U.S. Labor Productivity Increases by 3.2% in Fourth Quarter of 2023
The increase resulted in a 3.5 percent rise in output despite hours worked showing a modest 0.3% uptick
The U.S. Bureau of Labor Statistics (BLS) has reported that labor productivity in the nonfarm business sector surged by 3.2 percent in the fourth quarter of 2023. This increase resulted in a 3.5 percent rise in output, while hours worked saw a modest uptick of 0.3 percent. Compared to the same quarter a year ago, nonfarm business sector labor productivity increased by 2.6 percent. Additionally, annual average productivity for 2023 showed a growth of 1.3 percent compared to the previous year.
Durable Manufacturing Sector Faces Decline
In the manufacturing sector, productivity showed a mixed performance. While overall manufacturing sector productivity increased by 1.3 percent in the fourth quarter of 2023, the durable manufacturing sector experienced a decline of 1.0 percent. This decline can be attributed to a 4.0-percent decrease in output coupled with a 3.0-percent decrease in hours worked, marking the largest decline in hours worked since the second quarter of 2020.
Nondurable Manufacturing Sector Thrives
Conversely, the nondurable manufacturing sector witnessed a productivity surge of 3.8 percent during the same period, despite a 3.6 percent decrease in hours worked. Output remained unchanged from the previous quarter, contributing to the sector's robust productivity growth.
Related News: U.S. job openings rise slightly to 9.6 million, sign of continued strength in the job market
Historical Revisions Reflect Method Improvements
The BLS introduced methodological changes aimed at enhancing the accuracy of labor productivity estimates. These changes, including adjustments to hours worked by self-employed and unpaid family workers, resulted in revisions to historical data from 2018 to 2023. Additionally, revisions were made to employment and hours worked data from 2000 to 2023, reflecting improvements in seasonal adjustment techniques and adjustments to respondent weights.
Q4 Data Revisions Highlight Adjustments
Revised measures for the fourth quarter of 2023 revealed adjustments to previously reported data.
While nonfarm business productivity remained unchanged at a 3.2 percent increase, output was revised downward by 0.2 percentage points to 3.5 percent, and hours worked saw a slight downward revision of 0.1 percentage points to a 0.3 percent increase. Similar adjustments were observed in the manufacturing sector, where productivity was revised downward to 1.3 percent, reflecting changes in output and hours worked.
Nonfarm Business Sector Shows Steady Growth
Annual averages for 2023 indicate a steady growth trajectory in the nonfarm business sector, with productivity increasing by 1.3 percent. Output saw a 2.6 percent increase, accompanied by a 1.3 percent rise in hours worked. Meanwhile, unit labor costs in the sector were revised upward by 0.1 percentage point to reflect a 3.0 percent increase in 2023.
Manufacturing Sector Faces Challenges
In contrast, the manufacturing sector experienced a slight decrease in productivity by 0.8 percent for the year 2023. This decline was attributed to a 0.6 percent decrease in output, coupled with a marginal increase of 0.2 percent in hours worked. Unit labor costs in manufacturing increased by 5.9 percent, reflecting the challenges faced by the sector.
The revised data underscores the dynamic nature of labor productivity in various sectors of the economy, reflecting both challenges and opportunities in the evolving landscape of the U.S. workforce.
Related News
