Both durable and non-durable goods manufacturing saw increases.
Manufacturing sector labor productivity increased four percent in the second quarter of 2023, according to a U.S. Bureau of Labor Statistics report released August 3, 2023.
The report says output increased 1.9 percent and hours worked decreased two percent during the same period.
In the durable manufacturing sector, productivity increased 5.2 percent, with a 4.1-percent increase in output and a 1.1-percent decrease in hours worked. Nondurable manufacturing productivity increased 3.4 percent, as output decreased 0.1 percent and hours worked decreased 3.4 percent. Total manufacturing sector productivity decreased one percent from the same quarter a year ago.
Unit labor costs (the amount a business pays its workers to produce one unit of output) in the total manufacturing sector increased 3.6 percent in the second quarter of 2023, reflecting a 7.8-percent increase in hourly compensation and a four percent increase in productivity.
Manufacturing unit labor costs increased 4.9 percent from the same quarter a year ago.
Manufacturing sector labor productivity has increased at an annualized rate of 0.3 percent during the current business cycle, which began in the fourth quarter of 2019. This rate reflects output and hours worked growing at annualized rates of 0.4 percent and 0.1 percent, respectively. This slow productivity growth rate follows the flat annual rate of growth during the last business cycle that spanned the fourth quarter of 2007 through fourth-quarter 2019.
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 productivity tend to reduce them. Real hourly compensation, which factors-in consumer prices, increased 2.7 percent in the second quarter of 2023, and declined 0.3 percent over the last four quarters.
Labor productivity, or output-per-hour, is calculated by dividing an index of real output by an index of hours worked by all workers, including employees, proprietors and unpaid family workers. During the current business cycle, starting in the fourth quarter of 2019, labor productivity has grown at an annualized rate of 1.4 percent, as output grew at a 2.0-percent per year rate, outpacing hours worked, which grew at a 0.7-percent annual rate. The 1.4-percent annual rate of productivity growth in the current business cycle thus far is below the long-term historical average rate since 1947 of 2.1 percent.
