2022 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 2022, Revised

Nonfarm business sector labor productivity decreased 7.3 percent in the first quarter of 2022, the U.S. Bureau of Labor Statistics reported today, as output decreased 2.3 percent and hours worked increased 5.4 percent. This is the largest decline in quarterly productivity since the third quarter of 1947, when the measure decreased 11.7 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.6 percent, reflecting a 4.2-percent increase in output that was outpaced by a 4.8-percent increase in hours worked. (See table A1.) This is the largest four-quarter decline since the fourth quarter of 1993, when the measure also declined 0.6 percent.

Unit labor costs in the nonfarm business sector increased 12.6 percent in the first quarter of 2022, reflecting a 4.4-percent increase in hourly compensation and a 7.3-percent decrease in productivity. Unit labor costs increased 8.2 percent over the last four quarters. (See tables A1 and 2.) This is the largest four-quarter increase in this measure since another 8.2-percent increase in the third quarter of 1982. 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 productivity tend to reduce them.

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. With the 5.4 percent increase to hours worked in the first quarter of 2022, this marks the first quarter that both the output and hours worked measures have surpassed their levels in the fourth quarter of 2019, the last quarter not affected by the COVID-19 pandemic. The first-quarter 2022 output index is 3.5 percent above the level seen in the fourth quarter of 2019, and the hours worked index is now 0.8 percent above its fourth quarter 2019 level. The labor productivity index is 2.6 percent higher in first-quarter 2022 than in fourth-quarter 2019, corresponding to an annual labor productivity growth rate of 1.2 percent during that period.

Manufacturing sector labor productivity increased 0.2 percent in the first quarter of 2022, as output increased 5.1 percent and hours worked increased 4.9 percent. In the durable manufacturing sector, productivity increased 0.9 percent, with a 6.9-percent increase in output and a 6.0-percent increase in hours worked. Nondurable manufacturing sector productivity saw no change, as both output and hours worked increased 3.2 percent. Total manufacturing sector productivity increased 1.5 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Manufacturing sector output is now 3.1 percent above its level in the fourth quarter of 2019, the last quarter not affected by the COVID-19 pandemic. Hours worked in manufacturing remain 1.0 percent below the fourth-quarter 2019 level. The manufacturing labor productivity index is 4.2 percent higher in first-quarter 2022 than in fourth-quarter 2019, corresponding to an annual labor productivity growth rate of 1.8 percent during that period.

Unit labor costs in the total manufacturing sector increased 5.7 percent in the first quarter of 2022, reflecting a 5.9-percent increase in hourly compensation and a 0.2-percent increase in productivity. Manufacturing unit labor costs increased 4.8 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 first-quarter 2022 measures were announced today for the nonfinancial corporate sector. Productivity decreased 5.0 percent in the first quarter of 2022 as output increased 0.7 percent and hours worked increased 6.0 percent. Productivity decreased 0.2 percent over the last four quarters. Though unit profits of nonfinancial corporations decreased at a 5.1 percent annual rate in the first quarter of 2022, the measure increased 9.9 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. 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 fourth quarter of 2021 and the first quarter of 2022.

In the first quarter of 2022, nonfarm business sector productivity decreased 7.3 percent, a slightly smaller decline than the previously reported decrease of 7.5 percent. Output was revised up 0.1 percentage point and hours worked was revised down 0.1 percentage point. Unit labor costs increased 12.6 percent rather than increasing 11.6 percent as previously reported, reflecting a 1.2-percentage point upward revision to hourly compensation and a 0.2-percentage point upward revision to labor productivity. In the manufacturing sector, productivity was revised down from a 0.7-percent increase to a 0.2-percent increase, reflecting a 0.6- percentage point downward revision to output and a 0.2-percentage point downward revision to hours worked. Manufacturing unit labor costs increased 5.7 percent rather than the preliminary estimate of 2.1 percent, the combined effect of a 3.1-percentage point upward revision to hourly compensation and a 0.5-percentage point downward revision to productivity.

In the fourth quarter of 2021, labor productivity in the nonfarm business sector increased at the same 6.3- percent rate reported last month. Hourly compensation was revised up from the previously reported increase of 7.4 percent to an increase of 10.5 percent. As a result, unit labor costs increased 3.9 percent in the fourth quarter of 2021, rather than increasing 1.0 percent. Total manufacturing sector productivity, output, and hours worked were all unrevised in the fourth quarter of 2021. Hourly compensation was revised up 8.5 percentage points to a 9.6-percent increase; this led to an 8.6-percentage point upward revision to unit labor costs, from an increase of 1.7 percent to an increase of 10.3 percent.

In the nonfinancial corporate sector, productivity rose 1.1 percent in the fourth quarter of 2021 rather than 0.0 percent as previously reported, due to a 1.1-percentange point upward revision to output. Hours worked were unrevised. Annual average productivity in the nonfinancial corporate sector increased 4.6 percent in 2021, rather than the preliminary estimate of 4.5 percent.

Complete quarterly and annual data series can be found on the Productivity and Costs home page: www.bls.gov/ productivity/data-overview.htm.

Durable Previous quarter 0.9 6.9 6.0 6.0 -2.9 5.1 manufacturing A year ago 2.0 5.0 2.9 5.1 -2.6 3.1

Nondurable Previous quarter 0.0 3.2 3.2 5.5 -3.3 5.5 manufacturing A year ago 0.8 5.1 4.3 8.8 0.8 8.0

Nonfinancial Previous quarter -5.0 0.7 6.0 4.2 -4.6 9.7 corporate A year ago -0.2 4.5 4.7 8.1 0.1 8.3