2019 Fourth 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.

Fourth Quarter and Annual Averages 2019, Revised

Nonfarm business sector labor productivity increased 1.2 percent in the fourth quarter of 2019, the U.S. Bureau of Labor Statistics reported today, as output increased 2.4 percent and hours worked increased 1.2 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 2.6-percent increase in output and a 0.8-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 0.9 percent in the fourth quarter of 2019 as hourly compensation grew at a faster rate (2.1 percent) than productivity (1.2 percent). Unit labor costs increased 1.7 percent over the last four quarters. (See table 2.)

Historical Revisions to Productivity and Costs Data

Data in this release reflect the annual benchmark revision of BLS Current Employment Statistics program data on private nonfarm employment and hours. See Revised measures.

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 0.8 percent in the fourth quarter of 2019, as output decreased 0.4 percent and hours worked increased 0.4 percent. Total manufacturing sector productivity declined 0.6 percent over the last four quarters, as output decreased 1.1 percent and hours worked decreased 0.5 percent. (See tables A1 and 3.) Productivity decreased 0.9 percent in the durable manufacturing sector in the fourth quarter of 2019, reflecting a 1.4-percent decrease in output and a 0.5- percent decrease in hours worked. Productivity decreased 1.2 percent in the nondurable manufacturing sector, as output increased 0.8 percent and hours worked increased 2.0 percent. (See tables A1, 4, and 5.) Unit labor costs in the total manufacturing sector increased 3.6 percent in the fourth quarter of 2019, and increased 3.7 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

Quarterly and annual measures of hours and related series--including productivity--were revised historically for all major sectors. The revisions incorporate revised Current Employment Statistics (CES) program data published February 7, 2020. From 2015 to 2019, the data were subject to revision as a result of annual benchmarking of CES data and revised seasonal adjustment of those data. From 1990 onward, there were small revisions due to the CES reconstruction of two sectors; the transportation and warehousing sector, and the financial activities sector. Because hours worked were revised for the index base year of 2012, all measures incorporating hours worked--including productivity--were subject to revision back to 1947; resulting revisions to percent changes are small. Quarterly and annual measures of real hourly compensation for 2019 were revised due to revisions to consumer prices. In addition, third quarter, fourth quarter, and annual average data for 2019 were revised to incorporate regular updates of source data on output and compensation.

Revised and previous measures for the fourth quarter of 2019 are shown in table B1 for the business, nonfarm business, and manufacturing sectors. In the fourth quarter of 2019, nonfarm business productivity was revised down slightly from an increase of 1.4 percent to an increase of 1.2 percent, reflecting a 0.1-percentage point downward revision to output and a 0.1-percentage point upward revision to hours. Unit labor costs were revised down from an increase of 1.4 percent to an increase of 0.9 percent.

Manufacturing productivity decreased 0.8 percent rather than decreasing 1.2 percent in the fourth quarter of 2019, reflecting an upward revision to output that was larger than an upward revision to hours. A downward revision to hourly compensation and an upward revision to productivity both contributed to a downward revision to unit labor costs, which increased 3.6 percent rather than 5.9 percent as previously reported. (See table B1.)

In the third quarter of 2019, nonfarm business productivity was revised down slightly to a decline of 0.3 percent. Unit labor costs were revised down to an increase of 0.2 percent rather than 2.5 percent as previously reported, reflecting a 2.4-percentage point downward revision to hourly compensation. In the manufacturing sector, productivity declined 0.5 percent rather than declining 0.3 percent as previously reported. Unit labor costs declined 0.7 percent rather than increasing 3.3 percent as previously reported, reflecting a large downward revision to hourly compensation. (See table B2.) Nonfinancial corporate sector productivity increased 0.9 percent in the third quarter of 2019 rather than 2.4 percent as previously reported, reflecting a 1.3-percentage point downward revision to output and a 0.1-percentage point upward revision to hours. (See table A2.)

Annual averages

Unit labor costs in the nonfarm business sector increased 1.7 percent in 2019, reflecting increases of 3.6 percent in hourly compensation and 1.9 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 1.8 percent in 2019.

In the manufacturing sector, productivity grew 0.1 percent in 2019, as output was unchanged and hours worked decreased 0.1 percent. 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 3.1 percent in 2019.

Quarterly and annual data 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.