February 12, 2003 (The Editor’s Desk is updated each business day.)

Drop in unit labor costs in manufacturing last year

Unit labor costs in manufacturing fell in 2002, by 0.7 percent. This was the first annual drop in unit labor costs since 1999.

[Chart data—TXT]

The drop in unit labor costs in 2002 was the result of a 3.8-percent increase in hourly compensation and a 4.6-percent increase in labor productivity. 

Unit labor costs in durable goods manufacturing declined 1.5 percent in 2002. In contrast, there was with a 0.6-percent rise in unit labor costs in nondurable goods manufacturing.

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.

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, Fourth Quarter 2002" (PDF) (TXT), news release USDL 03-45.