Research >> Economics
4Q2018 Productivity Growth Increased 1.9%
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Nonfarm business sector labor productivity increased 1.9 percent in the fourth quarter of 2018, the U.S. Bureau of Labor Statistics reported today, as output increased 3.1 percent and hours worked increased 1.2 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2017 to the fourth quarter of 2018, productivity increased 1.8 percent, reflecting a 3.7-percent increase in output and a 1.9-percent increase in hours worked. Annual average productivity increased 1.3 percent from 2017 to 2018.
Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.
Unit labor costs in the nonfarm business sector increased 2.0 percent in the fourth quarter of 2018, and increased 1.0 percent over the last four quarters.
Manufacturing sector labor productivity increased 2.0 percent in the fourth quarter of 2018, as output increased 2.7 percent and hours worked rose 0.8 percent. Productivity increased 3.3 percent in the durable manufacturing sector and 1.9 percent in the nondurable manufacturing sector in the fourth quarter of 2018. Over the last four quarters, total manufacturing sector productivity increased 1.0 percent, as output increased 2.9 percent and hours worked increased 1.9 percent. Unit labor costs in manufacturing increased 2.2 percent in the fourth quarter of 2018 and rose 0.8 percent from the same quarter a year ago.
Revised measures
The measures released today are based on more recent source data than were available for the preliminary report.
Fourth-quarter and annual average 2018 data on output and compensation were published for the first time on February 28, 2019 by the Bureau of Economic Analysis, U.S. Department of Commerce. Therefore, measures based on these data--including productivity and unit labor costs--are published for the first time with this release.
Quarterly and annual measures of hours and related series--including productivity--were revised from 1947 forward for all sectors. These data were revised due to incorporation of revised Current Employment Statistics (CES) program data on employment and hours published February 1, 2019. Quarterly measures of real hourly compensation for all sectors were revised from first-quarter 2018 forward to reflect revised data on consumer prices from the BLS Office of Prices and Living Conditions.
Table B1 presents previous and revised measures for the fourth quarter of 2018. Because data for most measures were not available in our preliminary release on February 6, 2019, comparisons are shown primarily for manufacturing sector measures.
In the fourth quarter of 2018, manufacturing sector productivity was revised up to 2.0 percent from a preliminary estimate of 1.3 percent. The upward revision reflected both an upward revision to output and a downward revision to hours worked. Productivity was also revised up in durable goods manufacturing to 3.3 percent and in nondurable goods industries to 1.9 percent.
Table B2 presents previous and revised productivity and related measures for the third quarter of 2018 for the nonfarm business, business, and manufacturing sectors.
In the third quarter of 2018, nonfarm business productivity was revised down from an increase of 2.2 percent to an increase of 1.8 percent due to an upward revision to hours worked; output was unrevised. Unit labor costs were revised up 0.7 percentage point to an increase of 1.6 percent, the combined effect of the 0.4-percentage point downward revision to productivity and a 0.3-percentage point upward revision to hourly compensation.
Manufacturing productivity increased 1.0 percent rather than 1.1 percent in the third quarter of 2018, as hours worked were revised up slightly more than output. Unit labor costs in manufacturing were revised upward and increased 1.8 percent rather than declining 1.3 percent, due almost entirely to a 3.0 percentage point upward revision to hourly compensation.
Nonfinancial corporate sector productivity increased 6.1 percent in the third quarter of 2018, the same rate as previously reported. Both output and hours were revised up 0.5 percentage point. Unit labor costs decreased 2.3 percent in the third quarter of 2018, a slightly smaller decline than previously reported.
Annual averages
Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 1.3 percent in 2018, as output and hours increased 3.5 percent and 2.2 percent, respectively. In 2017, productivity increased 1.1 percent. The average annual rate of nonfarm business sector productivity growth from 2007 to 2018 corresponding to the current business cycle--is 1.3 percent, which is below the long-term rate from 1947 to 2018 of 2.1 percent.
Unit labor costs in the nonfarm business sector increased 1.4 percent in 2018, reflecting increases of 2.7 percent in hourly compensation and 1.3 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 0.3 percent in 2018.
In the manufacturing sector, productivity increased 0.8 percent in 2018, as output increased 2.7 percent and hours worked increased 1.9 percent. Manufacturing sector productivity has grown less than 1.0 percent in each of the last 8 years. The average annual rate of manufacturing productivity growth from 2007 to 2018 is 0.7 percent, well below the long-term rate from 1987 to 2018 of 2.6 percent. Unit labor costs increased 0.9 percent in 2018.
Posted: March 7, 2019 Thursday 08:30 AM