The Bureau of Labor Statistics said that labor productivity for the manufacturing sector was down 0.1 percent in the third quarter, its slowest pace in one year. Beyond the headline figure, the manufacturing data were split between durable and nondurable goods sectors.
Labor productivity for durable goods firms was up 1.1 percent, boosted by output growth of 3.1 percent. Durable goods productivity was lower than what was observed in the second quarter (4.3 percent), but output increased (up from 1.4 percent). The good news was that unit labor costs for durables was down in each of the past four quarters, with unit labor costs decreasing 0.8 percent in the third quarter. Overall, we have seen an 11.0 percent decline in unit labor costs for durable goods industries since the end of 2009. This helps businesses become more competitive globally.
In contrast, labor productivity and output for nondurable goods firms were both down 1.0 percent in the third quarter. This suggests continued weaknesses for nondurable goods manufacturers, which has seen output declines in each of the past two quarters. Unit labor costs were also higher in both the second and third quarters, up 2.5 percent and 4.0 percent, respectively.
In the larger economy, nonfarm productivity grew 3.0 percent, higher than the earlier estimate of 1.9 percent. Output growth clearly picked up in the third quarter, increasing from 3.3 percent in the second quarter to 4.7 percent. Unit labor costs were down 1.4 percent in the third quarter.
Chad Moutray is the chief economist, National Association of Manufacturers.