2019 First 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.

First Quarter 2019, Preliminary

Nonfarm business sector labor productivity increased 3.6 percent in the first quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 4.1 percent and hours worked increased 0.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2018 to the first quarter of 2019, productivity increased 2.4 percent, reflecting a 3.9- percent increase in output and a 1.5-percent increase in hours worked. (See table A1.) The four-quarter increase in productivity is the largest since a 2.7-percent gain in the third quarter of 2010.

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 decreased 0.9 percent in the first quarter of 2019, and increased 0.1 percent over the last four quarters--the lowest four-quarter rate since a 1.7-percent decline in the fourth quarter of 2013. (See table 2, and appendix table 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 1.7 percent in the first quarter of 2019, as output decreased 1.0 percent and hours worked decreased 2.6 percent. Productivity increased 1.4 percent in the durable manufacturing sector and 2.1 percent in the nondurable manufacturing sector in the first quarter of 2019. Over the last four quarters, total manufacturing sector productivity increased 1.2 percent, as output increased 1.8 percent and hours worked increased 0.7 percent. Unit labor costs in manufacturing increased 0.8 percent in the first quarter of 2019 and decreased 0.1 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.

Preliminary fourth-quarter and annual 2018 measures were announced today for the nonfinancial corporate sector. Productivity increased 3.2 percent in the fourth quarter of 2018 and increased 2.6 percent over the last four quarters. Annual average productivity increased 2.1 percent from 2017 to 2018. The historical average annual rate of productivity growth in the nonfinancial corporate sector between 1947 and 2018 is 2.2 percent. (See tables A2, C1, and 6.)

Revised measures

Hours and related measures--including labor productivity--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. Percent changes were affected back to 2014 but revisions were small. Measures of real hourly compensation for all sectors also were revised from 2014 forward due to incorporation of the revised Consumer Price Index Research Series Using Current Methods.

Manufacturing output and all related measures--including labor productivity--were revised historically to incorporate revised data from two sources: BLS annual measures of sectoral output from 1987 to 2016, and monthly Indexes of Industrial Production from January 1972 to February 2019, published by the Board of Governors of the Federal Reserve System on March 27, 2019.

In the fourth quarter of 2018, nonfarm business sector productivity increased 1.3 percent, rather than 1.9 percent as reported March 7, reflecting both a downward revision to output and a slight upward revision to hours. Unit labor costs were revised up to an increase of 2.5 percent. Total manufacturing sector productivity increased 1.1 percent in the fourth quarter of 2018, a smaller increase than previously reported. Unit labor costs in the manufacturing sector increased 3.2 percent during the fourth quarter, higher than previously reported. Labor productivity was revised down in the durable manufacturing sector to an increase of 2.4 percent, and was revised down in the nondurable manufacturing sector to an increase of 0.9 percent. (See table B1.)

Annual average productivity growth in the nonfarm business sector was not revised for 2018, and was revised up 0.1 percentage point for 2017. (See table 2.) The annual average rate of manufacturing productivity growth was revised for several of the years from 1988 forward. The average annual rate of productivity growth in the total manufacturing sector from 2007 to 2018--corresponding to the current business cycle--was not revised, increasing 0.7 percent.

Quarterly and annual data for all sectors for recent years appear in tables 1-6 and appendix tables 1-6. Full historical annual and quarterly measures can be found at www.bls.gov/lpc/#data.

Manufacturing Previous quarter 1.7 -1.0 -2.6 2.4 1.5 0.8 A Year ago 1.2 1.8 0.7 1.1 -0.6 -0.1 Durable manufacturing Previous quarter 1.4 -0.9 -2.3 2.6 1.7 1.1 A year ago 1.6 3.0 1.4 0.8 -0.9 -0.8 Nondurable manufacturing Previous quarter 2.1 -1.0 -3.0 2.1 1.2 0.0 A year ago 1.2 0.6 -0.6 1.5 -0.2 0.2

Nonfinancial Previous quarter 3.2 4.5 1.2 3.5 2.0 0.3 corporate A year ago 2.6 4.5 1.8 3.0 0.7 0.3