2019 Second 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.

Second Quarter 2019, Revised

Nonfarm business sector labor productivity increased 2.3 percent in the second quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 1.9 percent and hours worked decreased 0.4 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the second quarter of 2018 to the second quarter of 2019, productivity increased 1.8 percent, reflecting a 2.6-percent increase in output and a 0.9-percent increase in hours worked. The four- quarter increase in hours is the lowest estimate since the second quarter of 2010 (-0.3 percent). (See table A1.)

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 2.6 percent in the second quarter of 2019, and increased 2.6 percent over the last four quarters. (See 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 decreased 2.2 percent in the second quarter of 2019, as output decreased 3.0 percent and hours worked declined 0.8 percent. This is the second consecutive quarter with declines in both output and hours in the manufacturing sector; in the first quarter of 2019 output declined 1.8 percent and hours declined 2.9 percent. This is the first occurrence of two consecutive quarters of declines in both output and hours in manufacturing since the second quarter of 2009.

Productivity declined 0.6 percent in the durable manufacturing sector in the second quarter of 2019, reflecting a 1.9-percent decrease in output and a 1.4-percent decrease in hours worked. Productivity decreased 4.4 percent in the nondurable manufacturing sector as output fell 4.2 percent and hours worked rose 0.1 percent. Over the last four quarters, total manufacturing sector productivity was unchanged, as output increased 0.2 percent and hours worked increased 0.1 percent. Unit labor costs in the manufacturing sector increased 6.7 percent in the second quarter of 2019, and increased 4.5 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 second-quarter 2019 measures of productivity and costs were announced for the nonfinancial corporate sector. Labor productivity increased 2.8 percent in the second quarter of 2019, as output increased 3.1 percent and hours worked increased 0.3 percent. Unit labor costs increased 2.2 percent, as hourly compensation increased 5.1 percent and productivity increased 2.8 percent. Unit profits increased at a 13.2-percent annual rate in the second quarter of 2019. (See tables A2 and 6.)

Revised measures

The 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 nonfarm business, business, and manufacturing sectors.

In the second quarter of 2019, nonfarm business productivity increased 2.3 percent--the same as the preliminary estimate. Unit labor costs increased 2.6 percent, a slightly larger increase than previously reported. Manufacturing sector productivity was revised down to a decrease of 2.2 percent from a previously-reported decrease of 1.6 percent. Unit labor costs increased 6.7 percent, rather than increasing 5.8 percent as previously reported. Durable manufacturing productivity was revised up to a decline of 0.6 percent, smaller than the previously-reported decline of 0.9 percent; nondurable manufacturing productivity was revised down to a decline of 4.4 percent, from a previously-reported decline of 2.6 percent.

In the first quarter of 2019, nonfarm business productivity was not revised. Unit labor costs were revised up slightly to an increase of 5.7 percent. Manufacturing sector productivity was revised up slightly to an increase of 1.2 percent. Unit labor costs were revised up slightly to an increase of 6.9 percent.

In the nonfinancial corporate sector, first-quarter 2019 productivity was revised up slightly to an increase of 1.6 percent. Unit profits were revised down slightly to a decline of 33.7 percent. (See tables B2 and 6.)

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

Nonfinancial Previous quarter 2.8 3.1 0.3 5.1 2.1 2.2 corporate A year ago 2.6 3.9 1.2 3.9 2.1 1.3