US Nonfarm Labor Productivity Falls by the Largest in 61 Years in Q3 2021

Source: Bureau of Labor Statistics

US nonfarm labor productivity in the business sector slumped 5.2% in the third quarter, the largest decline since the second quarter of 1960. SPY is up +1.86%, DXY is up +0.17%.

• From the prior year, nonfarm labor productivity was down by 0.6%.
• The falls in nonfarm labor productivity happened amid an overall 1.8% jump in output while the hours worked rose by 7.4%.
• Nonfarm unit labor costs increased by 9.6% from the prior year, with a 3.9% rise in hourly compensation and a 5.2% slump in productivity. Unit labor costs are now up 6.3% over the last four quarters.
• Labor productivity in the manufacturing sector fell by 1.8%, with input increases of 5.1% and hours worked gain of 7.0%. The productivity is now 1.0% above the level before the pandemic.
• Unit labor costs in the manufacturing sector were up 4.6% in the third quarter, a 2.7% increase in hourly compensation, and a 1.8% productivity decline. The costs are 3.7% above last year. 
• The nonfarm business labor productivity is now 2.8% higher than the fourth quarter of 2019, representing an annual 1.6% growth rate through the pre-pandemic quarter.