Transmission of material in this release is embargoed until USDL 25-0715
8:30 a.m. (ET) Thursday, May 8, 2025
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Productivity and Costs
First Quarter 2025, Preliminary
Nonfarm business sector labor productivity decreased 0.8 percent in the first quarter of 2025, the U.S.
Bureau of Labor Statistics reported today, as output decreased 0.3 percent and hours worked increased
0.6 percent. (All quarterly percent changes in this release are seasonally adjusted annualized rates.) This
is the first decline in nonfarm business sector labor productivity since the second quarter of 2022. From
the same quarter a year ago, nonfarm business sector labor productivity increased 1.4 percent in the first
quarter of 2025. (See tables A1 and 2.)
Unit labor costs in the nonfarm business sector increased 5.7 percent in the first quarter of 2025,
reflecting a 4.8-percent increase in hourly compensation and a 0.8-percent decrease in productivity. Unit
labor costs increased 1.3 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 1.0 percent in the first
quarter of 2025, and was unchanged 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
annualized rate of 1.8 percent, reflecting a 2.4-percent rate of growth in output and a 0.6-percent rate of
growth in hours worked. The 1.8-percent annualized rate of productivity growth in the current business
cycle thus far is higher than the 1.5-percent rate of the previous business cycle from the fourth quarter of
2007 through the fourth quarter of 2019, and is below the long-term rate of 2.1 percent since the first
quarter of 1947.
Manufacturing sector labor productivity increased 4.5 percent in the first quarter of 2025, as output
increased 5.1 percent and hours worked increased 0.5 percent. The increase in productivity is the
steepest since the second quarter of 2021, when the measure increased 5.3 percent. In the durable
manufacturing sector, productivity increased 7.1 percent, reflecting a 7.9-percent increase in output and
a 0.8-percent increase in hours worked. Nondurable manufacturing sector productivity increased 2.2
percent, as output increased 2.3 percent and hours worked increased 0.1 percent. Total manufacturing
sector productivity increased 1.5 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)
Unit labor costs in the total manufacturing sector increased 1.6 percent in the first quarter of 2025,
reflecting a 6.2-percent increase in hourly compensation and a 4.5-percent increase in productivity.
Manufacturing unit labor costs increased 0.7 percent from the same quarter a year ago. (See tables A1
and 3.)
Manufacturing sector labor productivity has grown at an annualized rate of 0.5 percent during the
current business cycle, as output has increased 0.2 percent and hours have declined 0.3 percent. The 0.5-
percent annualized rate of productivity growth in the current business cycle thus far is above the 0.1-
percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of
2019 and is below the long-term rate of 2.1 percent since the first quarter of 1987. The 4.5 percent
increase in labor productivity in the first quarter of 2025 boosted the annualized growth rate for the
current business cycle 0.2 percentage point, from 0.3 percent to 0.5 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 fourth-quarter and annual 2024 measures were announced today for the nonfinancial
corporate sector. Productivity increased 4.9 percent in the fourth quarter of 2024, as output increased
5.4 percent and hours worked increased 0.4 percent. From the fourth quarter of 2023 to the fourth
quarter of 2024, nonfinancial corporate sector productivity increased 3.7 percent.
Revised measures
Hours and related measures--including labor productivity and hourly compensation--for all sectors were
revised to incorporate updated ratios of hours worked to hours paid by detailed industry, provided by the
BLS National Compensation Survey; indexes were subject to revision back to 2018. Measures of real
hourly compensation for all sectors were also subject to revision from 2020 onward due to the
incorporation of the revised Consumer Price Index Retroactive Series. Fourth quarter and annual average
data for 2024 were revised to incorporate regular updates of source data on output and compensation
published by the Department of Commerce on March 27, 2025. Manufacturing sector output for the
third and fourth quarters of 2024 reflects revisions published by the Board of Governors of the Federal
Reserve System on March 18 and April 16, 2025.
Table B1 presents previous and revised productivity and related measures for the business, nonfarm
business, and manufacturing sectors for the fourth quarter of 2024.
In the fourth quarter of 2024, nonfarm business sector productivity was revised up 0.2 percentage
point to an increase of 1.7 percent, reflecting a 0.1-percentage point upward revision to output; hours
worked were not revised. Nonfarm business unit labor costs were revised down 0.2 percentage point to
an increase of 2.0 percent, reflecting a 0.1-percentage point downward revision to hourly compensation
and the aforementioned 0.2-percentage point upward revision to labor productivity.
In the manufacturing sector, productivity, output, and hours worked for the fourth quarter of 2024
were not revised. Unit labor costs were revised up 0.1 percentage point to an increase of 3.8 percent.
Although many measures were not revised for the manufacturing sector, the constituent durable and
nondurable manufacturing sectors saw offsetting revisions. Labor productivity was revised down 0.6
percentage point in the durable manufacturing sector and up 0.6 percentage point in the nondurable
manufacturing sector. Output was revised down 0.4 percentage point in the durable manufacturing
sector and up 0.5 percentage point in the nondurable manufacturing sector. Hours worked were revised
up 0.1 percentage point in the durable manufacturing sector and down 0.1 percentage point in the
nondurable manufacturing sector. Lastly, unit labor costs were revised up 0.7 percentage point in the
durable manufacturing sector and down 0.6 percentage point in the nondurable manufacturing sector
(See table B1.)
The annual average rate of productivity growth in the nonfarm business sector in 2024 was revised up
0.1-percentage point to an increase of 2.8 percent; annual average productivity for the manufacturing
sector was not revised. (See tables 2 and 3.)
Quarterly and annual data for all sectors from 2023 forward appear in tables 1-6. Full historical
measures can be found on the Productivity and Costs home page: www.bls.gov/productivity/tables/.
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The revised Productivity and Costs news release for first-quarter 2025 is scheduled to be released
on Thursday, June 5, 2025, at 8:30 a.m. (ET).
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Table A1. Labor productivity growth and related measures – preliminary first-quarter 2025
(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 -0.8 -0.3 0.6 4.8 1.0 5.7
A year ago 1.4 2.2 0.8 2.7 0.0 1.3
Business Previous quarter -1.1 -0.6 0.5 4.9 1.1 6.1
A year ago 1.4 2.1 0.7 2.8 0.0 1.4
Manufacturing Previous quarter 4.5 5.1 0.5 6.2 2.4 1.6
A Year ago 1.5 1.1 -0.4 2.2 -0.5 0.7
Durable Previous quarter 7.1 7.9 0.8 7.0 3.1 0.0
manufacturing A year ago 1.3 0.3 -1.0 2.0 -0.7 0.7
Nondurable Previous quarter 2.2 2.3 0.1 4.6 0.8 2.4
manufacturing A year ago 1.3 2.0 0.7 2.7 0.0 1.4
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Table A2. Labor productivity growth and related measures – preliminary fourth-quarter 2024
(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
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial Previous quarter 4.9 5.4 0.4 4.5 1.4 -0.4
corporate A year ago 3.7 4.3 0.5 4.7 1.9 0.9
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Table B1. Labor productivity growth and related measures – revised and previously published fourth-quarter 2024
(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 1.7 2.5 0.8 3.7 0.6 2.0
Previously published 1.5 2.4 0.8 3.8 0.7 2.2
Business Revised 2.2 2.5 0.3 4.3 1.2 2.1
Previously published 2.0 2.4 0.3 4.4 1.3 2.3
Manufacturing Revised 0.3 -1.3 -1.6 4.0 1.0 3.8
Previously published 0.3 -1.3 -1.6 4.0 1.0 3.7
Durable Revised -1.7 -3.6 -2.0 4.2 1.1 6.0
manufacturing Previously published -1.1 -3.2 -2.1 4.2 1.1 5.3
Nondurable Revised 2.0 1.1 -0.9 3.8 0.7 1.8
manufacturing Previously published 1.4 0.6 -0.8 3.8 0.7 2.4
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Table C1. Labor productivity growth and related measures – annual average changes: 2020-2024
Labor Hours Hourly Real hourly Unit labor
Sector Year productivity Output worked compensation compensation costs
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial 2024 4.2 4.4 0.2 5.5 2.5 1.2
corporate 2023 0.2 1.5 1.3 4.3 0.1 4.1
2022 -0.1 4.1 4.2 4.1 -3.7 4.1
2021 4.3 9.7 5.1 4.9 0.1 0.5
2020 3.4 -4.1 -7.3 8.0 6.6 4.4
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United States Department of Labor
