US Labor Productivity Rises at Highest Rate in 3 Years

Nonfarm business sector productivity increased 4.7% in the third quarter.

November 8, 2023

According to a recently released press release by the U.S. Bureau of Labor Statistics, labor productivity in the third quarter rose at its highest rate since the same time in 2020.

Nonfarm business labor productivity (which excludes the farming industry) increased 4.7% in the third quarter of 2023, as output increased 5.9% and hours worked increased 1.1%. In 2020, the rate for the third quarter was an increase of 5.7%. Last year’s third-quarter rate showed an increase of 2.2%.

Unit labor costs (how much a business pays its workers to produce one unit of output) for this third quarter decreased 0.8%, reflecting a 3.9% increase in hourly compensation and a 4.7% increase in productivity. Unit labor costs increased 1.9% over the last four quarters.

According to an article by Reuters, the current labor costs could positively affect the Federal Reserve’s next decision on interest rates. Last week Wednesday, the U.S. Central Bank held its policy interest rate steady at the range of 5.25%–5.50%. The moderate annual rise of 1.9% could bring the Federal Reserve closer to its interest rate target of 2%.

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