Transmission of material in this release is embargoed until USDL 23-0398
8:30 a.m. (ET) Thursday, March 2, 2023
Technical information: (202) 691-5606 • Productivity@bls.gov • www.bls.gov/productivity
Media contact: (202) 691-5902 • PressOffice@bls.gov
PRODUCTIVITY AND COSTS
Fourth Quarter and Annual Averages 2022, Revised
Nonfarm business sector labor productivity increased 1.7 percent in the fourth quarter of 2022, the
U.S. Bureau of Labor Statistics reported today, as output increased 3.1 percent and hours worked
increased 1.4 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.)
This 1.7-percent increase in labor productivity for the fourth quarter of 2022 is 1.3 percentage points
below the preliminary estimate of a 3.0-percent increase. From the same quarter a year ago, nonfarm
business sector labor productivity decreased 1.8 percent, reflecting a 0.7-percent increase in output and a
2.6-percent increase in hours worked. (See table A1.) Annual average productivity decreased 1.7 percent
from 2021 to 2022. This is the largest annual decline in the measure since 1974, when productivity also
decreased 1.7 percent. (See table C1.)
Unit labor costs in the nonfarm business sector increased 3.2 percent in the fourth quarter of 2022,
reflecting a 4.9-percent increase in hourly compensation and a 1.7-percent increase in productivity. Unit
labor costs increased 6.3 percent over the last four quarters. (See tables A1 and 2.)
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Historical Revisions to Productivity and Costs Data
Data in this release incorporate the annual benchmark revision of BLS Current Employment Statistics
program data on employment and hours of employees on nonfarm payrolls. Data also include revisions
to employment and hours of all other business sector workers that reflect updated seasonal adjustment of
those data by the BLS Major Sector Productivity program. 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 productivity tend to reduce them.
Real hourly compensation, which takes into account consumer prices, increased 0.7 percent in the fourth
quarter, and declined 2.4 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 persons, including employees, proprietors, and unpaid family workers. The fourth
quarter of 2022 is the second consecutive quarter in which both output and labor productivity increased,
following decreases in the first two quarters of the year. Labor productivity has grown at an annualized
rate of 1.4 percent since the last business cycle peak in the fourth quarter of 2019--the last quarter before
the COVID-19 pandemic and ensuing recession--reflecting a 2.1-percent rate of growth in output and a
0.7-percent rate of growth in hours worked over that three-year period.
Manufacturing sector labor productivity decreased 2.7 percent in the fourth quarter of 2022, as output
decreased 3.0 percent and hours worked decreased 0.4 percent. In the durable manufacturing sector,
productivity decreased 3.1 percent, with a 3.5-percent decrease in output and a 0.4-percent decrease in
hours worked. Nondurable manufacturing sector productivity decreased 2.2 percent, as output decreased
2.5 percent and hours worked decreased 0.3 percent. Total manufacturing sector productivity decreased
1.9 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)
Unit labor costs in the total manufacturing sector increased 7.7 percent in the fourth quarter of 2022,
reflecting a 4.8-percent increase in hourly compensation and a 2.7-percent decrease in productivity.
Manufacturing unit labor costs increased 6.3 percent from the same quarter a year ago. (See tables A1
and 3.)
Labor productivity in the manufacturing sector has grown at an annualized rate of 0.6 percent since the
fourth quarter of 2019, reflecting a 0.8-percent rate of growth in output and a 0.2-percent rate of growth
in hours worked.
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
Third quarter, fourth quarter, and annual average data for 2022 were revised to incorporate regular
updates of source data on output and compensation published by the Department of Commerce on
February 23, 2023. Quarterly measures of real hourly compensation in 2022 were revised to reflect
updates to seasonally adjusted data from the BLS Consumer Price Index program released on February
14.
Quarterly and annual measures of hours worked, productivity, and related series were revised
historically for all major sectors. From 2018 to 2022, the revisions reflect incorporation of revised BLS
Current Employment Statistics (CES) program data for employment and hours of employees on nonfarm
payrolls. Notable revisions in those data reflect upward revisions due to both the benchmarking of CES
employment to the Quarterly Census of Employment and Wages in March 2022--which is wedged in
over the prior 12 months--and the incorporation of actual business births and deaths during this period.
From 1990 to 2022, revisions reflect reconstruction of employment for two industries by CES based on a
correction to the coding of some establishments within these two industries. Revisions to employment
and hours worked by all workers from 2018 to 2022 also reflect revised seasonal adjustment of hours
worked by nonfarm proprietors and unpaid family workers, all farm workers, and employees of
government enterprises. These measures, based on source data from the BLS Current Population Survey
(CPS), are seasonally adjusted by the BLS Major Sector Productivity program. Because hours worked
were revised for the index base year of 2012, all measures incorporating hours worked--including
productivity--were subject to revision back to 1947.
Revised and previous measures for the fourth quarter of 2022 are shown in table B1 for the business,
nonfarm business, and manufacturing sectors. In the fourth quarter of 2022, nonfarm business
productivity increased 1.7 percent--a 1.3-percentage point downward revision from the preliminary
estimate of a 3.0-percent increase. This reflects a 0.4-percentage point downward revision to output and
a 0.9-percentage point upward revision to hours worked. Unit labor costs increased 3.2 percent rather
than increasing 1.1 percent as previously reported, reflecting a 1.3-percentage point downward revision
to productivity and a 0.8-percentage point upward revision to hourly compensation.
Manufacturing productivity decreased 2.7 percent in the fourth quarter of 2022 rather than decreasing
1.5 percent as reported on February 2. This reflects a 0.4-percentage point downward revision to output
and a 0.7-percentage point upward revision to hours worked. A 1.6-percentage point upward revision to
hourly compensation and the 1.2-percentage point downward revision to productivity both contributed
to an upward revision to unit labor costs, which increased 7.7 percent rather than 4.8 percent as
previously reported. Productivity was revised down by 1.4 percentage points and 0.8 percentage point in
the durable and nondurable manufacturing sectors, respectively. (See table B1.)
In the third quarter of 2022, nonfarm business productivity was revised down to an increase of 1.2
percent due to an upward revision in hours worked; output was not revised. Unit labor costs increased
6.9 percent rather than 2.0 percent as previously reported, reflecting a 4.8-percentage point upward
revision to hourly compensation and the 0.2-percentage point downward revision to productivity. Total
manufacturing sector productivity was revised down by 0.4 percentage point as durable manufacturing
productivity was revised up by 0.3 percentage point and nondurable manufacturing productivity was
revised down by 1.5 percentage points. In the total manufacturing sector, unit labor costs were revised
up by 5.6 percentage points to an increase of 12.1 percent, reflecting upward revisions to unit labor costs
in both the durable and nondurable manufacturing sectors. (See table B2.)
Nonfinancial corporate sector productivity increased 0.6 percent in the third quarter of 2022 rather
than decreasing 1.6 percent as previously reported, primarily reflecting a 2.4-percentage point upward
revision to output. Unit labor costs were revised up by 1.8 percentage points to an increase of 7.1
percent. (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 decreased 1.7 percent in
2022, as the 4.0-percent increase in hours worked outpaced the 2.3-percent increase in output. The 1.7-
percent decrease in labor productivity in 2022 is the largest annual decrease in the measure since 1974
when the measure decreased by the same amount. These are also the largest declines in the annual
series, which begins in 1948.
Unit labor costs in the nonfarm business sector increased 6.5 percent in 2022, reflecting an increase of
4.7 percent in hourly compensation and a decrease of 1.7 percent in productivity. This is the largest
annual increase in unit labor costs since 1982, when the measure increased 8.2 percent. Real hourly
compensation, which takes into account changes in consumer prices, decreased 2.8 percent in 2022. This
is the largest annual decline in real hourly compensation since the series began in 1948.
In the manufacturing sector, productivity decreased 1.0 percent in 2022, as an increase in output of 3.1
percent was outpaced by an increase in hours worked of 4.2 percent. The annual increase of 4.2 percent
in hours worked is the largest increase in the series, which begins in 1988.
Manufacturing unit labor costs increased 5.2 percent in 2022, with hourly compensation increasing 4.1
percent. Real hourly compensation in the manufacturing sector decreased 3.3 percent in 2022, the largest
decline since the series began in 1988.
Quarterly and annual data for all sectors from 2020 to 2022 appear in tables 1-6. Full historical
measures can be found on the Productivity and Costs website: www.bls.gov/productivity/tables.
______________
The preliminary Productivity and Costs news release for first-quarter 2023 is scheduled to be
released on Thursday, May 4, 2023, at 8:30 a.m. (ET).
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Table A1. Labor productivity growth and related measures – revised fourth-quarter 2022
(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
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Nonfarm business Previous quarter 1.7 3.1 1.4 4.9 0.7 3.2
A year ago -1.8 0.7 2.6 4.4 -2.4 6.3
Business Previous quarter 2.0 3.0 1.0 5.3 1.1 3.3
A year ago -1.8 0.6 2.5 4.5 -2.3 6.4
Manufacturing Previous quarter -2.7 -3.0 -0.4 4.8 0.6 7.7
A Year ago -1.9 0.7 2.7 4.3 -2.4 6.3
Durable Previous quarter -3.1 -3.5 -0.4 4.0 -0.1 7.4
manufacturing A year ago -1.9 1.9 3.9 3.7 -3.0 5.8
Nondurable Previous quarter -2.2 -2.5 -0.3 6.2 2.0 8.6
manufacturing A year ago -1.1 -0.5 0.6 5.1 -1.7 6.3
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Table A2. Labor productivity growth and related measures – revised and previously published third-quarter 2022
(percent change from previous quarter at annual rate)
Labor Hours Hourly Real hourly Unit labor
Sector productivity Output worked compensation compensation costs
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Nonfinancial Revised 0.6 4.3 3.6 7.7 2.1 7.1
corporate Previously published -1.6 1.9 3.5 3.6 -2.0 5.3
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Table B1. Labor productivity growth and related measures – revised and previously published fourth-quarter 2022
(percent change from previous quarter at annual rate)
Labor Hours Hourly Real hourly Unit labor
Sector productivity Output worked compensation compensation costs
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Nonfarm business Revised 1.7 3.1 1.4 4.9 0.7 3.2
Previously published 3.0 3.5 0.5 4.1 1.0 1.1
Business Revised 2.0 3.0 1.0 5.3 1.1 3.3
Previously published 3.2 3.3 0.1 4.5 1.4 1.3
Manufacturing Revised -2.7 -3.0 -0.4 4.8 0.6 7.7
Previously published -1.5 -2.6 -1.1 3.2 0.1 4.8
Durable Revised -3.1 -3.5 -0.4 4.0 -0.1 7.4
manufacturing Previously published -1.7 -2.9 -1.2 2.4 -0.8 4.1
Nondurable Revised -2.2 -2.5 -0.3 6.2 2.0 8.6
manufacturing Previously published -1.4 -2.3 -0.9 5.0 1.8 6.5
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Table B2. Labor productivity growth and related measures – revised and previously published third-quarter 2022
(percent change from previous quarter at annual rate)
Labor Hours Hourly Real hourly Unit labor
Sector productivity Output worked compensation compensation costs
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Nonfarm Business Revised 1.2 3.6 2.4 8.2 2.5 6.9
Previously published 1.4 3.6 2.3 3.4 -2.2 2.0
Business Revised 1.0 3.5 2.5 8.0 2.3 7.0
Previously published 1.1 3.5 2.4 3.2 -2.3 2.0
Manufacturing Revised -3.9 -0.8 3.2 7.7 2.0 12.1
Previously published -3.5 -0.2 3.5 2.7 -2.8 6.5
Durable Revised -4.7 0.9 5.9 7.7 2.0 13.0
manufacturing Previously published -5.0 1.7 7.0 2.2 -3.3 7.5
Nondurable Revised -1.6 -2.6 -1.1 7.1 1.4 8.8
manufacturing Previously published -0.1 -2.1 -2.1 2.9 -2.7 2.9
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Table C1. Labor productivity growth and related measures – annual average changes: 2018-2022
Labor Hours Hourly Real hourly Unit labor
Sector Year productivity Output worked compensation compensation costs
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Nonfarm business 2022 -1.7 2.3 4.0 4.7 -2.8 6.5
2021 2.2 7.8 5.5 4.7 0.0 2.4
2020 4.5 -3.5 -7.6 8.1 6.8 3.5
2019 2.0 2.7 0.7 3.8 2.0 1.8
2018 1.4 3.5 2.0 3.4 0.9 1.9
Manufacturing 2022 -1.0 3.1 4.2 4.1 -3.3 5.2
2021 2.6 5.8 3.2 2.7 -1.9 0.1
2020 0.9 -6.6 -7.4 7.0 5.7 6.1
2019 -2.4 -2.3 0.2 2.4 0.5 4.9
2018 0.2 2.0 1.8 2.3 -0.1 2.1
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United States Department of Labor
