2018 Third Quarter (Preliminary) Productivity and Costs

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

Third Quarter 2018, Preliminary

Nonfarm business sector labor productivity increased 2.2 percent during the third quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 4.1 percent and hours worked increased 1.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2017 to the third quarter of 2018, productivity increased 1.3 percent, reflecting a 3.7-percent increase in output and a 2.4-percent increase in hours worked. (See tables A1 and 2.)

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 1.2 percent in the third quarter of 2018, reflecting a 3.5-percent increase in hourly compensation and a 2.2-percent increase in labor productivity. Unit labor costs increased 1.5 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 output per hour tend to reduce them.

Manufacturing sector labor productivity increased 0.5 percent in the third quarter of 2018, as output increased 3.4 percent and hours worked increased 2.9 percent. Productivity increased 1.5 percent in the durable manufacturing sector, as output rose 4.9 percent and hours worked increased 3.4 percent. In the non-durable goods manufacturing sector, a 0.1-percent decline in productivity reflected a 1.9-percent increase in output and a 2.0-percent increase in hours worked. Over the last four quarters, total manufacturing sector productivity increased 1.3 percent, as output increased 3.4 percent and hours worked increased 2.1 percent. Unit labor costs in manufacturing increased 0.9 percent in the third quarter of 2018 and increased 0.9 percent from the same quarter a year ago. (See tables A1 and 3.)

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.

Revised measures

Revised and previous measures for the second quarter of 2018 are shown in tables A2 and B1, covering the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

In the second quarter of 2018, nonfarm business sector productivity increased 3.0 percent, slightly higher than reported on September 6. Unit labor costs declined 1.0 percent during the second quarter, the same rate as previously reported. In the manufacturing sector, productivity was revised down 0.3 percentage point to an increase of 1.2 percent, due to a downward revision to output. Durable manufacturing productivity was revised down from 1.1 percent to 0.3 percent, due to a downward revision to output; nondurable manufacturing productivity was revised up slightly to 2.4 percent. Unit labor costs in total manufacturing increased 0.1 percent rather than decreasing 0.2 percent as previously reported.

Second-quarter 2018 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity decreased 0.9 percent rather than decreasing 0.7 percent as previously reported. Unit labor costs increased 2.7 percent rather than the preliminary estimate of a 2.4-percent increase. (See table A2.)

Complete annual and quarterly data series can be found on the Productivity and Costs home page: www.bls.gov/lpc/#data.

Manufacturing Previous quarter 0.5 3.4 2.9 1.5 -0.5 0.9 A Year ago 1.3 3.4 2.1 2.2 -0.4 0.9 Durable manufacturing Previous quarter 1.5 4.9 3.4 1.8 -0.2 0.3 A year ago 1.6 4.0 2.4 2.7 0.1 1.1 Nondurable manufacturing Previous quarter -0.1 1.9 2.0 0.8 -1.2 0.9 A year ago 1.2 2.7 1.5 1.2 -1.4 0.0