2024 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 2024, Revised

Nonfarm business sector labor productivity increased 0.2 percent in the first quarter of 2024, the U.S. Bureau of Labor Statistics reported today, as output increased 0.9 percent and hours worked increased 0.6 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 increased 2.9 percent, the largest four-quarter increase since the first quarter of 2021, when the measure increased 5.9 percent. (See table A1.)

Unit labor costs in the nonfarm business sector increased 4.0 percent in the first quarter of 2024, reflecting a 4.2-percent increase in hourly compensation and a 0.2-percent increase in productivity. Unit labor costs increased 0.9 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, increased 0.4 percent in the first quarter of 2024, and increased 0.6 percent over the last four quarters.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all workers, including employees, proprietors, and unpaid family workers. During the current business cycle, starting in the fourth quarter of 2019, labor productivity has grown at an annual rate of 1.5 percent, reflecting a 2.2-percent rate of growth in output and a 0.6-percent rate of growth in hours worked during the business cycle. The 1.5-percent annual rate of productivity growth in the current business cycle thus far is the same as the 1.5 percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019, and is below the long-term rate of 2.1 percent since the first quarter of 1947.

Manufacturing sector labor productivity was unchanged in the first quarter of 2024, as output and hours worked both decreased 0.2 percent. In the durable manufacturing sector, productivity increased 1.0 percent, reflecting a 0.1-percent increase in output and a 0.9-percent decrease in hours worked. Nondurable manufacturing sector productivity decreased 1.4 percent as output decreased 0.5 percent and hours worked increased 0.9 percent. Total manufacturing sector productivity increased 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 3.1 percent in the first quarter of 2024, reflecting a 3.1-percent increase in hourly compensation and no change in productivity. Manufacturing unit labor costs increased 4.1 percent from the same quarter a year ago, reflecting an increase of 1.1 percent in labor productivity and an increase of 5.3 percent in hourly compensation. Real hourly compensation increased 2.0 percent from the same quarter a year ago. (See tables A1 and 3.)

Manufacturing sector labor productivity has grown at an annual rate of 0.3 percent during the current business cycle, as output has grown 0.1 percent and hours have declined 0.2 percent. The 0.3-percent annual rate of productivity growth in the current business cycle thus far is above the 0.0-percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019, and is below the long-term rate of 2.1 percent since the first quarter of 1987.

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 2024 measures were announced today for the nonfinancial corporate sector. Productivity increased 1.8 percent in the first quarter of 2024 as output increased 2.5 percent and hours worked increased 0.7 percent. Productivity increased 3.2 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; they reflect regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the Board of Governors of the Federal Reserve System.

In the first quarter of 2024, nonfarm business sector productivity increased 0.2 percent, a slight downward revision from the previously reported increase of 0.3 percent. Output and hours worked were both revised down 0.4 percentage point. Unit labor costs increased 4.0 percent rather than increasing 4.7 percent as previously reported, reflecting a 0.8-percentage point downward revision to hourly compensation and a 0.1-percentage point downward revision to labor productivity. In the manufacturing sector, productivity was revised down from a 0.2-percent increase to a 0.0-percent change, reflecting a 0.2-percentage point downward revision to output and no revision to hours worked. Manufacturing unit labor costs increased 3.1 percent rather than the preliminary estimate of 3.2 percent, as a 0.3-percentage point downward revision to hourly compensation was mostly offset by a 0.2-percentage point downward revision to productivity.

In the fourth quarter of 2023, labor productivity in the nonfarm business sector remained at 3.5 percent, as both output and hours worked were unrevised. Hourly compensation, however, was revised down from the previously reported increase of 3.5 percent to an increase of 0.6 percent. As a result, unit labor costs decreased 2.8 percent in the fourth quarter of 2023, rather than no change as previously reported. Labor productivity in the total manufacturing sector was revised down 0.1-percentage point to an increase of 2.3 percent, the result of a 0.1-percentage point downward revision to output, which declined at a 1.1-percent rate. Hours worked were unrevised, decreasing 3.3 percent in the fourth quarter. Hourly compensation was revised down 3.7 percentage points to a 3.1-percent increase; this led to a 3.5-percentage point downward revision to unit labor costs, from an increase of 4.2 percent to an increase of 0.7 percent.

In the nonfinancial corporate sector, productivity grew 6.4 percent in the fourth quarter of 2023 rather than 7.9 percent as previously reported, due to a 1.5-percentange point downward revision to output. Hours worked were unrevised, increasing at a 0.2-percent rate.

Quarterly and annual data for all sectors for recent years appear in tables 1-6. Full historical annual and quarterly measures can be found at www.bls.gov/productivity/tables/.

Durable Previous quarter 1.0 0.1 -0.9 5.1 1.3 4.1 manufacturing A year ago 1.2 0.5 -0.7 5.7 2.4 4.5

Nonfinancial Previous quarter 1.8 2.5 0.7 4.4 0.6 2.6 corporate A year ago 3.2 3.5 0.3 4.3 1.1 1.1