Non-Farm Productivity and Unit Labor Costs – United States

Report on the efficiency of industrial workers. Key figures released in this report include Productivity and Unit Labor Costs.

Non-farm Productivity

Measures the output produced for each hour of labor worked. Non-farm Productivity is considered the most accurate gauge of overall business health, given farming data’s small and volatile contribution to GDP. To businesses, higher productivity indicates efficient use of employees and capital. Given that labor costs make up more than two-thirds of the average businesses expenses, high productivity can allow a firm to fulfill consumer demand with less labor costs, boosting profitability. Thus trends in this report can precede investment spending and business growth. Also if prices raw materials increase, improved productivity can save a firm from passing higher costs to the end consumer. Given such business effects, healthy productivity growth bodes well for the economy as a whole, signaling increased production capability and business growth.

Productivity is reported as output per hour per worker, categorized into industry figures.

On a Technical Note: The Non-Farm Productivity number is generated by comparing the number of hours worked (Employment Situation report) to Gross Domestic Product data

Unit Labor Costs

Measures changes in the actual dollar cost firms pay for employees to make a uniform output. Since labor costs make up such a sizeable portion of business’ production costs, trends in this figure are significant to wage pressures. High or rising labor costs are often passed to consumers in higher final prices, causing inflation. As a result, rising Unit Labor Costs often act as an early indicator of inflation, making it the key indicator in the Productivity and Costs report.

The figure is reported in headlines as a percentage change from previous quarters.

Relevance: Rarely affects markets
Release schedule : Quarterly, 8:30 AM (EST); approximately 5 weeks following the end of reporting quarter
Revisions schedule : First revision occurs one month after release, the second two months later; revisions are often dependent on updated GDP and employment data.
Source of report : Bureau of Labor Statistics, Department of Labor
Web Address : http://www.bls.gov/
Address of release : http://www.bls.gov/lpc/
AKA : Non-farm Productivity, Productivity, Unit Labor Costs

 

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