Department of Labor Logo United States Department of Labor
Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Economic News Release
PRINT:Print

Fourth Quarter and Annual Averages 2023, Preliminary



Transmission of material in this release is embargoed until                                 USDL 24-0147
8:30 a.m. (ET) Thursday, February 1, 2024

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 2023, Preliminary

Nonfarm business sector labor productivity increased 3.2 percent in the fourth quarter of 2023, the 
U.S. Bureau of Labor Statistics reported today, as output increased 3.7 percent and hours worked 
increased 0.4 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) 
From the same quarter a year ago, nonfarm business sector labor productivity increased 2.7 percent. (See 
table A1.) Annual average productivity increased 1.2 percent from 2022 to 2023. (See table C1.) 

Unit labor costs in the nonfarm business sector increased 0.5 percent in the fourth quarter of 2023, 
reflecting a 3.7-percent increase in hourly compensation and a 3.2-percent increase in productivity. Unit 
labor costs increased 2.3 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 0.9 percent in the fourth 
quarter of 2023, and increased 1.8 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 1.6 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 1.6-percent annual rate of productivity growth in the current business 
cycle thus far is just 0.1-percentage point above the previous business cycle rate 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 increased 2.3 percent in the fourth quarter of 2023, as output 
decreased 2.4 percent and hours worked decreased 4.6 percent. The 4.6-percent decrease in hours 
worked is the largest decline since the historic decline in the second quarter of 2020. In the durable 
manufacturing sector, productivity increased 1.4 percent, reflecting a 4.4-percent decrease in output and 
a 5.7-percent decrease in hours worked. Nondurable manufacturing sector productivity increased 2.5 
percent, as output decreased 0.3 percent and hours worked decreased 2.7 percent. Total manufacturing 
sector productivity increased 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 4.2 percent in the fourth quarter of 2023, 
reflecting a 6.6-percent increase in hourly compensation and a 2.3-percent increase in productivity. 
Manufacturing unit labor costs increased 5.4 percent from the same quarter a year ago. (See tables A1 
and 3.)

Manufacturing sector labor productivity has increased at an annual rate of 0.2 percent during the current 
business cycle, which began in the fourth quarter of 2019. This rate reflects a 0.1-percent growth rate for 
output and a 0.2-percent rate of decline for hours worked. 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.  

Revised measures

Revised and previously published measures for the third quarter of 2023 are shown in tables A2 and 
B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial 
corporations.

In the third quarter of 2023, nonfarm business productivity was revised down 0.3 percentage point, to an 
increase of 4.9 percent, due to a 0.3-percentage point downward revision to output. (See table B1.) Unit 
labor costs decreased 1.1 percent in the third quarter, rather than decreasing 1.2 percent as previously 
reported.

In the manufacturing sector, productivity declined 0.8 percent in the third quarter of 2023 as 
previously reported. Unit labor costs were revised upwards 0.1 percentage point to an increase of 6.3 
percent. 

As for the nonfinancial corporate sector, productivity was revised up 0.3 percentage point in the third 
quarter of 2023 to an increase of 2.5 percent. This revision reflects a 0.2-percentage point upward 
revision to output to an increase of 3.3 percent. Hours worked were unrevised. (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 increased 1.2 percent in 
2023, as output increased 2.6 percent and hours worked increased 1.3 percent.

Unit labor costs in the nonfarm business sector increased 2.9 percent in 2023, reflecting an increase of 
4.2 percent in hourly compensation and an increase of 1.2 percent in productivity. Real hourly 
compensation, which takes into account changes in consumer prices, increased 0.1 percent in 2023. 

In the manufacturing sector, productivity decreased 0.8 percent in 2023, reflecting a decrease in output 
of 0.5 percent and an increase in hours of 0.3 percent.

Manufacturing unit labor costs increased 5.5 percent in 2023, as hourly compensation increased 4.7 
percent while productivity decreased 0.8 percent. Manufacturing real hourly compensation increased 0.5 
percent.

Quarterly and annual data for all sectors from 2021 forward appear in tables 1-6. Full historical 
measures can be found on the Productivity and Costs home page: www.bls.gov/productivity/tables/.
______________
The revised Productivity and Costs news release for fourth-quarter and annual averages 2023 is 
scheduled to be released on Thursday, March 7, 2024, at 8:30 a.m. (ET). 



=========================================================================================================================
                                                Upcoming Revisions
                                                
Data in this release do not reflect the annual benchmark revision of the BLS Current Employment 
Statistics program data to be released February 2, 2024. This benchmark will be incorporated in the next 
release on March 7, 2024.
=========================================================================================================================


=========================================================================================================================
                                                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 available in the Monthly Labor Review at 
www.bls.gov/opub/mlr/2023/article/an-improved-estimate-of-self-employment-hours.htm.
=========================================================================================================================




=========================================================================================================================
Table A1. Labor productivity growth and related measures - preliminary fourth-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            3.2          3.7      0.4        3.7            0.9           0.5
                        A year ago                  2.7          3.3      0.6        5.0            1.8           2.3
                        
Business                Previous quarter            3.3          3.5      0.2        4.0            1.2           0.6
                        A year ago                  2.7          3.3      0.6        5.0            1.8           2.2
                        
Manufacturing           Previous quarter            2.3         -2.4     -4.6        6.6            3.8           4.2
                        A Year ago                  0.7         -0.5     -1.2        6.2            2.9           5.4

 Durable                Previous quarter            1.4         -4.4     -5.7        9.0            6.0           7.4
 manufacturing          A year ago                  0.0         -0.3     -0.3        6.4            3.1           6.4

 Nondurable             Previous quarter            2.5         -0.3     -2.7        2.5           -0.2           0.0
 manufacturing          A year ago                  2.0         -0.7     -2.7        5.5            2.2           3.4
=========================================================================================================================


=========================================================================================================================
Table A2. 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
-------------------------------------------------------------------------------------------------------------------------       
Nonfinancial             Revised                    2.5          3.3      0.8        3.7            0.1           1.2
corporate          Previously published             2.2          3.1      0.8        3.9            0.3           1.7
=========================================================================================================================


=========================================================================================================================
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
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        Revised                     4.9          5.8      0.9        3.8            0.2          -1.1
                   Previously published             5.2          6.1      0.9        3.9            0.3          -1.2
                        
Business                Revised                     4.8          5.6      0.7        3.9            0.3          -0.9
                   Previously published             5.2          6.0      0.8        4.0            0.4          -1.2
                        
Manufacturing           Revised                    -0.8         -0.3      0.5        5.5            1.8           6.3
                   Previously published            -0.8         -0.3      0.5        5.4            1.8           6.2
                                                                                                               
 Durable                Revised                    -2.0          1.4      3.4        3.5           -0.1           5.6
 manufacturing     Previously published            -1.8          1.6      3.4        3.4           -0.2           5.3
                        
 Nondurable             Revised                     2.6         -1.9     -4.4        8.7            5.0           6.0
 manufacturing     Previously published             2.3         -2.1     -4.2        8.8            5.0           6.4
=========================================================================================================================


=========================================================================================================================
Table C1. Labor productivity growth and related measures - annual average changes: 2019-2023


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Year                    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business        2023                        1.2          2.6      1.3        4.2            0.1           2.9
                        2022                       -1.9          2.1      4.0        3.7           -4.1           5.6
                        2021                        1.7          7.2      5.5        4.9            0.0           3.1
                        2020                        5.2         -2.8     -7.6        8.2            6.7           2.9
                        2019                        2.3          3.0      0.7        3.9            2.1           1.6
                        
Manufacturing           2023                       -0.8         -0.5      0.3        4.7            0.5           5.5
                        2022                       -1.3          2.8      4.2        3.5           -4.3           4.8
                        2021                        1.7          4.9      3.2        2.3           -2.4           0.6
                        2020                        0.6         -6.9     -7.4        6.8            5.4           6.2
                        2019                       -2.2         -2.0      0.2        2.5            0.7           4.8
=========================================================================================================================
Last Modified Date: February 01, 2024