February 18, 1999 (The Editor’s Desk is updated each business day.)

Factory unit labor costs rise for first time in five years

Labor costs per unit of output in manufacturing rose 0.2 percent in 1998, the first increase in unit labor costs since 1993. The increase was the result of a slowing of the rate of productivity growth in manufacturing, coupled with a moderate increase in the growth of hourly compensation.

[Chart data—TXT]

The hourly compensation of manufacturing workers rose 4.5 percent in 1998, and their productivity increased 4.3 percent [revised to 4.2 percent on 3/10/99].  The compensation rise was the largest since a 5.3-percent rise in 1991.

During the past few years, the durable and nondurable goods components of manufacturing have experienced sharply differing labor cost trends. Unit labor costs in durable goods manufacturing fell 2.5 percent in 1998, the seventh consecutive drop in unit labor costs in this sector. In contrast, unit labor costs in nondurable goods have increased every year since 1992. In 1998, these costs rose 3.8 percent [revised to 3.9 percent on 3/10/99].

These data are a product of the BLS Quarterly Labor Productivity program. Additional information is available from news release USDL 99-32, "Productivity and Costs: Preliminary Fourth-Quarter Measures and Annual Averages, 1998."