• U.S. Productivity and Costs – Q3 2012

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Nonfarm business sector labor productivity increased at a 1.9 percent annual rate during the third quarter of 2012. The increase in productivity reflects increases of 3.2 percent in output and 1.3 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2011 to the third quarter of 2012, productivity increased 1.5 percent as output and hours worked rose 3.3 percent and 1.8 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 nonfarm businesses decreased 0.1 percent in the third quarter of 2012, while hourly compensation increased 1.8 percent. Unit labor costs rose 1.1 percent over the last four quarters. BLS defines 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 declined 0.4 percent in the third quarter of 2012, as output and hours worked decreased 0.6 percent and 0.2 percent, respectively. Productivity fell 0.7 percent in the durable goods sector and 0.1 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.5 percent, as output increased 4.1 percent and hours worked rose 2.6 percent. Unit labor costs in manufacturing rose 1.5 percent in the third quarter of 2012 and decreased 0.8 percent from the same quarter a year ago. Source: USDOL-BLS

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