Productivity and Costs, Fourth Quarter and Annual Averages 2018, Revised



Transmission of material in this release is embargoed until                                  USDL 19-0358
8:30 a.m. (EST) Thursday, March 7, 2019

Technical information:  (202) 691-5606    Productivity@bls.gov   www.bls.gov/lpc
Media contact:          (202) 691-5902    PressOffice@bls.gov


                                   PRODUCTIVITY AND COSTS 
                        Fourth Quarter and Annual Averages 2018, Revised

Nonfarm business sector labor productivity increased 1.9 percent in the fourth quarter of 2018, the 
U.S. Bureau of Labor Statistics reported today, as output increased 3.1 percent and hours worked 
increased 1.2 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) 
From the fourth quarter of 2017 to the fourth quarter of 2018, productivity increased 1.8 percent, 
reflecting a 3.7-percent increase in output and a 1.9-percent increase in hours worked. (See tables A1 
and 2.) Annual average productivity increased 1.3 percent from 2017 to 2018. (See table C1.) 

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 2.0 percent in the fourth quarter of 2018, and 
increased 1.0 percent over the last four quarters. (See tables A1 and 2.) 

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                         New and Revised Productivity and Costs Data

This is the first publication of fourth quarter and annual average 2018 measures of labor productivity 
and costs for the business and nonfarm business sectors, reflecting the Feb. 28, 2019 release of source 
data on output and compensation by the U.S. Department of Commerce. Also, data in this release reflect 
the annual benchmark revision of BLS Current Employment Statistics program data on private nonfarm 
employment and hours, and historical revision of those data. See Revised measures.
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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 increased 2.0 percent in the fourth quarter of 2018, as output 
increased 2.7 percent and hours worked rose 0.8 percent. Productivity increased 3.3 percent in the 
durable manufacturing sector and 1.9 percent in the nondurable manufacturing sector in the fourth 
quarter of 2018. Over the last four quarters, total manufacturing sector productivity increased 1.0 
percent, as output increased 2.9 percent and hours worked increased 1.9 percent. Unit labor costs in 
manufacturing increased 2.2 percent in the fourth quarter of 2018 and rose 0.8 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

The measures released today are based on more recent source data than were available for the 
preliminary report. 

Fourth-quarter and annual average 2018 data on output and compensation were published for the first 
time on February 28, 2019 by the Bureau of Economic Analysis, U.S. Department of Commerce. 
Therefore, measures based on these data--including productivity and unit labor costs--are published for 
the first time with this release.

Quarterly and annual measures of hours and related series--including productivity--were revised from 
1947 forward for all sectors. These data were revised due to incorporation of revised Current 
Employment Statistics (CES) program data on employment and hours published February 1, 2019. 
Quarterly measures of real hourly compensation for all sectors were revised from first-quarter 2018 
forward to reflect revised data on consumer prices from the BLS Office of Prices and Living Conditions. 

Table B1 presents previous and revised measures for the fourth quarter of 2018. Because data for most 
measures were not available in our preliminary release on February 6, 2019, comparisons are shown 
primarily for manufacturing sector measures. 

In the fourth quarter of 2018, manufacturing sector productivity was revised up to 2.0 percent from a 
preliminary estimate of 1.3 percent. The upward revision reflected both an upward revision to output 
and a downward revision to hours worked. Productivity was also revised up in durable goods 
manufacturing to 3.3 percent and in nondurable goods industries to 1.9 percent.  

Table B2 presents previous and revised productivity and related measures for the third quarter of 2018 
for the nonfarm business, business, and manufacturing sectors.

In the third quarter of 2018, nonfarm business productivity was revised down from an increase of 2.2 
percent to an increase of 1.8 percent due to an upward revision to hours worked; output was unrevised. 
Unit labor costs were revised up 0.7 percentage point to an increase of 1.6 percent, the combined effect 
of the 0.4-percentage point downward revision to productivity and a 0.3-percentage point upward 
revision to hourly compensation.

Manufacturing productivity increased 1.0 percent rather than 1.1 percent in the third quarter of 2018, as 
hours worked were revised up slightly more than output. Unit labor costs in manufacturing were revised 
upward and increased 1.8 percent rather than declining 1.3 percent, due almost entirely to a 3.0-
percentage point upward revision to hourly compensation. (See table B2.) 

Nonfinancial corporate sector productivity increased 6.1 percent in the third quarter of 2018, the same 
rate as previously reported. Both output and hours were revised up 0.5 percentage point. Unit labor costs 
decreased 2.3 percent in the third quarter of 2018, a slightly smaller decline than previously reported. 
(See table A2.)

Annual averages

Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector 
and the total manufacturing sector. Nonfarm business sector productivity grew 1.3 percent in 2018, as 
output and hours increased 3.5 percent and 2.2 percent, respectively. In 2017, productivity increased 1.1 
percent. The average annual rate of nonfarm business sector productivity growth from 2007 to 2018--
corresponding to the current business cycle--is 1.3 percent, which is below the long-term rate from 1947 
to 2018 of 2.1 percent. 

Unit labor costs in the nonfarm business sector increased 1.4 percent in 2018, reflecting increases of 2.7 
percent in hourly compensation and 1.3 percent in productivity. Real hourly compensation, which takes 
into account changes in consumer prices, increased 0.3 percent in 2018. 

In the manufacturing sector, productivity increased 0.8 percent in 2018, as output increased 2.7 percent 
and hours worked increased 1.9 percent. Manufacturing sector productivity has grown less than 1.0 
percent in each of the last 8 years. The average annual rate of manufacturing productivity growth from 
2007 to 2018 is 0.7 percent, well below the long-term rate from 1987 to 2018 of 2.6 percent. Unit labor 
costs increased 0.9 percent in 2018.

Quarterly and annual data for all sectors from 2016 to 2018 appear in tables 1-6. Full historical 
measures can be found at: www.bls.gov/lpc/#data.
______________

The preliminary Productivity and Costs news release for first-quarter 2019 is scheduled to be 
released on Thursday, May 2, 2019 at 8:30 a.m. (EDT).





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Table A1. Labor productivity growth and related measures - revised fourth-quarter 2018
(percent change from previous quarter at annual rate and from same quarter a year ago)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Percent change from:    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        Previous quarter           1.9          3.1      1.2       3.9            2.4           2.0
                        A year ago                 1.8          3.7      1.9       2.8            0.6           1.0
                        
Business                Previous quarter           1.8          3.2      1.3       3.6            2.1           1.8
                        A year ago                 1.9          3.6      1.7       2.9            0.7           1.0
                                                        
Manufacturing           Previous quarter           2.0          2.7      0.8       4.3            2.7           2.2
                        A Year ago                 1.0          2.9      1.9       1.8           -0.4           0.8
 Durable
 manufacturing          Previous quarter           3.3          6.1      2.7       4.1            2.6           0.7
                        A year ago                 1.5          4.5      3.0       1.6           -0.6           0.2
 Nondurable
 manufacturing          Previous quarter           1.9         -0.7     -2.5       4.1            2.6           2.1
                        A year ago                 1.3          1.3      0.0       1.8           -0.4           0.6
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 Table A2. Labor productivity growth and related measures - revised and previously published third-quarter 2018
 (percent change from previous quarter at annual rate)
 
 
                                                Labor                   Hours    Hourly         Real hourly    Unit labor
 Sector                                         productivity   Output   worked   compensation   compensation   costs
 -------------------------------------------------------------------------------------------------------------------------      
 Nonfinancial             Revised                  6.1          7.7      1.5       3.6            1.6          -2.3
 corporate          Previously published           6.1          7.2      1.0       3.3            1.3          -2.7
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Table B1. Labor productivity growth and related measures  revised and previously published fourth-quarter 2018
(percent change from previous quarter at annual rate) 


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        Revised                    1.9          3.1      1.2       3.9            2.4           2.0
                   Previously published            N.A.         N.A.     1.6       N.A.           N.A.          N.A.
                        
Business                Revised                    1.8          3.2      1.3       3.6            2.1           1.8
                   Previously published            N.A.         N.A.     1.7       N.A.           N.A.          N.A.
                                                        
Manufacturing           Revised                    2.0          2.7      0.8       4.3            2.7           2.2
                   Previously published            1.3          2.3      1.0       N.A.           N.A.          N.A.

 Durable                Revised                    3.3          6.1      2.7       4.1            2.6           0.7
 manufacturing     Previously published            2.6          5.7      3.0       N.A.           N.A.          N.A.
                        
 Nondurable             Revised                    1.9         -0.7     -2.5       4.1            2.6           2.1
 manufacturing     Previously published            1.2         -1.2     -2.4       N.A.           N.A.          N.A.
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Table B2. Labor productivity growth and related measures - revised and previously published third-quarter 2018
(percent change from previous quarter at annual rate)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm Business        Revised                    1.8          4.0      2.1       3.5            1.4           1.6
                   Previously published            2.2          4.0      1.7       3.2            1.2           0.9
                        
Business                Revised                    1.4          3.9      2.5       3.2            1.2           1.8
                   Previously published            1.8          3.9      2.1       2.9            0.9           1.1
                        
Manufacturing           Revised                    1.0          4.4      3.4       2.8            0.8           1.8
                   Previously published            1.1          4.2      3.1      -0.2           -2.2          -1.3

 Durable                Revised                    2.0          5.9      3.9       1.4           -0.6          -0.5
 manufacturing     Previously published            2.2          5.8      3.6       0.5           -1.5          -1.7
                        
 Nondurable             Revised                    0.2          2.7      2.5       5.4            3.3           5.2
 manufacturing     Previously published            0.2          2.6      2.3      -1.6           -3.6          -1.9
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Table C1. Labor productivity growth and related measures - annual average changes: 2014-18


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Year                    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business........2018                       1.3          3.5      2.2       2.7            0.3           1.4
........................2017                       1.1          2.7      1.6       3.4            1.2           2.2
........................2016                       0.2          1.6      1.4       1.1           -0.2           0.9
........................2015                       1.3          3.5      2.2       3.1            2.9           1.8
........................2014                       0.8          3.1      2.3       2.8            1.1           2.0
                        
Manufacturing...........2018                       0.8          2.7      1.9       1.7           -0.7           0.9
........................2017                       0.7          1.8      1.0       3.4            1.2           2.6
........................2016                       0.3          0.4      0.0       0.6           -0.7           0.3
........................2015                      -1.6         -0.6      1.0       2.5            2.3           4.1
........................2014                       0.0          1.6      1.6       2.8            1.1           2.8
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Last Modified Date: March 07, 2019