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In the second quarter of 2024, labor productivity in the nonfarm business sector increased 2.3%, beating the consensus estimate of 1.8%. Labor productivity is up 2.7% in the past year. During Q2 2024, output rose 3.3% and hours worked increased 1%—leading to more output per hour. In the manufacturing sector, labor productivity rose 1.8% in Q2 2024, with a 3.4% increase in output and a 1.6% rise in hours worked. Productivity in durable manufacturing increased 0.4%, while nondurable manufacturing saw a productivity increase of 3.5%. Overall, manufacturing sector productivity increased 0.4% in the past year.

Unit labor costs in the nonfarm business sector rose 0.9% in Q2 2024, slowing from a downwardly revised 3.8% annualized pace in Q1. Over the past four quarters, unit labor costs increased 0.5%, the lowest rate since Q3 2019. On the other hand, unit labor costs in the manufacturing sector rose 3.2% in Q2 2024, with hourly compensation increasing 5.1% and productivity rising 1.8%. Unit labor costs are up 4.3% in the past year. Over the same time, hourly compensation increased 4.7%, productivity rose 0.4% and real hourly compensation grew 1.5%.

Real hourly compensation (inflation adjusted) grew 0.4% in Q2 2024 but showed no change over the past year. Since the current business cycle began in Q4 2019, labor productivity has grown at an annualized rate of 1.6%, which is slightly higher than the 1.5% rate of the previous cycle (Q4 2007 to Q4 2019) but lower than the long-term rate of 2.1% since Q1 1947.

During the current business cycle, manufacturing labor productivity grew at an annualized rate of 0.3%, with a 0.2% increase in output and a 0.1% decline in hours worked. This growth rate is higher than the 0% rate of the previous cycle (Q4 2007 to Q4 2019) but lower than the long-term rate of 2.1% since Q1 1987.