2025 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 2025, Preliminary

Nonfarm business sector labor productivity increased 2.4 percent in the second quarter of 2025, the U.S. Bureau of Labor Statistics reported today, as output increased 3.7 percent and hours worked increased 1.3 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 1.3 percent in the second quarter of 2025. (See tables A1 and 2.)

Unit labor costs in the nonfarm business sector increased 1.6 percent in the second quarter of 2025, reflecting a 4.0-percent increase in hourly compensation and a 2.4-percent increase in productivity. Unit labor costs increased 2.6 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 2.3 percent in the second quarter of 2025, and increased 1.4 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 annualized rate of 1.8 percent, reflecting a 2.4-percent rate of growth in output and a 0.6-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 is below the long-term rate of 2.1 percent since the first quarter of 1947.

Manufacturing sector labor productivity increased 2.1 percent in the second quarter of 2025, as output increased 2.3 percent and hours worked increased 0.3 percent. In the durable manufacturing sector, productivity increased 3.3 percent, reflecting a 4.1-percent increase in output and a 0.8-percent increase in hours worked. Nondurable manufacturing sector productivity increased 1.2 percent, as output increased 0.5 percent and hours worked decreased 0.7 percent. Total manufacturing sector productivity increased 1.5 percent from the same quarter a year ago. This is the largest four-quarter gain in manufacturing productivity since the second quarter of 2021, when it increased 4.8 percent. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 1.7 percent in the second quarter of 2025, reflecting a 3.8-percent increase in hourly compensation and a 2.1-percent increase in productivity. Unit labor costs increased 3.8 percent in the nondurable goods sector and declined 0.2 percent in durable goods industries. Manufacturing unit labor costs increased 2.5 percent from the same quarter a year ago. (See tables A1 and 3.)

Manufacturing sector labor productivity has grown at an annualized rate of 0.5 percent during the current business cycle, as output has increased 0.2 percent and hours have declined 0.3 percent. The 0.5- percent annualized rate of productivity growth in the current business cycle thus far is above the 0.1- 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 all sectors for the first quarter of 2025; labor data published by BLS August 1, 2025, have not yet been incorporated. Regular updates of source data published in June and July by the Board of Governors of the Federal Reserve System are reflected in revised data for the manufacturing sectors for fourth-quarter 2024 and first-quarter 2025.

Nonfarm business sector productivity was revised down 0.3 percentage point to a decrease of 1.8 percent in the first quarter of 2025; output was revised down 0.4 percentage point to a decrease of 0.6 percent and hours worked were revised down 0.1 percentage point to an increase of 1.2 percent. (See table B1.) The downward revision to productivity translated to a 0.3-percentage point upward revision to first-quarter unit labor costs, to a rate of 6.9 percent; hourly compensation was not revised.

Manufacturing sector productivity was revised down 1.1 percentage points to an increase of 3.3 percent in the first quarter of 2025, reflecting a 1.1-percentage point downward revision to output; hours worked were not revised. Productivity was revised down 0.4 percentage point to an increase of 6.8 percent in the durable manufacturing subsector, and the preliminary estimate of a 1.7-percent increase in nondurable manufacturing was revised down 1.7 percentage points to no change. In the first quarter of 2025, total manufacturing unit labor costs were revised up 0.9 percentage point to an increase of 2.9 percent, primarily reflecting the 1.1-percentage point downward revision to productivity; hourly compensation was revised down 0.1 percentage point. (See tables B1 and 3.)

Nonfinancial corporate sector productivity was revised up 1.0 percentage point to a decrease of 0.2 percent in the first quarter of 2025, reflecting a 0.9-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 0.9 percentage point to an increase of 4.6 percent. (See table A2 and 6.)

Quarterly and annual data for all sectors from 2023 forward appear in tables 1-6. Full historical measures can be found on the Productivity and Costs home page: www.bls.gov/productivity/tables/.

Durable Previous quarter 3.3 4.1 0.8 3.0 1.4 -0.2 manufacturing A year ago 2.2 1.1 -1.1 4.3 1.8 2.1

Nondurable Previous quarter 1.2 0.5 -0.7 5.1 3.4 3.8 manufacturing A year ago 0.6 0.8 0.2 3.7 1.2 3.1