Nonfarm business sector labor productivity increased at a 0.7 percent
annual rate during the fourth quarter of 2011, the U.S. Bureau of Labor
Statistics reported today. The gain in productivity reflects increases of
3.6 percent in output and 2.9 percent in hours worked. (All quarterly
percent changes in this release are seasonally adjusted annual rates.)
From the fourth quarter of 2010 to the fourth quarter of 2011,
productivity grew 0.5 percent, as output rose 2.3 percent and hours rose
1.8 percent. Annual average productivity increased 0.7
percent from 2010 to 2011.
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 increased 1.2 percent in the fourth
quarter of 2011, as productivity grew at a slower rate (0.7 percent) than
hourly compensation (1.9 percent). Unit labor costs rose 1.3 percent over
the last four quarters. Annual average unit labor costs
increased 1.2 percent from 2010 to 2011.
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 fourth
quarter of 2011, as output rose 3.8 percent and hours worked increased 4.2
percent; this is the largest quarterly gain in hours worked since the
fourth quarter of 2005 (4.8 percent). Over the last four quarters,
manufacturing productivity increased 1.7 percent. Annual average
productivity grew 2.8 percent from 2010 to 2011. Unit labor costs in
manufacturing increased 1.6 percent in the fourth quarter of 2011 but
decreased 1.1 percent from the same quarter a year ago.