2019 First Quarter (Revised) 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, Revised

Nonfarm business sector labor productivity increased 3.4 percent in the first quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 3.9 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 1.6 percent in the first quarter of 2019, and decreased 0.8 percent over the last four quarters--the lowest four-quarter rate since a 1.7-percent decline in the fourth quarter of 2013. (See and 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 0.4 percent in the first quarter of 2019, as output decreased 2.0 percent and hours worked decreased 2.4 percent. Productivity declined 0.6 percent in the durable manufacturing sector, reflecting a 2.8-percent decrease in output and a 2.2-percent decrease in hours worked. Productivity increased 1.6 percent in the nondurable manufacturing sector as output fell 1.1 percent but hours worked fell 2.6 percent. Over the last four quarters, total manufacturing sector productivity increased 0.8 percent, as output increased 1.6 percent and hours worked increased 0.7 percent. Unit labor costs in the manufacturing sector increased 2.0 percent in the first quarter of 2019 and saw no change 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 first-quarter 2019 measures were announced today for the nonfinancial corporate sector. Productivity decreased 0.4 percent in the first quarter of 2019 and increased 1.3 percent over the last four quarters. Unit profits of nonfinancial corporations fell at a 17.9 percent annual rate in the first quarter of 2019 and increased 3.7 percent over the last four quarters. (See table 6.)

Revised measures

Measures released today are based on more recent source data than were available for the preliminary report. Table B1 presents previous and revised productivity and related measures for the business, nonfarm business, and manufacturing sectors for the first quarter of 2019.

In the first quarter of 2019, nonfarm business productivity rose 3.4 percent, rather than 3.6 percent as reported May 2, due solely to a 0.2-percentage point downward revision to output. Unit labor costs were revised down and decreased 1.6 percent, as hourly compensation was revised down by more than productivity. In the manufacturing sector, productivity was revised down from an increase of 1.7 percent to an increase of 0.4 percent, due primarily to a 1.0-percentage point downward revision to output; hours worked were revised up 0.2 percentage points. Unit labor costs increased 2.0 percent rather than the preliminary estimate of 0.8 percent, reflecting the downward revision to productivity; hourly compensation increased at the same 2.4 percent rate reported previously.

In the fourth quarter of 2018, labor productivity in the nonfarm business sector increased at the same 1.3-percent rate reported May 2. Hourly compensation was revised down from the previously reported increase of 3.9 percent to a 0.9-percent increase. As a result, unit labor costs decreased 0.4 percent in the fourth quarter of 2018, rather than increasing 2.5 percent. Total manufacturing sector productivity increased 1.0 percent in the fourth quarter of 2018, a smaller increase than previously reported. Hourly compensation was revised down 0.9 percentage point to a 3.4-percent increase; this led to a downward revision to unit labor costs, which rose 2.4 percent rather than increasing 3.2 percent.

In the nonfinancial corporate sector, productivity rose 1.4 percent in the fourth quarter of 2018 rather than increasing 3.2 percent as previously reported, due solely to a downward revision to output. Annual average productivity in the nonfinancial corporate sector increased 2.0 percent in 2018, rather than the preliminary estimate of 2.1 percent.

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