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Productivity and Costs: First Quarter 2014, Revised

U.S. Bureau of Labor Statistics (06/04/14)

The U.S. Bureau of Labor Statistics reports that during the first quarter of 2014, nonfarm business sector labor productivity fell at an annual rate of 3.2%, hours worked increased 2.2%, and output dropped 1.1%. This marks the biggest decline in productivity since the 2008 first quarter. Unit labor costs in nonfarm businesses increased 5.7% in the first quarter of 2014, due to the decline in productivity and to a 2.3% increase in hourly compensation. Unit labor costs increased 1.2% over the past four quarters. BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase labor costs, and increases in output per hour tend to reduce them.