Nonfarm business sector labor productivity increased 4.7 percent in the third quarter of 2023, the U.S. Bureau of Labor Statistics reported today, as output increased 5.9 percent and hours worked increased 1.1 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The increase in labor productivity is the highest rate since the third quarter of 2020, in which productivity increased 5.7 percent.

From the same quarter a year ago, nonfarm business sector labor productivity increased 2.2 percent in the third quarter of 2023. (See table A1.)

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all workers, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector decreased 0.8 percent in the third quarter of 2023, reflecting a 3.9-percent increase in hourly compensation and a 4.7-percent increase in productivity.

Unit labor costs increased 1.9 percent over the last four quarters. (See tables A1 and 2.)