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Economic News Release
PRINT:Print

Third Quarter 2023, Preliminary



Transmission of material in this release is embargoed until                                 USDL 23-2317
8:30 a.m. (ET) Thursday, November 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 
                                 Third Quarter 2023, Preliminary
                                  
Nonfarm business sector labor productivity increased 4.7 percent in the third quarter of 2023, the 
U.S. Bureau of Labor Statistics reported today, as output increased 5.9 percent and hours worked 
increased 1.1 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, in which 
productivity increased 5.7 percent. From the same quarter a year ago, nonfarm business sector labor 
productivity increased 2.2 percent in the third quarter of 2023. (See table A1.)

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.

Unit labor costs in the nonfarm business sector decreased 0.8 percent in the third quarter of 2023, 
reflecting a 3.9-percent increase in hourly compensation and a 4.7-percent increase in productivity. Unit 
labor costs increased 1.9 percent over the last four quarters. (See tables A1 and 2.) 

=========================================================================================================================       
                                        Historical Revisions

Data in this release reflect the 2023 Comprehensive Update of the National Income and Product 
Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. Department of Commerce 
on September 28, 2023. See “Revised measures” section. 
=========================================================================================================================

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 0.6 percent over the last four quarters. 

Manufacturing sector labor productivity declined 0.7 percent in the third quarter of 2023, as output 
decreased 0.1 percent and hours worked increased 0.7 percent. In the durable manufacturing sector, 
productivity decreased 1.4 percent, reflecting a 2.3-percent increase in output and a 3.8-percent increase 
in hours worked. Nondurable manufacturing sector productivity increased 2.1 percent, as output 
decreased 2.4 percent and hours worked decreased 4.4 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 7.0 percent in the third quarter of 2023, 
reflecting a 6.2-percent increase in hourly compensation and a 0.7-percent decrease in productivity. 
Manufacturing unit labor costs increased 5.8 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

Measures of output for the business, nonfarm business, and nonfinancial corporate sectors, and measures 
of compensation for all sectors, incorporate revised National Income and Product Accounts (NIPA) data 
released on September 28, 2023, by the Bureau of Economic Analysis (BEA), U.S. Department of 
Commerce. Measures of real output provided by BEA reflect a change in base year from 2012 to 2017, 
and BLS has also changed the base year of indexes of labor productivity and related measures to 2017. 
As a result, all indexes in this release were revised historically. Revisions to percent change measures 
affected shorter time periods. Quarterly and annual measures incorporating compensation were subject 
to revision back to 2008 for the business and nonfarm business sectors, back to 2013 for the nonfinancial 
corporate sector, and back to 2018 for the manufacturing sector. Source data on output and 
compensation released by BEA on October 26, 2023, are reflected in data for the third quarter of 2023. 
Regular updates of source data on manufacturing output released in September and October by the 
Board of Governors of the Federal Reserve System are reflected in data for the first three quarters of 
2023; there were no historical revisions to manufacturing output.

Hours worked and related measures for the business and nonfarm business sectors were subject to 
revision back to 2008 due to revised NIPA data on government enterprises employment and on the 
proportion of industry compensation paid to employees of nonprofit institutions. Hours worked and 
related measures for the nonfinancial corporate sector were subject to revision back to 2006 due to the 
incorporation of revised NIPA data on the proportion of industry compensation paid to employees of 
corporations. 

In second-quarter 2020, productivity was revised up 3.4 percentage points due to a 2.2-percentage point 
upward revision to output and a 0.2-percentage point upward revision to hours worked. The revised 
figures now stand at an increase of 20.7 percent for productivity and decreases of 32.8 percent and 44.4 
percent in output and hours worked, respectively. The second-quarter 2020 change is now the largest 
productivity increase in the series, topping the 17.9-percent increase in the fourth quarter of 1947. Other 
notably revised periods include the first and second quarters of 2021, which saw downward revisions to 
productivity of 1.8 percentage points and 1.5 percentage points, respectively. Because hours worked 
were not revised in these two quarters, these revisions can be attributed to downward revisions to output 
of 2.0 percentage points and 1.6 percentage points, respectively. Productivity in the first and second 
quarters of 2021 now stand at increases of 1.6 percent and 0.8 percent, respectively. 

From the first quarter of 2012 to the second quarter of 2023, growth was revised upward overall, causing 
the revised index to outpace the previously published index. The average annual rate of nonfarm 
business sector productivity growth from the first quarter of 2012 to the second quarter of 2023 was 
revised up 0.1 percentage point to an increase of 1.3 percent. 

The average annual rate of nonfarm business sector productivity growth during the portion of the current 
business cycle subject to revision--from the fourth quarter of 2019 to the second quarter of 2023--was 
revised down 0.1 percentage point to an increase of 1.2 percent. The rate of growth for this business 
cycle through the current quarter--the third quarter of 2023--is 1.4 percent. 

Table B1 presents revised and previous labor productivity and related measures for the nonfarm 
business, business, and manufacturing sectors for the second quarter of 2023. Table A2 presents these 
measures for the nonfinancial corporate sector.

Nonfarm business sector productivity in the second quarter of 2023 was revised up 0.1 percentage 
point to an increase of 3.6 percent. As hours worked were unrevised, this stems from a 0.1-percentage 
point upward revision to output. Second-quarter unit labor costs were revised up 1.0 percentage point to 
an increase of 3.2 percent, reflecting a 1.2-percentage point upward revision to hourly compensation and 
the aforementioned revision to productivity. Real hourly compensation in the second quarter of 2023 
was also revised upward 1.2 percentage point, to an increase of 4.1 percent. (See table B1.)

Manufacturing sector productivity was revised up 0.2 percentage point to an increase of 3.1 percent in 
the second quarter of 2023, reflecting a 0.2-percentage point upward revision to output. Hours worked 
were unrevised. Productivity was revised up 0.9 percentage point in the durable manufacturing sector 
and down 0.5 percentage point in the nondurable manufacturing sector. In the second quarter of 2023, 
total manufacturing unit labor costs increased 6.3 percent rather than 4.9 percent as previously reported, 
reflecting a 1.7-percentage point upward revision to hourly compensation which was partially offset by 
the 0.2-percentage point upward revision to productivity. (See table B1.)  

Nonfinancial corporate sector productivity increased 2.1 percent in the second quarter of 2023, rather 
than the previously published estimate of a 3.7-percent increase, as a result of a 1.6-percentage point 
downward revision to output and a 0.1-percentage point downward revision to hours worked. Unit labor 
costs in the nonfinancial corporate sector were revised up 2.8 percentage points to an increase of 4.9 
percent in the second quarter of 2023, as hourly compensation was revised up 1.3 percentage points and 
productivity was revised down 1.6 percentage points. (See table A2.) 

Annual averages

Table C1 presents annual data for the nonfarm business, total manufacturing, and nonfinancial corporate 
sectors from 2020 to 2022. Annual average percent changes compare average annual indexes from one 
year to the next.

Annual average productivity in the nonfarm business sector was revised down to a 1.9-percent 
decrease in 2022, as output increased 2.1 percent and hours worked increased 4.0 percent. Annual 
average productivity in 2021 was revised down 0.5 percentage point to an increase of 1.7 percent, and in 
2020 was revised up 0.7 percentage point to an increase of 5.2 percent. Unit labor costs were revised 
down 0.5 percentage point in 2022, revised up 0.7 percentage point in 2021, and revised down 0.6 
percentage point in 2020. (See table C1.)

Annual average manufacturing sector productivity, output, and hours worked were not revised for 
2022, 2021, or 2020. Unit labor costs were revised down in 2022, 2021, and 2020 by 0.3 percentage 
point, 0.4 percentage point, and 0.2 percentage point, respectively. (See table C1.)

In the nonfinancial corporate sector, productivity was revised up 1.2 percentage points to a decrease of 
1.0 percent in 2022. This stemmed from a 1.1-percentage point upward revision to output, as hours 
worked were unrevised. Unit labor costs were revised down 2.5 percentage points to an increase of 5.2 
percent, reflecting a 1.2-percentage point downward revision to hourly compensation and the 
aforementioned revision to productivity. (See tables C1 and 6.) 

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/.
______________
The revised Productivity and Costs news release for third-quarter 2023 is scheduled to be released 
on Wednesday, December 6, 2023, at 8:30 a.m. (ET). 




=========================================================================================================================
Table A1. 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
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        Previous quarter            4.7          5.9      1.1        3.9            0.3          -0.8
                        A year ago                  2.2          3.1      0.8        4.2            0.6           1.9
                                                                                     
Business                Previous quarter            4.7          5.7      1.0        4.0            0.4          -0.7
                        A year ago                  2.4          3.2      0.8        4.2            0.6           1.8
                        
Manufacturing           Previous quarter           -0.7         -0.1      0.7        6.2            2.5           7.0
                        A Year ago                 -0.7         -0.8     -0.1        5.0            1.4           5.8

 Durable                Previous quarter           -1.4          2.3      3.8        4.2            0.6           5.7
 manufacturing          A year ago                 -0.7          0.5      1.1        4.5            0.9           5.2

 Nondurable             Previous quarter            2.1         -2.4     -4.4        9.4            5.6           7.1
 manufacturing          A year ago                  0.1         -2.1     -2.2        5.7            2.1           5.6
=========================================================================================================================


=========================================================================================================================
Table A2. 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
 -------------------------------------------------------------------------------------------------------------------------      
 Nonfinancial             Revised                   2.1          1.2     -0.9        7.1            4.3           4.9
 corporate          Previously published            3.7          2.8     -0.8        5.8            3.0           2.1
=========================================================================================================================


=========================================================================================================================
Table B1. 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
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        Revised                     3.6          2.0     -1.5        6.9            4.1           3.2
                   Previously published             3.5          1.9     -1.5        5.7            2.9           2.2
                        
Business                Revised                     3.4          2.0     -1.4        6.5            3.7           3.0
                   Previously published             3.4          2.0     -1.3        5.4            2.6           1.9
                        
Manufacturing           Revised                     3.1          1.0     -2.1        9.7            6.8           6.3
                   Previously published             2.9          0.8     -2.1        8.0            5.1           4.9

 Durable                Revised                     5.4          4.2     -1.2       10.2            7.3           4.5
 manufacturing     Previously published             4.5          3.2     -1.3        7.5            4.6           2.9
                        
 Nondurable             Revised                     1.5         -2.1     -3.6        8.5            5.7           6.9
 manufacturing     Previously published             2.0         -1.5     -3.5        8.8            5.9           6.6
=========================================================================================================================


=========================================================================================================================
Table C1. Labor productivity growth and related measures - revised and previous annual average changes: 2020-2022


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector           Year                           productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm          2022           Revised            -1.9          2.1      4.0        3.7           -4.1           5.6
business                 Previously published      -1.6          2.3      4.0        4.4           -3.4           6.1
                         
                                
                 2021           Revised             1.7          7.2      5.5        4.9            0.0           3.1
                         Previously published       2.2          7.8      5.5        4.7           -0.1           2.4
                         

                 2020           Revised             5.2         -2.8     -7.6        8.2            6.7           2.9
                         Previously published       4.5         -3.5     -7.6        8.2            6.8           3.5
                         
                                
Nonfinancial     2022           Revised            -1.0          3.1      4.2        4.1           -3.7           5.2
corporate                Previously published      -2.2          2.0      4.2        5.3           -2.5           7.7
                         
                        
                 2021           Revised             3.6          9.0      5.1        4.7           -0.2           1.0
                         Previously published       3.0          8.3      5.2        4.5           -0.3           1.5
                         
                                                    3.4         -4.2     -7.4        8.0            6.6           4.5
                 2020           Revised             3.6         -4.0     -7.4        8.1            6.7           4.4
                         Previously published
                         
                               
Manufacturing    2022           Revised            -1.3          2.9      4.2        3.5           -4.3           4.8
                         Previously published      -1.3          2.9      4.2        3.8           -4.0           5.1
                         

                 2021           Revised             1.8          5.1      3.2        2.3           -2.4           0.4
                         Previously published       1.8          5.1      3.2        2.7           -2.1           0.8
                        
                        
                 2020           Revised             0.4         -7.0     -7.4        6.8            5.4           6.3
                         Previously published       0.4         -7.0     -7.4        7.0            5.6           6.5
=========================================================================================================================
Last Modified Date: November 02, 2023