2019 Third 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.

Third Quarter 2019, Revised

Nonfarm business sector labor productivity decreased 0.2 percent in the third quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 2.3 percent and hours worked increased 2.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2018 to the third quarter of 2019, productivity increased 1.5 percent, reflecting a 2.3-percent increase in output and a 0.9-percent increase in hours worked. (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 2.5 percent in the third quarter of 2019, reflecting a 2.3-percent increase in compensation per hour and a 0.2-percent decline in productivity. Unit labor costs increased 2.2 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 increased 0.1 percent in the third quarter of 2019, as output increased 1.3 percent and hours worked increased 1.2 percent. Total manufacturing sector productivity declined 0.1 percent over the last four quarters, as output decreased 0.5 percent and hours worked decreased 0.4 percent. (See tables A1 and 3.) Productivity increased 0.7 percent in the durable manufacturing sector in the third quarter of 2019, reflecting a 1.8-percent increase in output and a 1.0- percent increase in hours worked. Productivity decreased 0.8 percent in the nondurable manufacturing sector as output increased 0.8 percent and hours worked increased 1.6 percent. (See tables A1, 4, and 5.) Unit labor costs in the total manufacturing sector increased 3.0 percent in the third quarter of 2019, and increased 4.4 percent from the same quarter a year ago.

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 third-quarter 2019 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased at a 3.0-percent rate in the third quarter of 2019 and increased 1.7 percent over the last four quarters. Unit labor costs decreased 0.6 percent in the third quarter of 2019 and increased 1.7 percent over the last four quarters. Unit profits--a measure available only for the nonfinancial corporate sector--decreased 0.8 percent in the third quarter of 2019 and decreased 7.3 percent over the last four quarters. (See tables A2 and 6.)

Revised measures

Measures released today are based on more recent source data than were available for the preliminary report. Regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the Board of Governors of the Federal Reserve System are reflected in data for the second and third quarters of 2019.

In the third quarter of 2019, nonfarm business labor productivity decreased 0.2 percent rather than the preliminary estimate of a decline of 0.3 percent, as a 0.2-percentage point upward revision to output was greater than a 0.1-percentage point upward revision to hours worked. Unit labor costs were revised down 1.1 percentage points due primarily to a downward revision to hourly compensation. In the manufacturing sector, productivity increased 0.1 percent rather than decreasing 0.1 percent as previously reported, reflecting an upward revision to output and a downward revision to hours worked. Durable manufacturing productivity increased 0.7 percent rather than increasing 1.2 percent as previously reported, reflecting a 0.6-percentage point downward revision to output and a 0.2-percentage point downward revision to hours worked. Nondurable manufacturing productivity was revised up to a decline of 0.8 percent rather than a decline of 1.5 percent as previously reported, primarily due to a 1.0- percentage point upward revision to output. Total manufacturing unit labor costs were revised down 0.6 percentage point to an increase of 3.0 percent--the combined effect of the upward revision to productivity and a downward revision to hourly compensation.

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