessarily a good thing. Shrinking hours worked may be due to layoffs; reduced hours, etc. Productivity is a very noisy signal and is not a very good indicator of economic health, IMO. As I said, productivity spiked before the 2001 recession also.

 

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