In the third quarter of 2023, the U.S. Bureau of Labor Statistics reported a significant 5.2 percent increase in nonfarm business sector labor productivity. This surge resulted from a 6.1 percent increase in output and a 0.9 percent increase in hours worked. The growth in productivity is the highest since the third quarter of 2020. Unit labor costs in the nonfarm business sector decreased by 1.2 percent, reflecting a 3.9 percent increase in hourly compensation and a 5.2 percent increase in productivity.
For the manufacturing sector, labor productivity declined by 0.8 percent in the third quarter, driven by a 0.3 percent decrease in output and a 0.5 percent increase in hours worked. Durable manufacturing saw a 1.8 percent productivity decrease, while nondurable manufacturing increased by 2.3 percent. Unit labor costs in the total manufacturing sector increased by 6.2 percent.
The report also highlighted that nonfarm business sector labor productivity has grown at an annual rate of 1.5 percent during the current business cycle, which began in the fourth quarter of 2019. This rate is consistent with the previous business cycle and below the long-term rate since the first quarter of 1947.
In the nonfinancial corporate sector, productivity increased by 2.2 percent in the third quarter of 2023, with unit profits rising by 11.1 percent. Revised measures reflect adjustments to productivity, output, and hours worked for accuracy based on more recent data.
