U.S. Productivity and Costs, Fourth Quarter and Annual Averages 2017

February 1, 2018

The U.S Bureau of Labor Statistics reported that nonfarm business sector labor productivity ( or output per hour) decreased 0.1% for the fourth quarter of 2017; this as the number of hours worked and the level of output increased 3.3% and 3.2% respectively.

Productivity was up 1.1% for the 12-month ending fourth quarter 2017. Output increased 3.2% for the same the same 12-month period, while hours worked was up 2.1%.

Unit labor costs in the nonfarm business sector rose 2% in the fourth quarter of 2017 as a result of a 1.8% increase the hourly compensation. The unit labor costs increased 1.3% over the last four quarters according to the U.S Bureau of Labor Statistics.

Manufacturing Sector

The preliminary report highlighted a rise in labor productivity for the manufacturing sector by 5.7% in the fourth quarter as output climbed 7.3% and hours by 1.5%. notably, these were the largest quarterly increases in the sector’s productivity and output since the second quarter of 2010. Productivity increased 6.7% in the durable goods manufacturing sector and 4.5% in the nondurable goods sector in the fourth quarter of 2017. Over the last four quarters, total manufacturing sector productivity increased 1.1%, as output increased 2.7% and hours worked increased 1.6%.

Annual averages

 The average annual rate of nonfarm business sector productivity growth from 2007 to 2017(corresponding to the current business cycle) is 1.2 percent, which is below the long-term rate from 1947 to 2017 of 2.1%. In comparison, Nonfarm business sector productivity grew 1.2% in 2017, as output and hours increased 2.9% and 1.6%, respectively. Unit labor costs in the nonfarm business sector increased 0.2% in 2017, reflecting increases of 1.5% in hourly compensation and 1.2% in productivity

In the manufacturing sector, productivity increased 0.7 percent in 2017, as output increased 1.7% and hours worked increased 1.0%. Manufacturing sector productivity has grown less than 1.0% in each of the last 7 years. The average annual rate of manufacturing productivity growth from 2007 to 2017 is 0.8%, well below the long-term rate from 1987 to 2017 of 2.7 percent. Unit labor costs increased 0.9% in 2017.