The U.S. Bureau of Labor Statistics has reported that labor productivity in the nonfarm business sector increased by a modest 0.3 percent in the first quarter of 2024. This growth, although minimal, represents a positive trend amidst ongoing economic fluctuations. Output saw a 1.3 percent increase, while hours worked rose by 1.0 percent. Compared to the same quarter a year ago, nonfarm business sector labor productivity showed a more significant increase of 2.9 percent, a Bureau of Labor Statistics (BLS) press release said.
Unit labor costs within the nonfarm business sector surged by 4.7 percent during the first quarter of 2024. This increase is attributed to a 5.0-percent rise in hourly compensation, coupled with a marginal 0.3-percent increase in productivity. Over the past four quarters, unit labor costs have seen a more moderate increase of 1.8 percent.
Since the commencement of the current business cycle in the fourth quarter of 2019, labor productivity has shown steady growth at an annual rate of 1.5 percent. This growth is a result of a 2.2-percent rise in output and a 0.7-percent increase in hours worked.
However, this rate of productivity growth remains consistent with the previous business cycle, spanning from the fourth quarter of 2007 to 2019. Both cycles reflect a 1.5 percent annual rate, falling below the long-term rate since the first quarter of 1947.
In the first quarter of 2024, the manufacturing sector witnessed varied productivity changes. Overall, manufacturing sector labor productivity increased by a slight 0.2 percent, with output remaining unchanged and hours worked decreasing by 0.2 percent. Within the durable manufacturing sector, productivity showed a more promising increase of 1.2 percent, driven by a 0.4-percent rise in output and a 0.8-percent decline in hours worked.
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Conversely, the nondurable manufacturing sector experienced a 1.3-percent decrease in productivity, attributed to a 0.4-percent drop in output and a 0.9-percent increase in hours worked. Despite these fluctuations, total manufacturing sector productivity saw a 1.2 percent increase compared to the same quarter a year ago.
Unit labor costs within the total manufacturing sector rose by 3.2 percent in the first quarter of 2024. This increase is primarily due to a 3.4-percent rise in hourly compensation, slightly offset by a 0.2-percent increase in productivity. Notably, manufacturing unit labor costs surged by 5.0 percent from the same quarter a year ago, driven by a 6.3-percent increase in hourly compensation. Real hourly compensation also saw a significant 3.0 percent increase compared to the previous year.
During the current business cycle, manufacturing sector labor productivity has grown at an annual rate of 0.3 percent. This growth, though modest, exceeds the 0.0-percent rate observed in the previous business cycle from the fourth quarter of 2007 to 2019. However, it falls below the long-term rate since the first quarter of 1987, which stands at 2.1 percent.
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