Nonfarm business sector labor productivity decreased 2.7% in the first quarter of 2023, the U.S. Bureau of Labor Statistics reported this week, as output increased 0.2 %v and hours worked increased 3.0%. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.9%, reflecting a 1.3% increase in output and a 2.3% increase in hours worked.

The 0.9% productivity decline is the first time the four-quarter change series has remained negative for five consecutive quarters; this series begins in the first quarter of 1948.

Unit labor costs in the nonfarm business sector increased 6.3% in the first quarter of 2023, reflecting a 3.4% increase in hourly compensation and a 2.7% decrease in productivity. Unit

labor costs increased 5.8% over the last four quarters.

 BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs and increases in productivity tend to reduce them. Real hourly compensation, which takes into account consumer prices, decreased 0.3% in the first quarter of 2023, and declined 1.0% over the last four quarters.