Unit labour costs in the non-farm business sector increased by 1 per cent QoQ in Q2 2025, reflecting a 4.3-per cent QoQ increase in hourly compensation and a 3.3-per cent QoQ increase in productivity. Unit labour costs rose by 2.5 per cent YoY in the quarter. BLS calculates unit labour costs as the ratio of hourly compensation to labour productivity.
Increases in hourly compensation tend to increase unit labour costs and increases in productivity tend to reduce them.
Labour 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.
Manufacturing sector labour productivity increased by 2.5 per cent QoQ in Q2 2025 as output increased by 2.4 per cent QoQ and hours worked decreased by 0.1 per cent QoQ, a BLS release said.
Total US manufacturing sector productivity increased by 1.6 per cent YoY in the quarter. This is the largest four-quarter gain in manufacturing productivity since Q2 2021, when it had increased by 4.8 per cent YoY.
Unit labour costs in the total manufacturing sector increased by 2 per cent QoQ and 2.6 per cent YoY in Q2 2025, reflecting a 4.5-per cent QoQ increase in hourly compensation and a 2.5-per cent QoQ increase in productivity.
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