Unit labor costs in nonfarm businesses rose 0.7 percent in the first quarter of 2011, as a 2.5 percent increase in hourly compensation outpaced the 1.8 percent gain in productivity. Unit labor costs also rose 0.7 percent from the same quarter a year ago. In the first quarter of 2011, the consumer price series increased at a 5.3 percent annual rate, resulting in a decline of 2.6 percent in real hourly compensation.
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. Real hourly compensation is equal to hourly compensation divided by the consumer price series.
Manufacturing sector productivity grew 4.2 percent in the first quarter of 2011, as output and hours worked increased 7.7 percent and 3.3 percent, respectively. Over the last four quarters, manufacturing productivity increased 4.1 percent. Unit labor costs in manufacturing declined 1.4 percent in the first quarter of 2011 and 0.7 percent over the last four quarters.
Productivity increased 7.5 percent in the durable goods sector and 2.6 percent in the nondurable goods sector in the first quarter of 2011. In durable goods industries, a 14.0 percent jump in output outweighed a 6.1 percent increase in hours worked. Nondurable goods production rose 1.5 percent while hours fell 1.1 percent.
The data sources and methods used in the preparation of the manufacturing output series differ from those used in preparing the business and nonfarm business output series, and these measures are not directly comparable.
Preliminary first quarter 2011 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 4.1 percent in the first quarter of 2011 as output and hours rose 6.2 percent and 2.0 percent, respectively.
