Chart: Unit labor costs in the fourth quarter of 2009

Unit labor costs in non-farm businesses decreased 4.7 percent from the same quarter a year ago, the largest four-quarter decline since the series began in 1948.

[Chart data]

From the previous quarter, at an annual rate, unit labor costs in nonfarm businesses fell 5.9 percent in the fourth quarter of 2009, the result of productivity increasing faster than hourly compensation.

The annual average index of unit labor costs declined 1.7 percent from 2008 to 2009, the largest decline in that series.

The U.S. Bureau of Labor Statistics defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.

This data, from the Productivity and Costs program, is seasonally adjusted and is subject to revision. To learn more about productivity, output, hours and related measures, see "Productivity and Costs: Fourth Quarter and Annual Averages 2009, Revised" (HTML) (PDF), news release USDL-10-0255.