The Bureau of Labor Statistics publishes the quarterly report of productivity and costs using output data from the Bureau of Economic Analysis and the Census Bureau, labor cost data from the Bureau of Labor Statistics and the BEA, and additional data from the Federal Reserve Board. The report provides detailed information on labor costs and usage across different sectors of the United States economy.
Productivity growth is critical because it allows for higher wages and faster economic growth without inflationary consequences. In periods of robust economic growth, productivity ensures that inflation will remain well behaved despite tight labor markets. Productivity growth is also a key factor in helping to increase the overall wealth of an economy since real wage gains can be made when workers are more productive per hour.
According to the BLS, nonfarm business sector labor productivity increased at a 0.5 percent annual rate during the first quarter of 2013. The increase in productivity reflects increases of 2.1 percent in output and 1.6 percent in hours worked. This reflects a longer term trend of falling labor productivity since the end of the last recession. On a positive note, productivity in the manufacturing sector continued to grow at a rabid pace in the first quarter (up 3.5 percent), reflecting mainly growth in output per worker.
Considering that the economy is in its third year of recovery and that productivity has not shown any life since the end of 2009, it is unlikely that wages will grow rapidly in the nest few months. In fact, unit labor costs actually fell by 4.3 percent in the first quarter. This follows a spike in wages in the 4th quarter of 2012. Without sustained productivity growth, business cannot expand wages, and this will continue to put pressure on the demand side of the economy.