Nov. 2 (UPI) — Labor costs took an unexpected dip in the third quarter of 2023, as productivity increased, according to data released Thursday.
Labor non-business productivity was up 4.7% in the third quarter of 2023, the biggest gain since 2020 according to the Labor Department.
That productivity increase drove labor unit costs down by 0.8%.
“Unit labor costs in the non-farm business sector decreased 0.8% in the third quarter of 2023, reflecting a 3.9% increase in hourly compensation and a 4.7% increase in productivity,” the department’s Bureau of Labor Statistics said in a statement. “Unit labor costs increased 1.9 % over the last four quarters.”
Unit labor costs are determined by hourly compensation with productivity factored in.
Third quarter 2023 productivity was 2.2% higher than the same quarter in 2022. Hours worked were 1.1% higher.
Manufacturing sector labor productivity was down by 0.7%, caused by a 1.4% drop in durable goods manufacturing productivity.
But nondurable manufacturing productivity was up 2.1%.
According to the BLS, real hourly compensation, which takes into account consumer prices, increased 0.3% in the third quarter of 2023, and increased 0.6% over the last four quarters.
The productivity increase beat the Dow Jones estimate of 4.3%.
Fed Chair Jerome Powell said on Wednesday that wage gains have declined over the last 18 months to a level closer to what’s needed to align with the Fed’s target of 2% inflation over time.
