Nonfarm business sector labor productivity decreased at a 0.5 percent annual rate during the first quarter of 2012, the U.S. Bureau of Labor Statistics reported today. The decline in productivity reflects increases of 2.7 percent in output and 3.2 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2011 to the first quarter of 2012, productivity increased 0.5 percent as output and hours worked rose 2.8 percent and 2.2 percent, respectively. 

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

Unit labor costs in nonfarm businesses increased 2.0 percent in the first quarter of 2012, while hourly compensation increased 1.5 percent. Unit labor costs rose 2.1 percent over the last four quarters. 

BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.Manufacturing sector productivity rose 5.9 percent in the first quarter of 2012, as output grew 10.8 percent and hours worked increased 4.6 percent. The increases in productivity and output were the largest since the second quarter of 2010. Over the last four quarters, manufacturing sector productivity increased 2.5 percent. Unit labor costs in manufacturing fell 4.2 percent in the first quarter of 2012 and decreased 1.3 percent from the same quarter a year ago.

Preliminary fourth quarter and annual 2011 measures were announced today for the nonfinancial corporate sector. Productivity increased 3.7 percent in the fourth quarter of 2011, as output grew faster than hours worked. Annual average productivity for the nonfinancial corporate sector increased 0.4 percent in 2011. 

The concepts, sources, and methods used for the manufacturing and nonfinancial corporate output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable.