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1Q2024 Productivity Growth increased 0.3%
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Nonfarm business sector labor productivity increased 0.3 percent in the first quarter of 2024, the U.S. Bureau of Labor Statistics reported today, as output increased 1.3 percent and hours worked increased 1.0 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity increased 2.9 percent. (See table A1.)
Unit labor costs in the nonfarm business sector increased 4.7 percent in the first quarter of 2024, reflecting a 5.0-percent increase in hourly compensation and a 0.3-percent increase in productivity. Unit labor costs increased 1.8 percent over the last four quarters. (See tables A1 and 2.)
BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them. Real hourly compensation, which takes into account consumer prices, increased 1.1 percent in the first quarter of 2024, and increased 1.5 percent over the last four quarters.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all workers, including employees, proprietors, and unpaid family workers. During the current business cycle, starting in the fourth quarter of 2019, labor productivity has grown at an annual rate of 1.5 percent, reflecting a 2.2-percent rate of growth in output and a 0.7-percent rate of growth in hours worked during the business cycle. The 1.5-percent annual rate of productivity growth in the current business cycle thus far is the same as the 1.5 percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019, and is below the long-term rate since the first quarter of 1947 (2.1 percent).
Manufacturing sector labor productivity increased 0.2 percent in the first quarter of 2024, as output was unchanged and hours worked decreased 0.2 percent. In the durable manufacturing sector, productivity increased 1.2 percent, reflecting a 0.4-percent increase in output and a 0.8-percent decrease in hours worked. Nondurable manufacturing sector productivity decreased 1.3 percent as output decreased 0.4 percent and hours worked increased 0.9 percent. Total manufacturing sector productivity increased 1.2 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)
Unit labor costs in the total manufacturing sector increased 3.2 percent in the first quarter of 2024, reflecting a 3.4-percent increase in hourly compensation and a 0.2-percent increase in productivity. Manufacturing unit labor costs increased 5.0 percent from the same quarter a year ago, reflecting an increase of 1.2 percent in labor productivity and an increase of 6.3 percent in hourly compensation. Real hourly compensation increased 3.0 percent from the same quarter a year ago. (See tables A1 and 3.)
Manufacturing sector labor productivity has grown at an annual rate of 0.3 percent during the current business cycle, as output has grown 0.1 percent and hours have declined 0.2 percent. The 0.3-percent annual rate of productivity growth in the current business cycle thus far is above the 0.0-percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019, and is below the long-term rate since the first quarter of 1987 (2.1 percent).
The concepts, sources, and methods used for the manufacturing output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See the Technical Notes for a more detailed explanation.
Preliminary fourth-quarter and annual 2023 measures were announced today for the nonfinancial corporate sector. Productivity increased 7.9 percent in the fourth quarter of 2023, as output increased 8.1 percent and hours worked increased 0.2 percent. From the fourth quarter of 2022 to the fourth quarter of 2023, nonfinancial corporate sector productivity increased 3.6 percent.
Table C1 presents annual average changes for the most recent 5 years for the nonfinancial corporate sector. Nonfinancial corporate sector productivity increased 1.4 percent in 2023, as output increased 2.9 percent and hours worked increased 1.5 percent. (See tables A2, C1, and 6.)
Revised measures
Hours and related measures--including labor productivity and hourly compensation--for all sectors were revised to incorporate updated ratios of hours worked to hours paid by detailed industry, provided by the BLS National Compensation Survey; indexes were subject to revision back to 2015. Measures of real hourly compensation for all sectors were also subject to revision due to the incorporation of the revised Consumer Price Index Retroactive Series. Third quarter, fourth quarter, and annual average data for 2023 were revised to incorporate regular updates of source data on output and compensation published by the Department of Commerce on April 25, 2024, and data on manufacturing output published by the Board of Governors of the Federal Reserve System on April 16, 2024.
Table B1 presents previous and revised productivity and related measures for the business, nonfarm business, and manufacturing sectors for the fourth quarter of 2023.
In the fourth quarter of 2023, nonfarm business sector productivity was revised up 0.2 percentage point to an increase of 3.5 percent, reflecting a 0.3-percentage point upward revision to output; hours worked were not revised. Nonfarm business unit labor costs were revised down 0.4 percentage point to 0.0 percent. Total manufacturing sector productivity was revised up 0.9 percentage point to an increase of 2.4 percent in the fourth quarter of 2023, reflecting a 1.0-percentage point upward revision to output and a 0.2-percentage point upward revision to hours worked. Unit labor costs in the manufacturing sector were revised down 1.1 percentage point to an increase of 4.2 percent during the fourth quarter of 2023. Labor productivity was revised up 1.2 percentage point in the durable manufacturing sector to an increase of 0.5 percent. In the nondurable manufacturing sector, labor productivity was revised up 0.7 percentage point to an increase of 4.7 percent. (See table B1.)
The annual average rate of productivity growth in the nonfarm business sector in 2023 was revised up 0.1-percentage point to an increase of 1.4 percent. For the manufacturing sector, annual average productivity in 2023 was also revised up 0.1-percentage point, to a decline of 0.6 percent. (See tables 2 and 3.)
Quarterly and annual data for all sectors from 2022 forward appear in tables 1-6. Full historical measures can be found on the Productivity and Costs home page: www.bls.gov/productivity/tables/
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Posted: May 2, 2024 Thursday 08:30 AM