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Manufacturing labor productivity rose 5.5% at the annual rate in Q2, coming back strongly after three straight months of decline, according to the latest data from the U.S. Bureau of Labor Statistics.

The Q2 Preliminary Productivity and Costs report released Tuesday by the BLS said that manufacturing output increased 4.3%, building on the 3.9% gain in Q1.  The number of hours worked decreased 1.1% and hourly compensation increased 4.9%.

The second quarter manufacturing data reflects “resilient growth in demand for goods despite ongoing challenges with supply chain, workforce, inflationary and geopolitical issues,” said Chad Moutray, chief economist for the National Association of Manufacturers.

Manufacturing sector output is now 3.6% above its level in the fourth quarter of 2019, the last quarter unaffected by the COVID-19 pandemic. Hours worked remain 1.3% below the fourth-quarter 2019 level. The manufacturing labor productivity index is 4.9% higher in Q2 of 2022 than in Q4 of 2019.

Although the BLS data shows increased manufacturing labor productivity, nonfarm business labor productivity decreased 4.6% in Q2 following a 7.4% drop in Q1. Nonfarm business output decreased 2.1% and hours worked increased 2.6%. Compared to the same quarter a year ago, nonfarm business sector labor productivity has decreased 2.5% – the largest decline since 1948.

Unit labor costs in the nonfarm business sector increased 10.8% in Q2 of 2022, reflecting a 5.7% increase in hourly compensation and a 4.6% decrease in productivity.