US Productivity and Costs

Data Employment Macro

Source: BLS
Source Link: https://www.bls.gov/
Frequency: Quarterly
Next Release(s): September 4th, 2025 8:30 AM

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US labor productivity rose +2.4% QoQ and +1.3% YoY in Q2 2025, as output growth outpaced hours worked, indicating improved efficiency across nonfarm businesses.
- Output increased +3.7% QoQ, while hours worked rose +1.3%.
- Hourly compensation rose +4.0% QoQ (+3.9% YoY), lifting real hourly compensation by +2.3% QoQ.
- Unit labor costs increased +1.6% QoQ and +2.6% YoY, the highest since Q1 2024.
- Manufacturing productivity rose +2.1% QoQ, led by durable goods (+3.3%), while nondurable productivity grew just +1.2%.
- Nondurable manufacturing unit labor costs surged +3.8% QoQ, the steepest gain among tracked sectors.
US nonfarm business productivity fell -1.5% QoQ annualized in Q1 2025 (revised up from -0.8% QoQ annualized), the first decline since Q2 2022, as output decreased -0.2% and hours worked rose +1.3%.
- Unit labor costs surged +6.6% QoQ, driven by a +5.0% rise in hourly compensation and the drop in productivity; +1.9% YoY.
- Real hourly compensation rose +1.2% QoQ and +0.5% YoY.
- Manufacturing productivity rose +4.4% QoQ (output +4.8%, hours +0.4%), led by durable goods (+7.2%); +1.4% YoY.
- Manufacturing unit labor costs rose +2.0% QoQ (+6.4% compensation vs +4.4% productivity); +0.3% YoY.
- Nonfinancial corporate sector productivity fell -1.2% QoQ but was up +2.0% YoY.
US labor productivity fell at a quarterly annualized rate of -0.8% in Q1 2025, the first decline since Q2 2022 and mostly in line with expectations of a -0.7% decline.
- Total output fell at a -0.3% rate while hours worked increased at a 0.6% rate.
- On an annual basis, productivity was up 1.4% YoY with output up 2.2% YoY and hours worked up 0.8% YoY.
- Hourly compensation increased at a quarterly annualized rate of 4.8% which means that unit labor costs surged in Q1 2025, up at an annualized rate of 5.7% (vs 5.1% expected), the strongest increase since Q1 2024.
- While overall nonfarm business productivity declined, manufacturing productivity increased at a quarterly annualized rate of 4.5% as output grew 5.1% and hours worked was up 0.5%.
- Manufacturing unit labor costs increased at a 1.6% annualized rate and were up 0.7% YoY.
US labor productivity in Q4 2024 was revised up from an quarterly annualized rate of 1.2% in the initial estimate to 1.5%.
- On an annual basis, productivity was up 2.0% YoY to end 2024, the lowest since Q2 2023.
- The output growth rate saw a slight upward revision of 0.1 ppts to 2.4% while the hours worked rate was revised down -0.2 ppts to 0.8%.
- Unit labor costs growth saw a sharp -0.8 ppts revision to 2.2% as hourly compensation growth was revised down -0.4 ppts to 3.8%.
- Manufacturing productivity was revised down -0.5 ppts to 0.3% as output growth was revised down to -1.3% and hours worked growth was revised up to -1.6%.
- Manufacturing unit labor costs growth was revised up 0.4 ppts to 3.7%.
US labor productivity increased at an annual rate of 1.2% in Q4 2024, slightly below expectations of a 1.4% YoY increase, and 1.6% YoY, down from 2.1% YoY in Q3.
- Output increased at a 2.3% rate in Q4 while hours worked were up just 1.0%.
- With hourly compensation increasing at a 4.2% rate in Q4, unit labor costs saw a sizeable increase of 3.0%, though this was slower than the 3.4% expected.
- Manufacturing productivity saw a smaller gain of 0.8% as the decline in output of -1.0% was offset by a larger -1.8% decline in hours worked.
- On an annual basis, unit labor cost growth accelerated to 2.7% YoY in Q4 from a more moderate expansion of 2.2% YoY in Q3.
- For the full year 2024, labor productivity increased 2.3% and unit labor costs were up 2.6%. Both are faster than the rates for 2023.
- Manufacturing productivity grew for the first time since 2021 at 0.3% but both output and hours worked were negative. Manufacturing unit labor cost growth moderated to the slowest since 2023 at 3.1%.