2024 Third 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.

Third Quarter 2024, Preliminary

Nonfarm business sector labor productivity increased 2.2 percent in the third quarter of 2024, the U.S. Bureau of Labor Statistics reported today, as output increased 3.5 percent and hours worked increased 1.2 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 2.0 percent in the third quarter of 2024. (See table A1.)

Unit labor costs in the nonfarm business sector increased 1.9 percent in the third quarter of 2024, reflecting a 4.2-percent increase in hourly compensation and a 2.2-percent increase in productivity. Unit labor costs increased 3.4 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 3.0 percent in the third quarter of 2024, and increased 2.8 percent over the last four quarters.

Historical Revisions Data in this release reflect the 2024 Annual Update of the National Income and Product Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. Department of Commerce on September 26, 2024. See “Revised measures” section.

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 1.8 percent, reflecting a 2.5-percent rate of growth in output and a 0.7-percent rate of growth in hours worked. The 1.8-percent annualized rate of productivity growth in the current business cycle thus far is higher than the 1.5 percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019, and below the long-term rate of 2.1 percent since the first quarter of 1947.

Manufacturing sector labor productivity increased 1.0 percent in the third quarter of 2024, as output decreased 0.2 percent and hours worked decreased 1.2 percent. In the durable manufacturing sector, productivity increased 0.8 percent, reflecting a 2.6-percent decrease in output and a 3.4-percent decrease in hours worked. Nondurable manufacturing sector productivity decreased 0.3 percent, as output increased 2.3 percent and hours worked increased 2.6 percent. Total manufacturing sector productivity increased 0.7 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 5.3 percent in the third quarter of 2024, reflecting a 6.4-percent increase in hourly compensation and a 1.0-percent increase in productivity. Manufacturing unit labor costs increased 5.7 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.

Revised measures

Measures of output for the business, nonfarm business, and nonfinancial corporate sectors, and measures of compensation for all sectors, incorporate revised National Income and Product Accounts (NIPA) data released on September 26, 2024, by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce. As a result, all measures incorporating output, including labor productivity and unit labor costs, were revised back to 2019 for the business, nonfarm business, and nonfinancial corporate sectors. Source data on output and compensation released by BEA on October 30, 2024, are reflected in data for the third quarter of 2024. Regular updates of source data on manufacturing output released in September and October by the Board of Governors of the Federal Reserve System are reflected in data for the first three quarters of 2024; there were no historical revisions to manufacturing output.

Hours worked and related measures for the business and nonfarm business sectors were subject to revision back to 2018 due to revised NIPA data on government enterprises employment and on the proportion of industry compensation paid to employees of nonprofit institutions. Hours worked and related measures for the nonfinancial corporate sector were also subject to revision back to 2018 due to the incorporation of revised NIPA data on the proportion of industry compensation paid to employees of corporations.

Examining the period of revision from the first quarter of 2018 to the second quarter of 2024, output and productivity were revised up, and the nonfarm business labor productivity index now outpaces the previously published index. The annualized productivity growth rate during the revision period was revised up from a rate of 1.7 percent to a rate of 1.9 percent. These revisions are also reflected in the 0.2- percentage point upward revision to the nonfarm business labor productivity growth rate during the current business cycle, from a previously published rate of 1.6 percent to a revised rate of 1.8 percent.

Nonfarm business sector productivity in the second quarter of 2024 was revised down 0.4 percentage point to an increase of 2.1 percent. The revision comes from 0.5-percentage point and 0.1- percentage point downward revisions to output and hours worked, respectively. Second-quarter unit labor costs were revised up 2.0 percentage points to an increase of 2.4 percent, reflecting a 1.6- percentage point upward revision to hourly compensation and the 0.4-percentage point downward revision to productivity. Real hourly compensation in the second quarter of 2024 was also revised upward by 1.6 percentage points, to an increase of 1.7 percent. (See table B1.)

Manufacturing sector productivity was revised down 1.0 percentage point to an increase of 0.3 percent in the second quarter of 2024, reflecting a 0.9-percentage point downward revision to output and a 0.1-percentage point upward revision to hours worked. Productivity was revised down 1.2 percentage points in the durable manufacturing sector and revised down 0.6 percentage point in the nondurable manufacturing sector. In the second quarter of 2024, total manufacturing unit labor costs increased 5.8 percent rather than 3.6 percent as previously reported, reflecting a 1.3-percentage point upward revision to hourly compensation as well as the 1.0-percentage point downward revision to productivity. (See table B1.)

Nonfinancial corporate sector productivity increased 3.1 percent in the second quarter of 2024, rather than the previously published estimate of a 0.3-percent decrease. This revision results from a 3.3- percentage point upward revision to output and a 0.1-percentage point downward revision to hours worked. Unit labor costs in the nonfinancial corporate sector were revised down 1.8 percentage points to an increase of 1.3 percent in the second quarter of 2024, as hourly compensation was revised up 1.7 percentage points and productivity was revised up 3.4 percentage points. (See table A2.) Historical revisions to output and hours in the nonfinancial corporate sector resulted in a 0.5-percentage point upward revision to the annualized labor productivity growth rate during the current business cycle to 2.4 percent, just above the long-term rate of 2.3 percent since the start of 1947.

Annual averages

Annual average productivity in the nonfarm business sector was revised up along with output in each of the last 3 years. Productivity was revised up 0.2 percentage point to a 1.6-percent increase in 2023, was revised up 0.4 percentage point to a decrease of 1.5 percent in 2022 and was revised up 0.3 percentage point to an increase of 2.0 percent in 2021. Unit labor costs were revised down 0.6 percentage point in both 2023 and 2022 and were revised down 0.2 percentage point in 2021. (See table C1.)

From 2021 to 2023, annual average manufacturing sector productivity, output, and hours worked were not revised. In both 2023 and 2022, unit labor costs were revised down 0.4 percentage point, and were revised up 0.2 percentage point in 2021. (See table C1.)

In the nonfinancial corporate sector, productivity was revised down 1.4 percentage points to a 0.0 percent change in 2023. This stemmed from a 1.3-percentage point downward revision to output, and a 0.1-percentage point downward revision to hours worked. Unit labor costs were revised up 0.8 percentage point to an increase of 4.1 percent, reflecting a 0.6-percentage point downward revision to hourly compensation and the 1.4 percentage point downward revision to productivity. In both 2022 and 2021, nonfinancial corporate sector labor productivity was revised up by 0.9 percentage point and 0.7 percentage point, respectively, reflecting upward revisions to output. (See tables C1 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 0.8 -2.6 -3.4 7.4 6.1 6.5 manufacturing A year ago 0.2 -1.3 -1.5 7.3 4.6 7.1

Nondurable Previous quarter -0.3 2.3 2.6 5.0 3.7 5.3 manufacturing A year ago 0.8 0.8 0.1 4.7 2.0 3.9