2024 Second 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.

Second Quarter 2024, Preliminary

Nonfarm business sector labor productivity increased 2.3 percent in the second quarter of 2024, the U.S. Bureau of Labor Statistics reported today, as output increased 3.3 percent and hours worked increased 1.0 percent. (All quarterly percent changes in this release are seasonally adjusted annualized rates.) From the same quarter a year ago, nonfarm business sector labor productivity increased 2.7 percent. (See table A1.)

Unit labor costs in the nonfarm business sector increased 0.9 percent in the second quarter of 2024, reflecting a 3.3-percent increase in hourly compensation and a 2.3-percent increase in productivity. Unit labor costs increased 0.5 percent over the last four quarters, the lowest rate since the third quarter of 2019, when the measure also increased 0.5 percent. (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 second quarter of 2024 but was unchanged 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 annualized rate of 1.6 percent, reflecting a 2.2-percent rate of growth in output and a 0.7-percent rate of growth in hours worked. The 1.6-percent annualized rate of productivity growth in the current business cycle thus far is slightly above 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 increased 1.8 percent in the second quarter of 2024, as output increased 3.4 percent and hours worked increased 1.6 percent. In the durable manufacturing sector, productivity increased 0.4 percent, reflecting a 2.3-percent increase in output and a 1.9-percent increase in hours worked. Nondurable manufacturing sector productivity increased 3.5 percent as output increased 4.6 percent and hours worked increased 1.1 percent. Total manufacturing sector productivity increased 0.4 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 3.2 percent in the second quarter of 2024, reflecting a 5.1-percent increase in hourly compensation and a 1.8-percent increase in productivity. Manufacturing unit labor costs increased 4.3 percent from the same quarter a year ago, reflecting an increase of 4.7 percent in hourly compensation and an increase of 0.4 percent in labor productivity. Real hourly compensation increased 1.5 percent from the same quarter a year ago. (See tables A1 and 3.)

Manufacturing sector labor productivity has grown at an annualized rate of 0.3 percent during the current business cycle, as output has grown 0.2 percent and hours have declined 0.1 percent. The 0.3- percent annualized 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.

Revised measures

Regular updates of source data published in June and July by the BLS and the Bureau of Economic Analysis (BEA) are reflected in revised data for the first quarter of 2024; labor data scheduled to be published by BLS August 2, 2024, have not yet been incorporated. Measures of output for the manufacturing sectors incorporate the 2024 Annual Revision of the Index of Industrial Production (IIP) by the Board of Governors of the Federal Reserve System released June 28, as well as the regular update of the IIP released July 17. Manufacturing output and related measures were subject to revision back to the beginning of the series in 1987.

Nonfarm business sector productivity was revised up 0.2 percentage point to an increase of 0.4 percent in the first quarter of 2024; output was revised up 0.1 percentage point to an increase of 1.0 percent and hours worked were not revised. (See table B1.) The upward revision to productivity translated to a 0.2-percentage point downward revision to first-quarter unit labor costs, to a rate of 3.8 percent; hourly compensation was not revised.

Manufacturing sector productivity was revised down 1.1 percentage points to a decline of 1.1 percent in the first quarter of 2024, reflecting a 1.1 percentage point downward revision to output; hours worked were not revised. Productivity was revised down in both the durable and nondurable manufacturing subsectors. In the first quarter of 2024, total manufacturing unit labor costs were revised up 1.2 percentage points to an increase of 4.3 percent, primarily reflecting the 1.1-percentage point downward revision to productivity; hourly compensation was revised up 0.1 percentage point. (See tables B1 and 3.)

Nonfinancial corporate sector productivity was revised up slightly, to an increase of 1.9 percent in the first quarter of 2024. Unit labor costs in the nonfinancial corporate sector were revised down 0.1 percentage point to an increase of 2.5 percent. (See table A2 and 6.)

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 0.4 2.3 1.9 4.3 1.4 3.9 manufacturing A year ago -0.7 -0.3 0.4 4.9 1.6 5.6

Nondurable Previous quarter 3.5 4.6 1.1 6.6 3.7 3.0 manufacturing A year ago 2.0 0.5 -1.5 4.2 1.0 2.1