U.S. manufacturing productivity was substantially stronger in the second quarter than previously estimated, with the largest upward revision coming in durable-goods industries, the Labor Department reported Thursday.
Manufacturing labor productivity rose at a 2.4 percent annualized rate from April through June, the Bureau of Labor Statistics said, up from its preliminary estimate of 1.9 percent. The agency also revised first-quarter manufacturing productivity higher, to 2.2 percent from 1.9 percent.
The second-quarter revision reflected stronger estimates of factory output as well as a smaller upward adjustment to hours worked. Manufacturing output is now estimated to have surged at a 5.4 percent annual rate, compared with the previously reported 4.6 percent. Hours worked increased 2.9 percent, revised up from 2.6 percent.
The increase in manufacturing output was the largest since the second quarter of 2021, when output rose 6.7 percent. Productivity measures the amount of output produced for each hour worked.
The revisions were particularly large among manufacturers of durable goods, which include machinery, computers and electronics, fabricated metals, transportation equipment, and other long-lasting products.
Productivity in durable manufacturing increased at a 3.6 percent annualized rate in the second quarter, sharply higher than the preliminary estimate of 2.7 percent. Durable-goods output was revised to an 8.9 percent increase from 7.3 percent, while hours worked were revised to a 5.1 percent increase from 4.5 percent.
The productivity gains have also come alongside job growth. Manufacturing employment increased during both the first and second quarters, with the gains concentrated in durable-goods industries. That combination is unusual: outside of post-recession rebounds, durable-goods manufacturers have not posted productivity growth of at least 3.6 percent in consecutive quarters while also adding jobs in both quarters since the late 1990s.
The government also revised first-quarter productivity growth in durable manufacturing to 4.9 percent from 4.6 percent. Output growth was raised to 5.2 percent from 4.8 percent, while the estimate of hours worked was unchanged at 0.3 percent.
Nondurable manufacturing saw much smaller revisions. Second-quarter productivity growth was raised one-tenth of a percentage point to 2.1 percent. First-quarter productivity was revised to a decline of 0.6 percent from a previously reported decline of 0.7 percent.
The stronger productivity estimate also pushed labor-cost measures lower.
Unit labor costs for the overall manufacturing sector fell at a 0.3 percent annualized rate in the second quarter. The preliminary estimate had shown no change. BLS said it was the first quarterly decline in manufacturing unit labor costs since the second quarter of 2021.
Among durable-goods manufacturers, unit labor costs fell at a 2.2 percent annualized rate, compared with the earlier estimate of a 1.6 percent decline. Hourly compensation rose 1.4 percent while productivity increased 3.6 percent.
First-quarter manufacturing unit labor costs were also revised lower, to a 3.3 percent increase from 3.5 percent. In durable manufacturing, the first-quarter increase was revised to 2.6 percent from 2.9 percent.
The revisions were concentrated in manufacturing. Productivity for the broader nonfarm business sector remained unchanged from the preliminary estimate, rising at a 1.4 percent annualized rate in the second quarter as output increased 1.7 percent and hours worked rose 0.3 percent. First-quarter nonfarm productivity was also unrevised at 0.8 percent.
BLS said Thursday’s estimates incorporate more recent data from the Labor Department, the Bureau of Economic Analysis, and the Federal Reserve than were available when the preliminary second-quarter figures were published in August.
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