2025 Second 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.

Second Quarter 2025, Revised

Nonfarm business sector labor productivity increased 3.3 percent in the second quarter of 2025, the U.S. Bureau of Labor Statistics reported today, as output increased 4.4 percent and hours worked increased 1.1 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 1.5 percent in the second quarter of 2025. (See tables A1 and 2.)

Unit labor costs in the nonfarm business sector increased 1.0 percent in the second quarter of 2025, reflecting a 4.3-percent increase in hourly compensation and a 3.3-percent increase in productivity. Unit labor costs increased 2.5 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 2.6 percent in the second quarter of 2025, and increased 1.5 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 2.5 percent in the second quarter of 2025, as output increased 2.4 percent and hours worked decreased 0.1 percent. In the durable manufacturing sector, productivity increased 3.2 percent, reflecting a 3.5-percent increase in output and a 0.3-percent increase in hours worked. Nondurable manufacturing sector productivity increased 1.9 percent, as output increased 1.3 percent and hours worked decreased 0.6 percent. Total manufacturing sector productivity increased 1.6 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 2.0 percent in the second quarter of 2025, reflecting a 4.5-percent increase in hourly compensation and a 2.5-percent increase in productivity. Unit labor costs increased 0.9 percent in the durable goods sector and increased 3.1 percent in nondurable goods industries. Manufacturing unit labor costs increased 2.6 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.

Preliminary measures for the second quarter of 2025 were announced today for the nonfinancial corporate sector. Productivity increased 5.7 percent in the second quarter of 2025 as output increased 7.0 percent and hours worked increased 1.2 percent. Productivity increased 3.4 percent over the last four quarters. Unit profits of nonfinancial corporations increased at a 1.9-percent annual rate in the second quarter of 2025 and decreased 1.6 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. These measures do not reflect labor data to be released September 5, 2025, by the BLS Current Employment Statistics program.

In the second quarter of 2025, nonfarm business sector productivity increased 3.3 percent--a 0.9- percentage point upward revision from the preliminary estimate of a 2.4-percent increase--reflecting a 0.7-percentage point upward revision to output and a 0.2-percentage point downward revision to hours worked. From the same quarter a year ago, nonfarm business sector labor productivity was revised up by 0.2 percentage point, to an increase of 1.5 percent. Unit labor costs increased 1.0 percent in the second quarter of 2025 rather than increasing 1.6 percent as previously reported, reflecting a 0.3-percentage point upward revision to hourly compensation and a 0.9-percentage point upward revision to productivity.

Manufacturing sector productivity for the second quarter of 2025 was revised up to an increase of 2.5 percent from a previously reported increase of 2.1 percent, reflecting a 0.1-percentage point upward revision to output and a 0.4-percentage point downward revision to hours worked. Durable manufacturing sector productivity was revised down 0.1 percentage point to an increase of 3.2 percent; nondurable manufacturing sector productivity had a 0.7-percentage point upward revision to an increase of 1.9 percent. Total manufacturing unit labor costs increased 2.0 percent in the second quarter of 2025, reflecting a 0.3-percentage point upward revision.

In the first quarter of 2025, nonfarm business sector productivity and unit labor costs were not revised. Manufacturing sector productivity was revised down 0.2 percentage point to an increase of 3.1 percent. As a result, unit labor costs were revised up 0.2 percentage point to an increase of 3.1 percent. In the nonfinancial corporate sector, first-quarter 2025 productivity declined 0.2 percent, as previously reported. Unit labor costs and unit profits in the nonfinancial corporate sector were not revised. (See table 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 3.2 3.5 0.3 4.1 2.5 0.9 manufacturing A year ago 2.1 0.9 -1.2 4.6 2.1 2.5

Nondurable Previous quarter 1.9 1.3 -0.6 5.1 3.4 3.1 manufacturing A year ago 0.8 1.0 0.2 3.7 1.2 2.9

Nonfinancial Previous quarter 5.7 7.0 1.2 3.5 1.8 -2.1 corporate A year ago 3.4 4.2 0.7 3.8 1.3 0.4