Q1 US Productivity
June 6, 2018
business sector labor productivity increased 0.4 percent during the
first quarter of 2018, the U.S. Bureau of Labor Statistics reported
today, as output increased 2.7 percent and hours worked increased 2.3
percent. (All quarterly percent changes in this release are seasonally
adjusted annual rates.) From the first quarter of 2017 to the
first quarter of 2018, productivity increased 1.3 percent, reflecting a
3.6-percent increase in output and a 2.3-percent increase in hours
Wall Street was
looking for US productivity to rise 0.6%.
Labor productivity, or output per hour, is calculated by dividing an
index of real output by an index of hours worked by all persons,
including employees, proprietors, and unpaid family workers.
Unit labor costs in the nonfarm business sector increased 2.9 percent in
the first quarter of 2018, reflecting a 3.3-percent increase in hourly
compensation and a 0.4-percent increase in productivity. Unit labor
costs increased 1.3 percent over the last four quarters.
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 output per hour tend to reduce them.
Manufacturing sector labor productivity decreased 1.2 percent in the
first quarter of 2018, as output increased 1.7 percent and hours worked
increased 2.9 percent. Productivity declined 0.8 percent in the durable
manufacturing sector, as output rose 3.3 percent and hours worked
increased 4.2 percent. In the non-durable goods manufacturing sector, a
0.9-percent decrease in productivity reflected no change in output and a
0.9-percent increase in hours worked. Over the last four quarters, total
manufacturing sector productivity increased 0.3 percent, as output
increased 2.0 percent and hours worked increased 1.7 percent. Unit labor
costs in manufacturing increased 5.2 percent in the first quarter of
2018 and rose 2.5 percent from the same quarter a year ago.
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 first-quarter 2018 measures were announced today for the
nonfinancial corporate sector. Productivity increased 1.9 percent in the
first quarter of 2018 and increased 1.7 percent over the last four
quarters. Unit profits of nonfinancial corporations fell at a 9.5
percent annual rate in the first quarter of 2018 and increased 1.7
percent over the last four quarters.
Measures released today are based on more recent source data than were
available for the preliminary report. Table B1 presents previous and
revised productivity and related measures for the business, nonfarm
business, and manufacturing sectors for the first quarter of 2018.
In the first quarter of 2018, nonfarm business productivity rose 0.4
percent, rather than 0.7 percent as reported May 3, the combined effect
of a 0.1-percentage point downward revision to output and a
0.2-percentage point upward revision to hours worked. Unit labor costs
were revised up--due primarily to the downward revision to
productivity--and increased 2.9 percent. In the manufacturing sector,
productivity was revised down from an increase of 0.5 percent to a
decrease of 1.2 percent, due almost entirely to a 1.6-percentage point
downward revision to output. Hourly compensation was revised up 0.7
percentage point. As a result of the downward revision to productivity
and the upward revision to hourly compensation, unit labor costs
increased 5.2 percent rather than 2.7 percent as previously reported.
Table B2 shows previous and revised productivity and related measures
for the business, nonfarm business, manufacturing, and nonfinancial
corporate sectors for the fourth quarter of 2017.
In the fourth quarter of 2017, labor productivity in the nonfarm
business sector increased at the same 0.3-percent rate reported May 3.
Hourly compensation was revised up, and increased 2.9 percent. As a
result, unit labor costs increased 2.5 percent in the fourth quarter of
2017, rather than increasing 2.1 percent. Total manufacturing sector
productivity increased 4.3 percent in the fourth quarter of 2017, a
smaller increase than previously reported. Hourly compensation was
revised up 2.3 percentage points; and when combined with the small
downward revision to productivity this led to an upward revision to unit
labor costs, which rose 0.2 percent rather than decreasing 2.2 percent.
output and all related measures--including labor productivity--were
revised back as far as 2008 to incorporate revised BLS measures of
sectoral output in manufacturing industries published May 16, 2018 in
Multifactor Productivity Trends In Manufacturing - 2016. The period most
affected was from 2014 to 2016, with the average annual rate of
productivity growth over this period revised down from -0.1 percent to
-0.6 percent. The average annual rate of manufacturing productivity
growth from 2007 to 2017 was unrevised at 0.7 percent, well below the
long-term rate from 1987 to 2017 of 2.7 percent.
In the nonfinancial corporate sector, productivity rose 1.2 percent in
the fourth quarter of 2017 rather than increasing 0.8 percent as
previously reported, due solely to an upward revision to output. Annual
average productivity in the nonfinancial corporate sector increased 1.0
percent in 2017, the same as thepreliminary estimate. Unit profits rose
2.2 percent in the fourth quarter of 2017, rather than the 2.6 percent
increase reported May 3.