2019 US Productivity Rises Most In A Decade, Real Wages Jump Most Since 2015

After disappointingly contracting by 0.2% in Q3 2019, US Productivity was expected to expand by 1.6% QoQ in Q4, but while it did bounce back, the preliminary US productivity rose only 1.4% QoQ. This enabled a 1.8% YoY gain in productivity for 2019…

 

Source: Bloomberg

This is the biggest annual gain in productivity since 2009…

Source: Bloomberg

Unit labor costs were also up at a 1.4% rate following a 2.5% pace in the previous three months. The report showed inflation-adjusted hourly compensation averaged a 1.9% pace in 2019, the biggest gain since 2015.

Subdued productivity has been a long-running topic of debate among economists. In an October 2019 speech, Federal Reserve Chairman Jerome Powell pointed out several possible reasons, including that the productivity slowdown may be overstated due to mismeasurement.

Earlier this week, former Fed Chair Janet Yellen said slow productivity growth is a “huge concern.”