Labor Productivity from the BLS, chart by Mish

Today the BLS released Labor Productivity and Costs for 2023 Q1. Let's take a look.

Labor Productivity Details 

•  Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers. 
• Nonfarm business sector labor productivity decreased 2.7 percent in the first quarter of 2023
• Output increased 0.2 percent and hours worked increased 3.0 percent.
• From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.9 percent, reflecting a 1.3-percent increase in output and a 2.3-percent increase in hours worked. 
• The 1.1-percent rate of productivity growth in the current business cycle thus far is a historically low productivity growth rate; no other previous business cycle had lower productivity growth, except for the brief six-quarter cycle from 1980 Q1 to 1981 Q3, which exhibited 1.0 percent growth. 
• The 0.9-percent productivity decline is the first time the four-quarter change series has remained negative for five consecutive quarters; this series begins in the first quarter of 1948. 

Unit Labor Cost Details 

• Unit labor costs in the nonfarm business sector increased 6.3 percent in the first quarter of 2023, reflecting a 3.4-percent increase in hourly compensation and a 2.7-percent decrease in productivity. 
• Unit labor costs increased 5.8 percent over the last four quarters. 
• Real hourly compensation, which takes into account consumer prices, decreased 0.3 percent in the first quarter of 2023, and declined 1.0 percent over the last four quarters.

Labor Productivity and Costs, Percent Change from Prior Quarter

Labor Productivity from the BLS, chart by Mish

What's Going On With Productivity?

1. Biden rules and regulations
2. Biden's clean energy push including the ridiculously-named Inflation Reduction Act (IRA)
3. Retiring baby boomers are replaced by less skilled workers 

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