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
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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.)
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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.
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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 0.3 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/.
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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).
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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
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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
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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
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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
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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
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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
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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
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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
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United States Department of Labor
