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Economic Data (USA)

Friday, June 03, 2022

Productivity and Labor Costs Report for Q1 2022 (Revised)

The Labor Department's Bureau of Labor Statistics (BLS) this morning released its quarterly report on Productivity and Unit Labor Costs for the first quarter of 2022 (revised):

Nonfarm Productivity
Predicted: -7.5%
Actual: -7.3%

  • Change from A Year Ago: -0.6%


Unit Labor Costs
Predicted: +10.0%
Actual: +12.6%

  • Change from A Year Ago: +8.2%


The yellow-highlighted percentages represent the quarter-to-quarter change in non-farm productivity and unit labor costs for the United States.

For non-farm productivity, a positive number represents an improvement in the efficiency of producing domestic goods and services in the U.S., and therefore can signify a favorable inflationary outlook, and vice versa.

The Unit Labor Costs report measures the costs related to producing each unit of output. A positive number can be a harbinger of rising inflation, and vice versa.

The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

From Today's Report
"...Nonfarm business sector labor productivity decreased 7.3% in the first quarter of 2022, the U.S. Bureau of Labor Statistics reported today, as output decreased 2.3 percent and hours worked increased 5.4%. This is the largest decline in quarterly productivity since the third quarter of 1947, when the measure decreased 11.7%. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.6%, reflecting a 4.2-percent increase in output that was outpaced by a 4.8% increase in hours worked. (See chart 1 and table A1.) This is the largest four-quarter decline since the fourth quarter of 1993, when the measure also declined 0.6%.

Unit labor costs in the nonfarm business sector increased 12.6% in the first quarter of 2022, reflecting a 4.4% increase in hourly compensation and a 7.3% decrease in productivity. Unit labor costs increased 8.2% over the last four quarters. (See chart 2 and tables A1 and 2.) This is the largest four-quarter increase in this measure since another 8.2% increase in the third quarter of 1982. 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..."

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