February 09, 2006 (The Editor’s Desk is updated each business day.)

Unit labor costs in fourth quarter of 2005

Unit labor costs in nonfarm business increased at an annual rate of 3.5 percent (seasonally adjusted) in the fourth quarter of 2005, after falling 0.5 percent in the third quarter and 1.2 percent in the second quarter.

Percent change in unit labor costs, nonfarm business, seasonally adjusted, 2004 I-2005 IV (percent change from previous quarter at annual rate)
[Chart data—TXT]

Unit labor costs—the cost of the labor input required to produce one unit of output—are computed by dividing labor costs in nominal terms by real output.

Unit labor costs can also be expressed as the ratio of hourly compensation to labor productivity. The rise in unit labor costs in the fourth quarter reflected a 2.8-percent increase in hourly compensation and a 0.6-percent decrease in labor productivity.

These data are a product of the BLS Productivity and Costs program. Data are subject to revision. Additional information is available in "Productivity and Costs, Preliminary Fourth Quarter and Annual Averages for 2005," news release USDL 06-159.

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