US Manufacturing Labor Productiveness Slid 1.0% in Q3

Nonfarm enterprise sector labor productiveness decreased 5.0 p.c within the third quarter of 2021, the U.S. Bureau of Labor Statistics reported at present, as output elevated 1.7 p.c and hours labored elevated 7.0 p.c. That is the bottom price of quarterly productiveness development for the reason that second quarter of 1981, when the measure decreased 5.1 p.c. (All quarterly p.c adjustments on this launch are seasonally adjusted annual charges.) From the third quarter of 2020 to the third quarter of 2021, nonfarm enterprise sector labor productiveness decreased 0.5 p.c. The four-quarter price is the bottom price since the third quarter of 2011, when the measure additionally declined 0.5 p.c (See chart 1 and desk A1.)

Bureau of Labor Statistics

Unit labor prices within the nonfarm enterprise sector elevated at an annual price of 8.3 p.c within the third quarter of 2021, reflecting a 2.9-percent enhance in hourly compensation and a 5.0-percent lower in productiveness. Unit labor prices elevated 4.8 p.c during the last 4 quarters. (See chart 2 and desk A1.) BLS calculates unit labor prices because the ratio of hourly compensation to labor productiveness. Will increase in hourly compensation have a tendency to extend unit labor prices and will increase in productiveness have a tendency to cut back them.

Labor productiveness, or output per hour, is calculated by dividing an index of actual output by an index of hours labored by all individuals, together with workers, proprietors, and unpaid household staff. The third quarter of 2021 is the fifth consecutive quarter with will increase in each output and hours labored, following historic declines in these measures within the second quarter of 2020. The output index is now 1.8 p.c above the extent seen within the fourth quarter of 2019, the final quarter not affected by the COVID-19 pandemic, whereas the hours labored index stays 1.0 p.c beneath its fourth quarter 2019 degree. (See chart 3 and tables A1 and a pair of.)

Bureau of Labor Statistics

The nonfarm enterprise labor productiveness index is 2.9 p.c larger in third-quarter 2021 than it was in fourth-quarter 2019, equivalent to a median annual development price of 1.6 p.c throughout the pandemic interval of fourth quarter 2019 by way of third quarter 2021. This price is barely larger than the 1.4-percent common annual development price throughout the earlier enterprise cycle—from 2007 to 2019—however beneath the long-term common price since 1947 of two.1 p.c.

Manufacturing sector labor productiveness decreased 1.0 p.c within the third quarter of 2021, as output elevated 5.7 p.c and hours labored elevated 6.7 p.c. Within the sturdy manufacturing sector, productiveness elevated 1.4 p.c, with a 9.9-percent enhance in output and an 8.4-percent enhance in hours labored. Nondurable manufacturing sector productiveness decreased 2.6 p.c, as output (+1.3 p.c) grew slower than hours labored (+4.0 p.c). Complete manufacturing sector productiveness elevated 2.4 p.c from the identical quarter a yr in the past. (See tables A1, 3, 4, and 5.)

Manufacturing sector output is now 1.1 p.c above its degree within the fourth quarter of 2019, the final quarter not affected by the COVID-19 pandemic. Hours labored in manufacturing stay 3.3 p.c beneath the fourth-quarter 2019 degree. The manufacturing labor productiveness index is now 4.6 p.c larger than in fourth-quarter 2019, reflecting development at a 2.6-percent annual price throughout the pandemic interval of fourth quarter 2019 by way of third quarter 2021. This price is far larger than the 0.2-percent common annual development price throughout the earlier enterprise cycle — from 2007 to 2019 — and is simply above the long-term price of two.3 p.c per yr from 1987 to 2020. (See chart 4 and tables A1 and three.)

Unit labor prices within the whole manufacturing sector elevated 2.9 p.c within the third quarter of 2021, reflecting a 1.9-percent enhance in hourly compensation and a 1.0-percent lower in productiveness. Manufacturing unit labor prices elevated 1.9 p.c from the identical quarter a yr in the past. (See tables A1 and three.)

Bureau of Labor Statistics