Productivity in the fourth quarter of 2010

During the fourth quarter of 2010, nonfarm business sector labor productivity—as measured by output per hour—increased at a 2.6 percent annual rate. Output increased 4.0 percent and hours worked increased 1.4 percent. Manufacturing sector productivity rose 5.9 percent, as output increased 4.4 percent and hours worked decreased 1.4 percent.

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Unit labor costs—defined as the ratio of hourly compensation to labor productivity—in nonfarm businesses fell 0.6 percent in the fourth quarter of 2010, due to productivity increasing faster than hourly compensation. Unit labor costs in manufacturing declined at a 2.7 percent annual rate in the fourth quarter of 2010.

From the fourth quarter of 2009 to the fourth quarter of 2010, as output rose faster than hours worked, nonfarm business productivity increased 1.9 percent and manufacturing productivity increased 4.2 percent.

Unit labor costs in nonfarm businesses edged down 0.1 percent, from the fourth quarter of 2009 to the fourth quarter of 2010. Over that same period, unit labor costs in manufacturing decreased by 2.7 percent.

These data are from the BLS Productivity program. Data in this report are seasonally adjusted annual rates. These estimates are subject to revision. Additional information is available in "Productivity and Costs, Fourth Quarter and Annual Averages 2010, Revised." Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours of all persons, including employees, proprietors, and unpaid family workers. The revised measures were based on more recent source data than were available for the preliminary report.