2022 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 2022, Revised

Nonfarm business sector labor productivity increased 0.8 percent in the third quarter of 2022 rather than the preliminary estimate of 0.3 percent, the U.S. Bureau of Labor Statistics reported today, as output increased 3.3 percent and hours worked increased 2.5 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 1.3 percent, reflecting a 2.1-percent increase in output and a 3.4- 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 2.4 percent in the third quarter of 2022, reflecting a 3.2-percent increase in hourly compensation and a 0.8-percent increase in productivity. Unit labor costs increased 5.3 percent over the last four quarters. (See tables A1 and 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 productivity tend to reduce them. Real hourly compensation, which takes into account consumer prices, declined 2.3 percent in the third quarter and declined 4.0 percent over the last four quarters--the largest four-quarter decline in the series, which begins in the first quarter of 1948.

Manufacturing sector labor productivity decreased 2.9 percent in the third quarter of 2022, as output increased 0.6 percent and hours worked increased 3.6 percent. In the durable manufacturing sector, productivity decreased 5.0 percent, with a 1.7-percent increase in output and a 7.1-percent increase in hours worked. Nondurable manufacturing sector productivity increased 1.3 percent, as output decreased 0.7 percent and hours worked decreased 1.9 percent. Total manufacturing sector productivity decreased 1.1 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 5.8 percent in the third quarter of 2022, reflecting a 2.7-percent increase in hourly compensation and a 2.9-percent decrease in productivity. Manufacturing unit labor costs increased 5.2 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 third-quarter 2022 measures were announced today for the nonfinancial corporate sector. (See table A2.) Productivity decreased 1.8 percent in the third quarter of 2022 as output and hours worked increased 1.8 percent and 3.7 percent, respectively. Productivity decreased 2.7 percent in the nonfinancial corporate sector over the last four quarters; this is the largest four-quarter decline in this series, which begins in the first quarter of 1948. Unit profits of nonfinancial corporations decreased at a 0.7-percent annual rate in the third quarter of 2022 and increased 8.3 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 second and third quarters of 2022. Measures of output for the manufacturing sectors incorporate revised annual benchmark data from 1987 to 2020 released November 18 by BLS. This revision primarily affected measures in 2017- 2020; revisions to percent changes prior to 2017 did not exceed 0.1 percentage point.

In the third quarter of 2022, nonfarm business sector labor productivity increased 0.8 percent rather than the preliminary estimate of a 0.3-percent increase, reflecting a 0.5-percentage point upward revision to output and a 0.1-percentage point upward revision to hours worked. Unit labor costs were revised down 1.1 percentage points due to the combined effect of a 0.5-percentage point upward revision to labor productivity and a 0.6-percentage point downward revision to hourly compensation.

In the manufacturing sector, productivity decreased 2.9 percent rather than 1.3 percent as previously reported, reflecting a 1.3-percentage point downward revision to output and a 0.3-percentage point upward revision to hours worked. Durable manufacturing productivity decreased 5.0 percent rather than decreasing 4.3 percent as previously reported, reflecting a 0.3-percentage point downward revision to output and a 0.5-percentage point upward revision to hours worked. Nondurable manufacturing productivity was revised down to an increase of 1.3 percent rather than an increase of 4.0 percent as previously reported, due to a 2.5-percentage point downward revision to output and a 0.2-percentage point upward revision to hours worked. Total manufacturing unit labor costs were revised up 2.0 percentage points to an increase of 5.8 percent, the combined effect of a 0.3-percentage point upward revision to hourly compensation and a 1.6-percentage point downward revision to productivity.

In the second quarter of 2022, labor productivity, output, and hours worked were unrevised for the nonfarm business sector. Unit labor costs increased 6.7 percent, rather than increasing 8.9 percent as previously reported, due to a 2.2-percentage point downward revision to hourly compensation.

In the manufacturing sector, productivity was revised down 0.1 percentage point to an increase of 2.8 percent. Unit labor costs were revised up to an increase of 0.7 percent rather than the previously reported decrease of 0.7 percent. This revision is mainly due to a 1.3-percentage point upward revision to hourly compensation.

In the nonfinancial corporate sector, productivity decreased 3.2 percent rather than decreasing 2.7 percent as previously reported, due solely to a 0.5-percentage point downward revision to output; hours worked were unrevised. Unit labor costs were revised down 0.3 percentage point to an increase of 7.2 percent, reflecting a 0.8-percentage point downward revision to hourly compensation that was partially offset by a 0.5-percentage point downward revision to labor productivity.

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

Calendar year 2023 release dates for Productivity and Costs news releases are now available at www.bls.gov/schedule/news_release/prod2.htm.

Durable Previous quarter -5.0 1.7 7.1 2.2 -3.3 7.5 manufacturing A year ago -0.6 4.7 5.4 4.1 -3.9 4.7

Nonfinancial Previous quarter -1.8 1.8 3.7 3.5 -2.1 5.3 corporate A year ago -2.7 1.3 4.1 4.5 -3.5 7.4