2019 Fourth 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.

Fourth Quarter and Annual Averages 2019, Preliminary

Nonfarm business sector labor productivity increased 1.4 percent in the fourth quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 2.5 percent and hours worked increased 1.1 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2018 to the fourth quarter of 2019, productivity increased 1.8 percent, reflecting a 2.7-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 1.4 percent in the fourth quarter of 2019 as hourly compensation grew at a faster rate (2.8 percent) than productivity (1.4 percent). Unit labor costs increased 2.4 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 1.2 percent in the fourth quarter of 2019, as output decreased 1.0 percent and hours worked increased 0.2 percent. Total manufacturing sector productivity declined 0.7 percent over the last four quarters, as output decreased 1.2 percent and hours worked decreased 0.5 percent. (See tables A1 and 3.) Productivity decreased 0.8 percent in the durable manufacturing sector in the fourth quarter of 2019, reflecting a 1.6-percent decrease in output and a 0.8-percent decrease in hours worked. Productivity decreased 2.2 percent in the nondurable manufacturing sector, as output decreased 0.4 percent and hours worked increased 1.9 percent. (See tables A1, 4, and 5.) Unit labor costs in the total manufacturing sector increased 5.9 percent in the fourth quarter of 2019, and increased 5.3 percent from the same quarter a year ago. (See table A1.)

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 previously published measures for the third quarter of 2019 are shown in tables A2 and B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

Manufacturing output and all related measures--including labor productivity--were revised historically to incorporate revised BLS annual measures of sectoral output from 1987 to 2017. 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 third and fourth quarters of 2019.

In the third quarter of 2019, nonfarm business productivity decreased 0.2 percent, the same rate as previously reported. (See table B1.) Unit labor costs in the nonfarm business sector increased 2.5 percent in the third quarter, also the same rate as previously reported.

In the manufacturing sector, productivity was revised down 0.4 percentage point, to a decrease of 0.3 percent. Manufacturing unit labor costs increased 3.3 percent, a 0.3-percentage point upward revision from the previous estimate.

In the nonfinancial corporate sector, productivity was revised down 0.6 percentage point in the third quarter of 2019, to an increase of 2.4 percent. This downward revision to productivity is the result of a 0.6-percentage point downward revision to output; hours worked increased 0.6 percent as previously reported. (See table A2.)

Annual averages

Unit labor costs in the nonfarm business sector increased 2.0 percent in 2019, reflecting increases of 3.8 percent in hourly compensation and 1.7 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 1.9 percent in 2019.

In the manufacturing sector, the annual average changes in labor productivity, output, and hours worked were all 0.0 percent in 2019. The average annual rate of manufacturing productivity growth from 2007 to 2019 is 0.4 percent, well below the long-term rate from 1987 to 2019 of 2.5 percent. Unit labor costs increased 3.8 percent in 2019.

Quarterly and annual data, where available, for all sectors from 2017 to 2019 appear in tables 1-6. Full historical measures can be found on the Productivity and Costs home page: www.bls.gov/lpc/#data.