2010 Fourth Quarter (Preliminary) Productivity and Costs — 2011-02-03

Nonfarm business sector labor productivity increased at a 2.6 percent annual rate during the fourth quarter of 2010, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 4.5 percent in output and 1.8 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) Productivity increased 1.7 percent over the last four quarters (table A). Annual average productivity increased 3.6 percent from 2009 to 2010 (table C). Quarterly measures provide information on business cycles whereas annual measures are compared to long-term trends. Labor productivity is calculated by dividing an index of real output by an index of the combined hours worked of all persons, including employees, proprietors, and unpaid family workers. Unit labor costs in nonfarm businesses declined 0.6 percent in the fourth quarter of 2010, as the increase in productivity (2.6 percent) outpaced the increase in hourly compensation (1.9 percent).