Transmission of material in this release is embargoed until USDL 23-2529
8:30 a.m. (ET) Wednesday, December 6, 2023
Technical information: (202) 691-5606 • Productivity@bls.gov • www.bls.gov/productivity
Media contact: (202) 691-5902 • PressOffice@bls.gov
PRODUCTIVITY AND COSTS
Third Quarter 2023, Revised
Nonfarm business sector labor productivity increased 5.2 percent in the third quarter of 2023, the
U.S. Bureau of Labor Statistics reported today, as output increased 6.1 percent and hours worked
increased 0.9 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.)
The increase in labor productivity is the highest rate since the third quarter of 2020, when productivity
increased 5.7 percent. From the same quarter a year ago, nonfarm business sector labor productivity
increased 2.4 percent. (See table A1.)
Unit labor costs in the nonfarm business sector decreased 1.2 percent in the third quarter of 2023,
reflecting a 3.9-percent increase in hourly compensation and a 5.2-percent increase in productivity. Unit
labor costs increased 1.6 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, increased 0.3 percent in the third
quarter of 2023, and increased 0.4 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 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 annual
rate of 1.5 percent, as output grew at a 2.2-percent per year rate, outpacing hours worked, which grew at
a 0.7-percent annual rate. The 1.5-percent annual rate of productivity growth in the current business
cycle thus far is the same rate as the previous business cycle from the fourth quarter of 2007 through
fourth-quarter 2019, and is below the long-term rate since the first quarter of 1947 (2.1 percent).
Manufacturing sector labor productivity declined 0.8 percent in the third quarter of 2023, as output
decreased 0.3 percent and hours worked increased 0.5 percent. In the durable manufacturing sector,
productivity decreased 1.8 percent, reflecting a 1.6-percent increase in output and a 3.4-percent increase
in hours worked. Nondurable manufacturing sector productivity increased 2.3 percent, as output
decreased 2.1 percent and hours worked decreased 4.2 percent. Total manufacturing sector productivity
decreased 0.7 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)
Unit labor costs in the total manufacturing sector increased 6.2 percent in the third quarter of 2023,
reflecting a 5.4-percent increase in hourly compensation and a 0.8-percent decrease in productivity.
Manufacturing unit labor costs increased 5.2 percent from the same quarter a year ago. (See tables A1
and 3.)
Manufacturing sector labor productivity has increased at an annual rate of 0.1 percent during the current
business cycle, which began in the fourth quarter of 2019. This rate reflects output and hours worked
growing at annual rates of 0.2 percent and 0.1 percent, respectively. This slow productivity growth rate
follows the 0.0-percent annual rate of growth during the last business cycle that spanned the fourth
quarter of 2007 through fourth-quarter 2019, and is below the long-term rate since the first quarter of
1987 of 2.1 percent.
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 third-quarter 2023 measures were announced today for the nonfinancial corporate
sector. (See table A2.) Productivity increased 2.2 percent in the third quarter of 2023 as output and
hours worked increased 3.1 percent and 0.8 percent, respectively. Productivity increased 1.2 percent in
the nonfinancial corporate sector over the last four quarters. Unit profits of nonfinancial corporations
increased 11.1 percent in the third quarter of 2023 and decreased 1.7 percent over the last four quarters.
(See table 6.)
Revised measures
Measures released today are based on more recent source data than were available for the preliminary
report. Regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the
Board of Governors of the Federal Reserve System are reflected in data for the second and third quarters
of 2023. Measures of output for the manufacturing sectors incorporate revised annual benchmark data
from 1987 to 2021 released November 21 by BLS. The most notable revisions to manufacturing output
from the incorporation of these data occurred with several upward revisions in 2018 and 2019 of
between 0.1 and 0.3 percentage point and several downward revisions in 2020 and 2021 of between 0.1
and 0.3 percentage point.
Table B1 presents revised and previously published productivity and related measures for the nonfarm
business, business, and manufacturing sectors for the third quarter of 2023.
In the third quarter of 2023, nonfarm business sector labor productivity increased 5.2 percent rather
than the preliminary estimate of a 4.7-percent increase, reflecting a 0.2-percentage point upward revision
to output and a 0.2-percentage point downward revision to hours worked. Unit labor costs were revised
down 0.4 percentage point, reflecting a 0.5-percentage point upward revision to labor productivity;
hourly compensation was not revised.
In the manufacturing sector, productivity decreased 0.8 percent rather than decreasing 0.7 percent as
previously reported, reflecting a 0.2-percentage point downward revision to output and a 0.2-percentage
point downward revision to hours worked. Durable manufacturing productivity decreased 1.8 percent
rather than decreasing 1.4 percent as previously reported, and nondurable manufacturing productivity
was revised up to an increase of 2.3 percent from the previously-reported increase of 2.1 percent. Total
manufacturing unit labor costs were revised down 0.8 percentage point to an increase of 6.2 percent, the
combined effect of a 0.8-percentage point downward revision to hourly compensation and a 0.1-
percentage point downward revision to productivity.
Table B2 shows revised and previously published productivity and related measures for the nonfarm
business, business, manufacturing, and nonfinancial corporate sectors for the second quarter of 2023.
In the second quarter of 2023, labor productivity, output, and hours worked were unrevised for the
nonfarm business sector. Unit labor costs increased 2.6 percent, rather than increasing 3.2 percent as
previously reported, due to a 0.7-percentage point downward revision to hourly compensation.
In the manufacturing sector, productivity was revised up 0.2 percentage point to an increase of 3.3
percent. Unit labor costs were revised down to an increase of 4.7 percent from the previously-reported
increase of 6.3 percent. This revision is mainly due to a 1.6-percentage point downward revision to
hourly compensation.
In the nonfinancial corporate sector, productivity increased 2.2 percent rather than increasing 2.1
percent as previously reported. Unit labor costs were not revised.
Quarterly and annual data for all sectors for recent years appear in tables 1-6. Full historical annual and
quarterly measures can be found at www.bls.gov/productivity/tables/.
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The preliminary Productivity and Costs news release for fourth-quarter and annual averages 2023
is scheduled to be released on Thursday, February 1, 2024, at 8:30 a.m. (ET).
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Calendar year 2024 release dates for Productivity and Costs news releases are now available at
www.bls.gov/schedule/news_release/prod2.htm.
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Upcoming Method Change
Beginning with the Productivity and Costs news release scheduled for March 7, 2024, estimates of hours
worked by self-employed workers and unpaid family workers will reflect a method change to reduce
volatility of the estimates. Self-employed and unpaid family workers accounted for 7.4 percent of hours
worked in the nonfarm business sector in 2022. The method change will remove statistically insignificant
variability during seasonal adjustment of the Current Population Survey (CPS) source data. In addition,
volatility associated with respondent turnover will be reduced by adjusting respondent weights. These two
adjustments by the BLS productivity program will dampen noise in the series without losing important
information about cyclical changes in hours worked by self-employed and unpaid family workers. A more
detailed discussion of the upcoming changes is forthcoming in the Monthly Labor Review in December
2023.
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Table A1. Labor productivity growth and related measures - revised third-quarter 2023
(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 5.2 6.1 0.9 3.9 0.3 -1.2
A year ago 2.4 3.2 0.8 4.0 0.4 1.6
Business Previous quarter 5.2 6.0 0.8 4.0 0.4 -1.2
A year ago 2.5 3.2 0.7 4.0 0.5 1.5
Manufacturing Previous quarter -0.8 -0.3 0.5 5.4 1.8 6.2
A Year ago -0.7 -0.8 -0.1 4.4 0.9 5.2
Durable Previous quarter -1.8 1.6 3.4 3.4 -0.2 5.3
manufacturing A year ago -0.8 0.2 1.0 3.8 0.2 4.6
Nondurable Previous quarter 2.3 -2.1 -4.2 8.8 5.0 6.4
manufacturing A year ago 0.2 -1.9 -2.1 5.5 1.9 5.3
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Table A2. Labor productivity growth and related measures – preliminary third-quarter 2023
(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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Nonfinancial Previous quarter 2.2 3.1 0.8 3.9 0.3 1.7
corporate A year ago 1.2 2.1 0.9 4.5 0.9 3.3
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Table B1. Labor productivity growth and related measures – revised and previously published third-quarter 2023
(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 5.2 6.1 0.9 3.9 0.3 -1.2
Previously published 4.7 5.9 1.1 3.9 0.3 -0.8
Business Revised 5.2 6.0 0.8 4.0 0.4 -1.2
Previously published 4.7 5.7 1.0 4.0 0.4 -0.7
Manufacturing Revised -0.8 -0.3 0.5 5.4 1.8 6.2
Previously published -0.7 -0.1 0.7 6.2 2.5 7.0
Durable Revised -1.8 1.6 3.4 3.4 -0.2 5.3
manufacturing Previously published -1.4 2.3 3.8 4.2 0.6 5.7
Nondurable Revised 2.3 -2.1 -4.2 8.8 5.0 6.4
manufacturing Previously published 2.1 -2.4 -4.4 9.4 5.6 7.1
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Table B2. Labor productivity growth and related measures – revised and previously published second-quarter 2023
(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 3.6 2.0 -1.5 6.2 3.4 2.6
Previously published 3.6 2.0 -1.5 6.9 4.1 3.2
Business Revised 3.4 2.0 -1.4 5.8 3.1 2.4
Previously published 3.4 2.0 -1.4 6.5 3.7 3.0
Nonfinancial Revised 2.2 1.2 -0.9 7.2 4.4 4.9
corporate Previously published 2.1 1.2 -0.9 7.1 4.3 4.9
Manufacturing Revised 3.3 1.1 -2.1 8.1 5.2 4.7
Previously published 3.1 1.0 -2.1 9.7 6.8 6.3
Durable
manufacturing Revised 5.2 4.0 -1.2 7.8 4.9 2.4
Previously published 5.4 4.2 -1.2 10.2 7.3 4.5
Nondurable
manufacturing Revised 2.0 -1.7 -3.6 8.4 5.6 6.3
Previously published 1.5 -2.1 -3.6 8.5 5.7 6.9
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United States Department of Labor
