Nonfarm business sector labor productivity increased at a 2.0 percent annual rate during the third quarter of 2014, the U.S. Bureau of Labor Statistics reported Wednesday, as output increased 4.4 percent and hours worked increased 2.3 percent. From the third quarter of 2013 to the third quarter of 2014, productivity rose 0.9 percent as output and hours worked increased 3.0 percent and 2.1 percent, respectively.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in the nonfarm business sector rose 0.3 percent in the third quarter of 2014, as a 2.3 percent increase in hourly compensation was larger than the 2.0 percent increase in productivity. Unit labor costs increased 2.4 percent over the last four quarters.
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 output per hour tend to reduce them.
Manufacturing sector productivity increased 3.2 percent in the third quarter of 2014, as output increased 4.1 percent and hours worked increased 0.8 percent. In the durable goods manufacturing sector, productivity grew 4.2 percent, reflecting a 6.6 percent increase in output and a 2.3 percent increase in hours. In nondurable goods industries, productivity grew 3.0 percent, as output increased 1.2 percent and hours worked fell 1.8 percent. Over the last four quarters, manufacturing productivity increased 2.8 percent, as output increased 4.4 percent and hours increased 1.5 percent. Unit labor costs in manufacturing decreased 0.7 percent in the third quarter of 2014 and increased 0.6 percent from the same quarter a year ago.
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.