Manufacturing sector labor productivity increased 1.3 percent during the fourth quarter of 2018, the U.S. Bureau of Labor Statistics reported Wednesday, as output increased 2.3 percent and hours worked increased 1.0 percent. From the fourth quarter of 2017 to the fourth quarter of 2018, manufacturing productivity increased 0.7 percent, reflecting a 2.8-percent increase in output and a 2.1-percent increase in hours worked. Annual average productivity increased 0.6 percent from 2017 to 2018.
Durable manufacturing labor productivity increased 2.6 percent, with output increasing 5.7 percent and hours increasing 3.0 percent. Labor productivity in the nondurable manufacturing sector increased 1.2 percent, with output declining 1.2 percent and hours declining 2.4 percent.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

In the third quarter of 2018, nonfarm business productivity was revised down 0.1 percentage point, to an increase of 2.2 percent. Unit labor costs in the nonfarm business sector increased 0.9 percent in the third quarter, the same rate as previously reported.

In the manufacturing sector, productivity was revised up 0.1 percentage point, to an increase of 1.1 percent. Manufacturing unit labor costs decreased 1.3 percent, a 0.1-percentage point downward revision from the previously reported figure.

In the nonfinancial corporate sector, productivity was revised up 0.6 percentage point in the third

quarter of 2018, to an increase of 6.1 percent–the largest increase since a 6.7-percent increase in the fourth quarter of 2012. This upward revision to productivity is due primarily to a 0.6-percentage point upward revision to output, with a small contribution from a 0.1-percentage point downward revision to hours.

In the manufacturing sector, productivity increased 0.6 percent in 2018, as output increased 2.6

percent and hours worked increased 2.0 percent. The increases in annual average output and hours were the largest since 2011 and 2012, respectively. Manufacturing sector productivity has grown less than 1.0 percent in each of the last 8 years. The average annual rate of manufacturing productivity growth from 2007 to 2018 is 0.6 percent, well below the long-term rate from 1987 to 2018 of 2.6 percent.

Quarterly and annual data, where available, for all sectors from 2016 to 2018 in full historical measures can be found here: www.bls.gov/lpc/#data

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