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Economic News Release
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Productivity and Costs, Third Quarter 2022, Preliminary



Transmission of material in this release is embargoed until                                 USDL 22-2096
8:30 a.m. (ET) Thursday, November 3, 2022

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 2022, Preliminary

Nonfarm business sector labor productivity increased 0.3 percent in the third quarter of 2022, the 
U.S. Bureau of Labor Statistics reported today, as output increased 2.8 percent and hours worked 
increased 2.4 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 decreased 1.4 percent, 
reflecting a 1.9-percent increase in output and a 3.4-percent increase in hours worked. The 1.4-percent 
four-quarter decline is the first instance of three consecutive declines in this measure since 1982. (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 persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 3.5 percent in the third quarter of 2022, 
reflecting a 3.8-percent increase in hourly compensation and a 0.3-percent increase in productivity. Unit 
labor costs increased 6.1 percent over the last four quarters. (See tables A1 and 2.) 

=========================================================================================================================
                                New Methodology and Historical Revisions

Data in this release reflect a new methodology for estimating hours worked. Data in this release also 
reflect the 2022 Annual 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 29, 2022. 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, declined 1.7 percent in the third 
quarter and declined 3.4 percent over the last four quarters--the largest four-quarter decline in the series, 
which begins in the first quarter of 1948. 

Manufacturing sector labor productivity decreased 1.3 percent in the third quarter of 2022, as output 
increased 1.9 percent and hours worked increased 3.3 percent. In the durable manufacturing sector, 
productivity decreased 4.3 percent, with a 2.0-percent increase in output and a 6.6-percent increase in 
hours worked. Nondurable manufacturing sector productivity increased 4.0 percent, as output increased 
1.8 percent and hours worked decreased 2.1 percent. Total manufacturing sector productivity decreased 
0.6 percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 3.8 percent in the third quarter of 2022, 
reflecting a 2.4-percent increase in hourly compensation and a 1.3-percent decrease in productivity. 
Manufacturing unit labor costs increased 4.3 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

=========================================================================================================================
                                Improvements to the Measurement of Hours Worked

Measures of hours worked for all sectors reflect a change in methods, and are revised historically. The 
new methodology uses all-employee hours data from the BLS Current Employment Statistics (CES) 
survey as the main source of data. This is an improvement upon the prior methodology, which instead 
used the CES production and nonsupervisory employee hours data. Another improvement in 
methodology is the use of BLS Current Population Survey (CPS) data to adjust CES all-employee hours 
paid to account for hours worked but not paid, also known as off-the-clock hours. The data also now 
incorporate all-employee based hours-worked-to-hours-paid ratios from the National Compensation 
Survey, rather than production and nonsupervisory worker ratios. 

The all-employee source data are available from March 2006 forward; therefore, these changes directly 
affect quarterly hours worked for productivity measures beginning in the second quarter of 2006, and 
annual hours worked beginning in 2007. Previously-published hours worked data have been linked to 
the new series, extending revisions to levels all the way back to 1947. As a result, all measures 
incorporating hours worked--including labor productivity--were revised back to 1947 for the business, 
nonfarm business, and nonfinancial corporate sectors and to 1987 for manufacturing and its subsectors. 
Revisions to quarterly percent changes prior to second quarter 2006 are small. For more information on 
the new hours worked methodology, see www.bls.gov/opub/mlr/2022/article/improving-estimates-of-
hours-worked-for-us-productivity-measurement.htm. 
=========================================================================================================================

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 29, 2022, by the Bureau of Economic Analysis (BEA), U.S. Department of 
Commerce. As a result, all measures incorporating output, including labor productivity and unit labor 
costs, were revised back to 2017 for the business, nonfarm business, and nonfinancial corporate sectors. 
Quarterly and annual measures incorporating compensation were subject to revision back to first quarter 
2017 for the business, nonfarm business, manufacturing and nonfinancial corporate sectors. Profits and 
related measures for the nonfinancial corporate sector were also revised beginning in 2017. Source data 
on output and compensation released by BEA on October 27, 2022, are reflected in data for the third 
quarter of 2022. Regular updates of source data on manufacturing output from the Board of Governors 
of the Federal Reserve System are reflected in data for the first and second quarters of 2022.

Hours worked and related measures for the business and nonfarm business sectors were also subject to 
revision back to 2017 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 2017 due to the 
incorporation of revised NIPA data on the proportion of industry compensation paid to employees of 
corporations. Improved processing of CPS data had a small effect on hours worked by self-employed 
and unpaid family workers (for whom the CPS is the data source) and therefore on total hours worked, 
back to 2000.

Annualized quarterly growth rates of labor productivity, output, and hours worked in the nonfarm 
business sector were revised. In second-quarter 2020, a 1.9-percentage point upward revision to output 
coincided with a 2.2-percentage point downward revision to hours worked. The revised figures now 
stand at decreases of 35.0 percent and 44.9 percent in output and hours worked, respectively. As a result, 
labor productivity in the second quarter of 2020 was revised up from an increase of 10.3 percent to an 
increase of 17.9 percent. This is the second-largest increase in the series; there was an 18.0 percent 
increase in the fourth quarter of 1947. 

In the third quarter of 2020, a 2.6-percentage point upward revision to quarter-to-quarter output growth 
was partially offset by a 1.0-percentage point upward revision to hours worked, and labor productivity 
was revised up 1.0 percentage point. Other notable revisions include a 2.0-percentage point upward 
revision to hours worked in the fourth quarter of 2021 which was mirrored by a 1.7-percentage point 
downward revision the following quarter; productivity was revised downward to an increase of 4.4 
percent in fourth-quarter 2021 and upward to a decrease of 5.9 percent in first-quarter 2022. 

Table B1 presents revised and previous labor productivity and related measures for the nonfarm 
business, business, and manufacturing sectors for the second quarter of 2022. Table A2 presents these 
measures for the nonfinancial corporate sector.

Nonfarm business sector productivity was not revised in the second quarter of 2022; a 0.2-
percentage point upward revision to output was offset by a 0.2-percentage point upward revision to 
hours worked. (See table B1.) Second-quarter unit labor costs were revised down 1.3 percentage points 
to an increase of 8.9 percent, reflecting a 1.2-percentage point downward revision to hourly 
compensation. While hourly compensation increased 4.5 percent in the second quarter of 2022, real 
hourly compensation decreased 5.5 percent.

Manufacturing sector productivity was revised down 1.8 percentage points to an increase of 2.9 
percent in the second quarter of 2022, reflecting a 0.4-percentage point downward revision to output 
and a 1.4-percentage point upward revision to hours worked. Productivity was revised down in both the 
durable and nondurable manufacturing subsectors. In the second quarter of 2022, total manufacturing 
unit labor costs decreased 0.7 percent rather than 0.2 percent as previously reported, reflecting a 2.3-
percentage point downward revision to hourly compensation, which was partially offset by the 1.8-
percentage point downward revision to productivity. (See table B1.)  

Nonfinancial corporate sector productivity declined 2.7 percent in the second quarter of 2022, rather 
than the previously published estimate of a 0.7-percent decline, as a result of a 1.7-percentage point 
downward revision to output and a 0.3-percentage point upward revision to hours worked. Productivity 
in nonfinancial corporations decreased 1.7 percent from the second quarter of 2021 to the second quarter 
of 2022. Unit labor costs in the nonfinancial corporate sector were revised up 0.9 percentage points to an 
increase of 7.5 percent in the second quarter of 2022, as a 2.0-percentage point downward revision to 
productivity outpaced a 1.2-percentage point downward revision to hourly compensation. (See table 
A2.) Unit labor costs increased 8.2 percent from the same quarter last year. (See table 6.)

Annual averages

Table C1 presents annual data for the nonfarm business, total manufacturing, and nonfinancial corporate 
sectors from 2019 to 2021. Annual average percent changes compare average annual indexes from one 
year to the next.

Annual average productivity in the nonfarm business sector was revised up to a 2.4-percent increase in 
2021, as output increased 7.8 percent and hours worked increased 5.3 percent. Unit labor costs were 
revised down 1.3 percentage points to an increase of 2.4 percent in 2021, reflecting the aforementioned 
upward revision to productivity and a 0.7-percentage point downward revision to hourly compensation. 
Revisions to productivity in the second quarter of 2020 contributed to an upward revision to the annual 
measure from 2.4 percent to 4.4 percent, the largest annual increase since 1992, when the measure 
increased 4.5 percent. Output was revised upward from a decline of 4.4 percent to a decline of 3.5 
percent in 2020, while hours worked were revised downward from a 6.7 percent decline to a 7.6 percent 
decline. Hourly compensation in 2020 was revised up to an increase of 8.1 percent and is now the largest 
annual gain since 1981, when the measure increased 9.6 percent. Productivity increased 2.0 percent in 
2019, little changed from the previous estimate of 2.1 percent.

Indexes of productivity for the nonfarm business sector were historically revised. The indexes diverge in 
the second quarter of 2020, reflecting the sharp upward revision to growth in that quarter. The average 
annual rate of productivity growth from fourth-quarter 2019 to second-quarter 2022 is 1.6 percent, 
which is larger than the previously published estimate of 0.6 percent. Through the third quarter of 2022, 
the average annual rate is 1.4 percent, which is the same as the rate of productivity growth over the 
previous business cycle, from 2007 to 2019. 

Annual average manufacturing sector productivity was not revised in 2021, remaining at 2.6 percent. 
In 2020, productivity was revised upward to an increase of 0.8 percent due to a corresponding 
downward revision to hours worked. The average annual rate of manufacturing productivity growth 
from 2007 to 2019 was unchanged at 0.2 percent. The 6.1-percent increase in manufacturing unit labor 
costs in 2020, revised down from the previously-reported value of 6.8 percent, remains the largest 
increase in the annual series, which begins in 1988. (See table C1.)

Annual average productivity in the nonfinancial corporate sector was revised down 1.4 percentage 
points to a 3.2-percent increase in 2021 due to a corresponding downward revision in output. 
Productivity was revised up in 2020 due primarily to a 1.1-percentage point downward revision to hours 
worked. (See tables C1 and 6.) The average annual rate of productivity growth in the nonfinancial 
corporate sector from 2007 to 2019, 1.1 percent, was not revised. 

Complete quarterly and annual data series can be found on the Productivity and Costs home page: 
www.bls.gov/lpc/#data
______________
The revised Productivity and Costs news release for third-quarter 2022 is scheduled to be released 
on Wednesday, December 7, 2022, at 8:30 a.m. (ET).





=========================================================================================================================
Table A1. Labor productivity growth and related measures - preliminary third-quarter 2022
(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            0.3          2.8      2.4        3.8           -1.7           3.5
                        A year ago                 -1.4          1.9      3.4        4.7           -3.4           6.1
                        
Business                Previous quarter            0.1          2.6      2.5        3.7           -1.9           3.6
                        A year ago                 -1.4          1.9      3.3        4.7           -3.3           6.2
                        
Manufacturing           Previous quarter           -1.3          1.9      3.3        2.4           -3.1           3.8
                        A Year ago                 -0.6          3.8      4.4        3.6           -4.3           4.3

 Durable                Previous quarter           -4.3          2.0      6.6        1.7           -3.8           6.3
 manufacturing          A year ago                 -0.4          4.8      5.2        3.5           -4.5           3.9

 Nondurable             Previous quarter            4.0          1.8     -2.1        3.1           -2.4          -0.8
 manufacturing          A year ago                 -0.4          2.7      3.1        3.8           -4.2           4.2
=========================================================================================================================


=========================================================================================================================
Table A2. Labor productivity growth and related measures - revised and previously published second-quarter 2022
(percent change from previous quarter at annual rate)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------       
Nonfinancial             Revised                   -2.7         -0.1      2.7        4.6           -5.3           7.5
corporate          Previously published            -0.7          1.6      2.4        5.8           -4.2           6.6
=========================================================================================================================


=========================================================================================================================
Table B1. Labor productivity growth and related measures - revised and previously published second-quarter 2022
(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                    -4.1         -1.2      2.9        4.5           -5.5           8.9
                   Previously published            -4.1         -1.4      2.7        5.7           -4.4          10.2
                        
Business                Revised                    -3.8         -1.4      2.5        4.9           -5.1           9.1
                   Previously published            -3.6         -1.4      2.3        6.1           -4.0          10.1
                        
Manufacturing           Revised                     2.9          3.6      0.7        2.2           -7.6          -0.7
                   Previously published             4.7          4.0     -0.7        4.5           -5.5          -0.2

 Durable                Revised                     3.9          5.1      1.2        2.7           -7.1          -1.2
 manufacturing     Previously published             4.9          5.3      0.4        4.9           -5.1           0.0
                        
 Nondurable             Revised                     2.1          2.0     -0.2        1.1           -8.5          -1.0
 manufacturing     Previously published             5.2          2.7     -2.4        3.5           -6.4          -1.6
=========================================================================================================================


=========================================================================================================================
Table B2. Labor productivity growth and related measures - revised and previously published first-quarter 2022
(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                    -5.9         -2.5      3.6        2.1           -6.4           8.5
                   Previously published            -7.4         -2.5      5.3        4.4           -4.4          12.7
                        
Business                Revised                    -6.0         -2.4      3.8        2.0           -6.6           8.6
                   Previously published            -7.7         -2.5      5.6        4.2           -4.6          12.8
                        
Manufacturing           Revised                    -3.3          3.7      7.3        1.4           -7.1           4.9
                   Previously published            -1.2          3.8      5.0        5.8           -3.1           7.1
 Durable
 manufacturing          Revised                    -2.8          5.5      8.6       -0.4           -8.8           2.5
                   Previously published            -0.6          5.6      6.2        5.9           -3.0           6.5
 Nondurable
 manufacturing          Revised                    -3.2          1.8      5.1        4.6           -4.2           8.1
                   Previously published            -1.2          1.8      3.0        5.5           -3.4           6.8

Nonfinancial            Revised                    -4.8         -1.2      3.8        3.8           -4.9           9.1
corporate          Previously published            -4.6          1.1      5.9        4.3           -4.4           9.3
=========================================================================================================================
        

=========================================================================================================================
Table C1. Labor productivity growth and related measures - revised and previous annual average changes: 2019-2021


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector           Year                           productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm          2021           Revised             2.4          7.8      5.3        4.9            0.2           2.4
business                 Previously published       1.9          7.4      5.4        5.6            0.9           3.7
                         
                                                  
                 2020           Revised             4.4         -3.5     -7.6        8.1            6.8           3.6
                         Previously published       2.4         -4.4     -6.7        7.0            5.7           4.5
                                                  
                                                  
                 2019           Revised             2.0          2.7      0.7        3.8            2.0           1.8
                         Previously published       2.1          2.7      0.7        3.9            2.0           1.8
                                                  
                                
Manufacturing    2021           Revised             2.6          5.8      3.1        2.7           -1.8           0.1
                         Previously published       2.6          5.8      3.2        4.5           -0.1           1.9
                         
                                                  
                 2020           Revised             0.8         -6.7     -7.4        7.0            5.7           6.1
                         Previously published       0.2         -6.7     -6.8        7.0            5.7           6.8
                                                  
                                                  
                 2019           Revised            -2.3         -2.2      0.2        2.4            0.5           4.8
                         Previously published      -1.9         -2.2     -0.2        2.8            1.0           4.8
                                                  
                               
Nonfinancial     2021           Revised             3.2          8.3      4.9        4.7            0.1           1.5
corporate                Previously published       4.6          9.7      4.9        5.3            0.6           0.7
                         

                 2020          Revised              3.5         -4.0     -7.3        8.1            6.7           4.4
                        Previously published        2.2         -4.2     -6.2        6.9            5.5           4.6
                        
                        
                 2019           Revised             1.6          2.5      0.9        3.9            2.1           2.3
                         Previously published       1.4          2.3      0.9        3.9            2.1           2.5
=========================================================================================================================
Last Modified Date: November 03, 2022