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Nonfarm business sector labor productivity decreased 7.3 percent in the first quarter of 2022

June 09, 2022

Nonfarm business sector labor productivity decreased 7.3 percent in the first quarter of 2022, as output decreased 2.3 percent and hours worked increased 5.4 percent. This is the largest decline in quarterly productivity since the third quarter of 1947, when the measure decreased 11.7 percent.

Percent changes in nonfarm business productivity and costs, Q1 2022
Measure Percent change from last quarter Percent change from same quarter a year ago

Labor productivity

-7.3% -0.6%

Output

-2.3 4.2

Hours worked

5.4 4.8

Unit labor costs

12.6 8.2

Hourly compensation

4.4 7.6

Real hourly compensation

-4.4 -0.4

From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.6 percent, reflecting a 4.2-percent increase in output that was outpaced by a 4.8-percent increase in hours worked. This is the largest four-quarter decline since the fourth quarter of 1993, when the measure also declined 0.6 percent.

Unit labor costs in the nonfarm business sector increased 12.6 percent in the first quarter of 2022, reflecting a 4.4-percent increase in hourly compensation and a 7.3-percent decrease in productivity. Unit labor costs increased 8.2 percent over the last four quarters. This is the largest four-quarter increase in this measure since another 8.2-percent increase in the third quarter of 1982.

These data are from the Productivity program and are subject to revision. All quarterly percent changes are seasonally adjusted annual rates. To learn more, see "Productivity and Costs — First Quarter (Revised) 2022." We also have more charts related to the latest "Productivity and Costs" news release. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked for all persons, including employees, proprietors, and unpaid family workers. Labor costs are calculated 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.

SUGGESTED CITATION

Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Nonfarm business sector labor productivity decreased 7.3 percent in the first quarter of 2022 at https://www.bls.gov/opub/ted/2022/nonfarm-business-sector-labor-productivity-decreased-7-3-percent-in-the-first-quarter-of-2022.htm (visited August 08, 2022).

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