Unit labor costs for nonfarm business increase 1.9 percent during 2016

During 2016, unit labor costs in the nonfarm business sector increased 1.9 percent, as hourly compensation increased 2.9 percent and labor productivity (output per hour) increased 1.0 percent. Since the end of 2006, unit labor costs for nonfarm business increased 12.7 percent, as hourly compensation grew 27.3 percent and labor productivity increased 13.0 percent.

Manufacturing sector unit labor costs increased 2.2 percent during 2016, with hourly compensation rising 2.6 percent and labor productivity rising 0.4 percent. Over the last decade, unit labor costs for manufacturing increased 3.8 percent. Over this period, a 21.5-percent increase in output per hour has largely offset a 26.2-percent increase in hourly compensation costs.

These data are from the Labor Productivity and Costs program. All percent changes shown are subject to revision. To learn more, see "Productivity and Costs — Fourth Quarter and Annual Averages 2016, Preliminary" (HTML) (PDF). Also see Charts related to the latest "Productivity and Costs" news release. Unit labor costs are calculated as the ratio of hourly compensation to labor productivity. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked for all persons, including employees, proprietors, and unpaid family workers.