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Economic News Release
PRINT:Print

First Quarter 2023, Revised



Transmission of material in this release is embargoed until                                 USDL 23-1195
8:30 a.m. (ET) Thursday, June 1, 2023

Technical information: (202) 691-5606  Productivity@bls.gov  www.bls.gov/productivity
Media contact:         (202) 691-5902  PressOffice@bls.gov     

                                     
                                     PRODUCTIVITY AND COSTS 
                                  First Quarter 2023, Revised

Nonfarm business sector labor productivity decreased 2.1 percent in the first quarter of 2023, the U.S. 
Bureau of Labor Statistics reported today, as output increased 0.5 percent and hours worked increased 
2.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) Labor 
productivity was revised up 0.6 percentage point, the combined effect of a 0.3-percentage point upward 
revision to output and a 0.4-percentage point downward revision to hours worked. From the same 
quarter a year ago, nonfarm business sector labor productivity decreased 0.8 percent, reflecting a 1.4-
percent increase in output and a 2.2-percent increase in hours worked. (See table A1.) The 0.8-percent 
productivity decline is the first time the four-quarter change series has remained negative for five 
consecutive quarters; this series begins in the first quarter of 1948.

Unit labor costs in the nonfarm business sector increased 4.2 percent in the first quarter of 2023, 
reflecting a 2.1-percent increase in hourly compensation and a 2.1-percent decrease in productivity. Unit 
labor costs increased 3.8 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, decreased 1.7 percent in the first 
quarter of 2023, and declined 2.6 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 
annualized rate of 1.1 percent, reflecting a 1.9-percent rate of growth in output and a 0.8-percent rate of 
growth in hours worked during the business cycle. The 1.1-percent rate of productivity growth in the 
current business cycle thus far is a historically low productivity growth rate; no other previous business 
cycle had lower productivity growth, except for the brief six-quarter cycle from first-quarter 1980 to 
third-quarter 1981, which exhibited 1.0 percent growth.

Manufacturing sector labor productivity decreased 2.5 percent in the first quarter of 2023, as output 
decreased 1.0 percent and hours worked increased 1.6 percent. In the durable manufacturing sector, 
productivity decreased 5.6 percent, with a 3.2-percent decrease in output and a 2.5-percent increase in 
hours worked. Nondurable manufacturing sector productivity increased 1.3 percent, as output increased 
1.4 percent and hours worked were unchanged. Total manufacturing sector productivity decreased 1.6 
percent from the same quarter a year ago. (See tables A1, 3, 4, and 5.)

Unit labor costs in the total manufacturing sector increased 3.1 percent in the first quarter of 2023, 
reflecting a 0.5-percent increase in hourly compensation and a 2.5-percent decrease in productivity. 
Manufacturing unit labor costs increased 4.5 percent from the same quarter a year ago. (See tables A1 
and 3.)

Manufacturing sector labor productivity has declined at an annualized rate of 0.1 percent during the current 
business cycle, which began in the fourth quarter of 2019. This rate reflects output and hours worked 
growing at annualized rates of 0.2 percent and 0.3 percent, respectively, over the same period. This is a 
historically low productivity growth rate and follows the 0.0-percent annual rate of the last business 
cycle from fourth-quarter 2007 through fourth-quarter 2019. 

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 first-quarter 2023 measures were announced today for the nonfinancial corporate sector. 
Productivity decreased 4.3 percent in the first quarter of 2023 as output decreased 1.9 percent and hours 
worked increased 2.5 percent. Productivity decreased 2.2 percent over the last four quarters. (See table 
6.) 

Revised measures

Measures released today are based on more recent source data than were available for the preliminary 
report; they reflect regular updates of source data from the BLS, the Bureau of Economic Analysis 
(BEA), and the Board of Governors of the Federal Reserve System. 

Table B1 presents previous and revised productivity and related measures for the business, nonfarm 
business, and manufacturing sectors for the first quarter of 2023.

In the first quarter of 2023, nonfarm business sector productivity decreased 2.1 percent, a smaller 
decline than the previously reported decrease of 2.7 percent. Output was revised up 0.3 percentage point 
and hours worked were revised down 0.4 percentage point. Unit labor costs increased 4.2 percent rather 
than increasing 6.3 percent as previously reported, reflecting a 1.3-percentage point downward revision 
to hourly compensation and a 0.6-percentage point upward revision to labor productivity. In the 
manufacturing sector, productivity was revised down from a 1.3-percent decrease to a 2.5-percent 
decrease, reflecting a 1.5-percentage point downward revision to output and a 0.2-percentage point 
downward revision to hours worked. Manufacturing unit labor costs increased 3.1 percent rather than the 
preliminary estimate of 3.4 percent, as a 1.6-percentage point downward revision to hourly 
compensation was largely offset by a 1.2-percentage point downward revision to productivity.  

Table B2 shows previous and revised productivity and related measures for the business, nonfarm 
business, manufacturing, and nonfinancial corporate sectors for the fourth quarter of 2022. 

In the fourth quarter of 2022, labor productivity in the nonfarm business sector was unrevised, 
retaining the 1.6-percent increase reported last month. Hourly compensation, however, was revised 
down from the previously reported increase of 4.9 percent to a decrease of 0.7 percent, due entirely to a 
downward revision to compensation. As a result, unit labor costs decreased 2.2 percent in the fourth 
quarter of 2022, rather than increasing 3.3 percent. Labor productivity in the total manufacturing sector 
was revised down 0.2-percentage point to a decrease of 3.2 percent, the result of a 0.3-percentage point 
downward revision to output, which contracted at a 3.7 percent rate. Hours worked were unrevised, 
decreasing 0.5 percent in the fourth quarter. Hourly compensation was revised down 4.9 percentage 
points to a 0.1-percent decrease; this led to a 4.8-percentage point downward revision to unit labor costs, 
from an increase of 8.0 percent to an increase of 3.2 percent.

In the nonfinancial corporate sector, productivity fell 2.1 percent in the fourth quarter of 2022 rather than 
rising 0.7 percent as previously reported, due to a 2.8-percentange point downward revision to output. 
Hours worked were unrevised, increasing at a 1.2 percent rate. Annual average productivity in the 
nonfinancial corporate sector decreased 2.2 percent in 2022, rather than the preliminary estimate of 2.0 
percent. Nonfinancial corporate sector productivity has grown at an annualized rate of 0.4 percent in the 
current business cycle. This rate is the lowest cyclical rate for this series, which begins in the first 
quarter of 1947. 

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 preliminary Productivity and Costs news release for second-quarter 2023 is scheduled to be 
released on Thursday, August 3, 2023, at 8:30 a.m. (ET). 




=========================================================================================================================
Table A1. Labor productivity growth and related measures - revised first-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          -2.1           0.5      2.6        2.1           -1.7           4.2
                        A year ago                -0.8           1.4      2.2        3.0           -2.6           3.8
                        
Business                Previous quarter          -1.7           0.9      2.7        2.1           -1.6           3.8
                        A year ago                -0.6           1.5      2.0        3.2           -2.5           3.8
                        
Manufacturing           Previous quarter          -2.5          -1.0      1.6        0.5           -3.1           3.1
                        A Year ago                -1.6          -0.3      1.3        2.8           -2.8           4.5

 Durable                Previous quarter          -5.6          -3.2      2.5       -1.2           -4.8           4.7
 manufacturing          A year ago                -2.0           0.3      2.4        2.2           -3.4           4.3

 Nondurable             Previous quarter           1.3           1.4      0.0        3.6           -0.2           2.2
 manufacturing          A year ago                -0.5          -1.0     -0.5        3.8           -1.9           4.3
=========================================================================================================================


=========================================================================================================================
Table A2. Labor productivity growth and related measures - preliminary first-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
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial         Previous quarter             -4.3          -1.9      2.5        2.2           -1.5           6.8
corporate            A year ago                   -2.2           0.2      2.4        3.7           -2.0           6.0
=========================================================================================================================


=========================================================================================================================
Table B1. Labor productivity growth and related measures - revised and previously published first-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                   -2.1           0.5      2.6        2.1           -1.7           4.2
                   Previously published           -2.7           0.2      3.0        3.4           -0.3           6.3
                        
Business                Revised                   -1.7           0.9      2.7        2.1           -1.6           3.8
                   Previously published           -2.3           0.6      3.0        3.5           -0.3           5.9
                        
Manufacturing           Revised                   -2.5          -1.0      1.6        0.5           -3.1           3.1
                   Previously published           -1.3           0.5      1.8        2.1           -1.6           3.4

 Durable                Revised                   -5.6          -3.2      2.5       -1.2           -4.8           4.7
 manufacturing     Previously published           -4.4          -1.8      2.7        0.6           -3.1           5.2
                        
 Nondurable             Revised                    1.3           1.4      0.0        3.6           -0.2           2.2
 manufacturing     Previously published            2.7           2.8      0.1        5.0            1.2           2.3
=========================================================================================================================


=========================================================================================================================
Table B2. Labor productivity growth and related measures  revised and previously published fourth-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                    1.6           2.9      1.3       -0.7           -4.7          -2.2
                   Previously published            1.6           2.9      1.3        4.9            0.7           3.3
                        
Business                Revised                    1.9           2.8      0.9       -0.3           -4.3          -2.2
                   Previously published            1.9           2.8      0.9        5.4            1.1           3.4
                        
Nonfinancial            Revised                   -2.1          -0.9      1.2        0.9           -3.2           3.0
corporate          Previously published            0.7           1.9      1.2        5.8            1.6           5.1
 
Manufacturing           Revised                   -3.2          -3.7     -0.5       -0.1           -4.1           3.2
                   Previously published           -3.0          -3.4     -0.5        4.8            0.6           8.0
 Nondurable
 manufacturing          Revised                   -2.2          -2.7     -0.5       -1.4           -5.4           0.8
                   Previously published           -2.1          -2.6     -0.5        4.1           -0.1           6.3

 Nondurable             Revised                   -4.3          -4.7     -0.4        2.4           -1.7           6.9
 manufacturing     Previously published           -3.9          -4.2     -0.4        6.1            1.8          10.3
=========================================================================================================================
Last Modified Date: June 01, 2023