2026 First 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.

First Quarter 2026, Preliminary

Nonfarm business sector labor productivity increased 0.8 percent in the first quarter of 2026, the U.S. Bureau of Labor Statistics reported today, as output increased 1.5 percent and hours worked increased 0.7 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 2.9 percent in the first quarter of 2026. (See tables A1 and 2.)

Unit labor costs in the nonfarm business sector increased 2.3 percent in the first quarter of 2026, reflecting a 3.1-percent increase in hourly compensation and a 0.8-percent increase in productivity. Unit labor costs increased 1.2 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, decreased 0.5 percent in the first quarter of 2026, and increased 1.4 percent over the last four quarters. The labor share, which is the percentage of output that accrues to workers in the form of compensation, was 54.1 percent in the first quarter of 2026, the lowest recorded value since the series began in 1947.

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 2.1 percent, reflecting a 2.5-percent rate of growth in output and a 0.4-percent rate of growth in hours worked. The 2.1-percent annualized rate of nonfarm business 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 just below the long-term rate of 2.2 percent since the first quarter of 1947.

Manufacturing sector labor productivity increased 3.6 percent in the first quarter of 2026, as output increased 3.3 percent and hours worked decreased 0.4 percent. In the durable manufacturing sector, productivity increased 5.3 percent, reflecting a 5.4-percent increase in output and a 0.1-percent increase in hours worked. Nondurable manufacturing sector productivity increased 2.0 percent, as output increased 0.9 percent and hours worked decreased 1.0 percent. Total manufacturing sector productivity increased 1.7 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 2.4 percent in the first quarter of 2026, reflecting a 6.1-percent increase in hourly compensation and a 3.6-percent increase in productivity. Manufacturing unit labor costs increased 3.7 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 0.1 percent and hours worked have declined 0.4 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 fourth-quarter and annual 2025 measures were announced today for the nonfinancial corporate sector. Productivity increased 5.4 percent in the fourth quarter of 2025, as output increased 4.6 percent and hours worked decreased 0.7 percent. In 2025, nonfinancial corporate sector annual productivity increased 2.9 percent. (See tables A2 and C1).

Revised measures

Hours and related measures--including labor productivity and hourly compensation--for all sectors were revised to incorporate updated ratios of hours worked to hours paid by detailed industry, provided by the BLS National Compensation Survey; indexes were subject to revision back to 2017. Measures of real hourly compensation for all sectors were also subject to revision from 2021 onward due to the incorporation of the revised Consumer Price Index Retroactive Series. Fourth quarter and annual average data for 2025 were revised to incorporate regular updates of source data on output and compensation published by the Department of Commerce on April 9, 2026. Manufacturing sector output for the fourth quarter of 2025 reflects revisions published by the Board of Governors of the Federal Reserve System on April 16, 2026.

Nonfarm business sector productivity in the fourth quarter of 2025 increased 1.6 percent rather than the previous estimate of 1.8 percent, reflecting a 0.2-percentage point downward revision to output; hours worked were not revised. Unit labor costs were revised up 0.2 percentage point to an increase of 4.6 percent.

Manufacturing sector productivity was revised down 0.7 percentage point to a decrease of 3.2 percent in the fourth quarter of 2025, reflecting a 0.6-percentage point downward revision to output; hours worked were not revised. Durable manufacturing sector productivity was revised down 0.2 percentage point to a decrease of 3.5 percent and nondurable manufacturing sector productivity was revised down 1.1 percentage points to a decrease of 2.3 percent. (See table B1.)

Quarterly and annual data for all sectors for recent years appear in tables 1-6. Full historical annual and quarterly measures, including percent changes, indexes, and levels, can be found in the file located at www.bls.gov/web/prod2/labor-productivity-major-sectors.xlsx.

Durable Previous quarter 5.3 5.4 0.1 7.7 4.0 2.3 manufacturing A year ago 2.9 2.7 -0.2 6.4 3.6 3.4

Nondurable Previous quarter 2.0 0.9 -1.0 2.9 -0.6 0.9 manufacturing A year ago 0.5 -0.2 -0.7 3.8 1.0 3.2

Nonfinancial Previous quarter 5.4 4.6 -0.7 6.2 3.6 0.8 corporate A year ago 3.8 3.8 0.0 5.2 2.4 1.3