Productivity and Costs, Fourth Quarter

If there is anything which can be said about 2024, Biden left it in better shape than what it was when he became the president.

Unlike 2008 and with the help of Congress, Biden was able to mitigate much of the impact of the pandemic on the economy, all citizens, and business endeavors. Without which, there would have been a collapse of the nation. After the pandemic, it became a battle against inflation by both the Fed and the government. Much was due to the economic stimuli put into play for businesses and people. It is unfortunate some business enterprises took advantage.

Read on about the preliminary results of 2024. This may be the only accurate and independent report on 2024 economic results. By the way and off topic to this post, increasing enlistment was happening well before the present administration.

Productivity and Costs, Fourth Quarter and Annual Averages 2024, Preliminary

Nonfarm business sector labor productivity increased 1.2 percent in the fourth quarter of 2024, the U. S. Bureau of Labor Statistics reported today, as output increased 2.3 percent and hours worked increased 1.0 percent. (All quarterly percent changes in this release are seasonally adjusted annualized rates.) From the same quarter a year ago, nonfarm business sector labor productivity increased 1.6 percent in the fourth quarter of 2024. (See chart 1 and table A1.) Annual average productivity increased 2.3 percent from 2023 to 2024. (See table C1.)

Unit labor costs in the nonfarm business sector increased 3.0 percent in the fourth quarter of 2024, reflecting a 4.2-percent increase in hourly compensation and a 1.2-percent increase in productivity. Unit labor costs increased 2.7 percent over the last four quarters. (See chart 2 and tables A1 and 2.)

BLS calculates 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 productivity tend to reduce them. Real hourly compensation, which takes into account consumer prices, increased 1.1 percent in the fourth quarter of 2024, and increased 1.5 percent over the last four quarters.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all workers, including employees, proprietors, and unpaid family workers. During the current business cycle, starting in the fourth quarter of 2019, labor productivity has grown at an annualized rate of 1.8 percent, reflecting a 2.5-percent rate of growth in output and a 0.7-percent rate of growth in hours worked. (See chart 3.) The 1.8-percent annualized rate of productivity growth in the current business cycle thus far is higher than the 1.5 percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019 and is below the long-term rate of 2.1 percent since the first quarter of 1947.

Manufacturing sector labor productivity increased 0.8 percent in the fourth quarter of 2024, as output decreased 1.0 percent and hours worked decreased 1.8 percent. In the durable manufacturing sector, productivity decreased 1.0 percent, reflecting a 3.5-percent decrease in output and a 2.5-percent decrease in hours worked. Nondurable manufacturing sector productivity increased 2.2 percent, as output increased 1.6 percent and hours worked decreased 0.5 percent. Total manufacturing sector productivity increased 0.2 percent from the same quarter a year ago (See tables A1, 3, 4, and 5).

Unit labor costs in the total manufacturing sector increased 3.3 percent in the fourth quarter of 2024, reflecting a 4.1-percent increase in hourly compensation and a 0.8-percent increase in productivity. Manufacturing unit labor costs increased 1.5 percent from the same quarter a year ago (See tables A1 and 3).

Manufacturing sector labor productivity has grown at an annualized rate of 0.2 percent during the current business cycle, as output was unchanged (0.0 percent) and hours have declined 0.2 percent. (See chart 4.) The 0.2-percent annualized rate of productivity growth in the current business cycle thus far is above the 0.1-percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019 and is below the long-term rate of 2.1 percent since the first quarter of 1987.

The concepts, sources, and methods used for the manufacturing output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See the Technical Notes for a more detailed explanation. (See page 7.)

Revised measures 

Table B1 presents previous and revised productivity and related measures for the business, nonfarm business, and manufacturing sectors for the third quarter of 2024. Table A2 presents these measures for the nonfinancial corporate sector.

Nonfarm business sector productivity in the third quarter of 2024 increased 2.3 percent rather than the previous estimate of a 2.2-percent increase, reflecting a 0.1-percentage point upward revision to output and a 0.1-percentage point upward revision to hours worked. Unit labor costs were revised down 0.3 percentage point, reflecting a 0.1-percentage point upward revision to labor productivity, and a 0.2 percentage point downward revision to hourly compensation.

Manufacturing sector productivity was revised down 0.4 percentage point to an increase of 0.5 percent in the third quarter of 2024, reflecting a 0.4-percentage point downward revision to output and a 0.1-percentage point upward revision to hours worked. Productivity was revised down 0.2 percentage point in the durable manufacturing sector and revised down 0.5 percentage point in the nondurable  manufacturing sector. (See table B1.)  

In the nonfinancial corporate sector, productivity was revised down 0.4 percentage point in the third quarter of 2024 to an increase of 3.0 percent. This revision reflects a 0.3-percentage point downward revision to output and a 0.1-percentage point upward revision to hours worked. (See table A2.)

Annual averages

Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity increased 2.3 percent in 2024, as output increased 2.9 percent and hours worked increased 0.6 percent.

Unit labor costs in the nonfarm business sector increased 2.6 percent in 2024, reflecting an increase of 5.0 percent in hourly compensation and an increase of 2.3 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 2.0 percent in 2024. 

In the manufacturing sector, productivity increased 0.3 percent in 2024, reflecting a decrease in output of 0.4 percent and a decrease in hours worked of 0.7 percent.

Manufacturing unit labor costs increased 3.1 percent in 2024, as hourly compensation increased 3.4 percent and productivity increased 0.3 percent. Manufacturing real hourly compensation increased 0.5 percent in 2024.

Quarterly and annual data for all sectors for recent years appear in tables 1-6. Full historical annual and quarterly measures can be found at www.bls.gov/productivity/tables/.