U.S.: Productivity and Costs, First Quarter 2018

May 3, 2018

Labor productivity, or output per hour, for nonfarm business sector increased 0.7 percent during the first quarter of 2018, reflecting an increase of 2.8 percent in output while hours worked increased 2.1 percent. On an annual basis, from the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent due to an increase in output of 3.6 percent and a 2.2 percent increase in hours worked.

According to the U.S. Bureau of Labor Statistics, unit labor costs for nonfarm businesses, which is calculated as the ratio of hourly compensation to labor productivity, increased 2.7 percent in the first quarter of 2018. The increase in unit labor costs is due to the fact that hourly compensation increase at a faster past than labor productivity. For the first quarter 2018 hourly compensation increase by 3.4 percent relative to the 0.7 percent increase in labor productivity. When the change in consumer prices was taken into account, real hourly compensation declined  0.1 percent in the first quarter of 2018. Unit labor costs increased 1.1 percent over the last four quarters.

Manufacturing sector labor productivity rose 0.5 percent in the first quarter of 2018, as output increased 3.3 percent and hours worked increased 2.8 percent. Productivity increased 1.3 percent in the durable manufacturing sector, as output grew at a 5.5-percent rate and hours worked increased 4.2 percent. In the non-durable goods manufacturing sector, a 0.6-percent increase in productivity reflected a 1.1-percent increase in output and a 0.5-percent increase in hours worked.

For the last twelve month manufacturing sector productivity increased 0.8 percent, as output increased 2.5 percent and hours worked increased 1.6 percent. Unit labor costs in manufacturing increased 2.7 percent in the first quarter of 2018 and increased 1.3 percent from the same quarter a year ago.


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