Productivity Declines in 58 of 90 Detailed Manufacturing, Mining Industries in 2019

Labor productivity declines were widespread among manufacturing industries in 2019, with decreases in 54 of the 86 four-digit NAICS industries. Of the 51 industries in durable manufacturing, 31 had productivity decreases in 2019 led by a 7.8% decline in the productivity of the HVAC and commercial refrigeration equipment industry. Nondurable manufacturing also had widespread declines in 2019 with productivity falling in 23 of 35 industries, led by a 13.1% decline in the other leather products industry. All four industries in the mining sector posted productivity declines in 2019 led by the coal mining industry with a decrease of 6.6%.

Labor Productivity Trends in NAICS 3-Digit Industries, 2019

Manufacturing

* Labor productivity decreased in 18 of the 21 NAICS 3-digit manufacturing industries in 2019, as output declined in 17 industries and hours worked rose in 10.

* The food industry had the largest productivity gain, 0.6%, as output increased and hours decreased.

* The leather and allied products industry had the largest productivity decline, 9.8%, as output fell and hours worked increased, each by 5.1%.

Mining

* Labor productivity declined 2.3% in the oil and gas extraction industry where an increase in hours worked outpaced growth in output.

* The mining, except oil and gas industry had a productivity decline of 3.8%, as hours worked increased while output declined.

Trends in Unit Labor Costs in 2019

Unit labor costs, which reflect the total labor costs required to produce a unit of output, rose in 77 of the 86 NAICS 4-digit manufacturing industries. Of the 51 industries in durable manufacturing, 45 experienced rising unit labor costs, led by the railroad rolling stock industry which increased 10.7%. Nondurable manufacturing also experienced widespread increases in unit labor costs with 32 of the 35 industries recording an increase, led by the textile furnishings mills industry with a rise of 17.6%. Of the four industries in the mining sector, three had increases in unit labor costs led by the coal mining industry which increased 7.0%.

Unit Labor Cost Trends in NAICS 3-Digit Industries, 2019 Manufacturing

* Employers experience increased unit labor costs when hourly compensation growth exceeds productivity growth. Unit labor costs increased in 20 of the 21 manufacturing industries, as hourly compensation growth outpaced that of productivity. Textile mills was the exception and had a decrease in unit labor costs due to hourly compensation declines that exceeded productivity declines.

Mining

* Unit labor costs declined in the oil and gas extraction industry 3.4%, as productivity decreased 2.3% and hourly compensation decreased 5.6%.

* The mining, except oil and gas industry saw a 5.6% increase in unit labor costs, as hourly compensation rose 1.7% while productivity dropped 3.8%. Long-Term Trends in Labor Productivity and Unit Labor Costs Labor Productivity

* Over the entire 1987-2019 period, labor productivity rose in 83 of the 91 manufacturing and mining industries. Output rose in 58 industries, while hours worked increased in only 17. In the 17 industries where hours worked increased, they rose at a slow pace, 0.7% per year on average.

* During the more recent 2007-19 period, which included the Great Recession of 2007-09, productivity increased in 45 industries. These increases are predominantly the result of a decline in hours worked rather than an increase in output, as hours worked fell in 35 of these industries while output increased in only 18. Unit Labor Costs

* During the 1987-2019 period, unit labor costs increased in 76 of the 86 NAICS 4-digit manufacturing industries. All five mining industries saw an increase in unit labor costs.

* From 2007 to 2019, unit labor costs increased in 79 of the 86 manufacturing industries and in 3 of the 5 mining industries.

Unit labor costs increased the most in the beverages industry.

The computer and peripheral equipment industry recorded the largest productivity gain as well as the largest unit labor cost decline during both the 1987-2019 and 1987-2007 periods. However, between 2007 and 2019, the oil and gas extraction industry posted the greatest productivity growth and the largest unit labor cost decline.

Additional Information

Time periods for data covered by this release precede, and are therefore not impacted by, the COVID-19 pandemic. Manufacturing industry output measures for 2018 and earlier years are constructed primarily using data from the economic censuses and annual surveys of the U.S. Census Bureau together with data on price changes primarily from BLS. These measures have been revised due to the release of the 2017 Economic Census and the 2018 Annual Survey of Manufactures. Manufacturing industry output for 2019 is estimated based on historical relationships between BLS sectoral output, BLS price indexes, and data on industrial production from the Federal Reserve Board.