Unit labor costs in fourth quarter of 2006

Unit labor costs in nonfarm business increased at a revised annual rate of 6.6 percent (seasonally adjusted) in the fourth quarter of 2006, after rising 1.1 percent in the third quarter.

[Chart data—TXT]

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. The rise in unit labor costs in the fourth quarter reflected an 8.2-percent increase in hourly compensation and a 1.6-percent increase in labor productivity.

These data are a product of the BLS Productivity and Costs program. Data in this report are seasonally adjusted annual rates. These estimates are subject to further revision. Additional information is available in "Productivity and Costs, Fourth Quarter and Annual Averages, 2006 Revised" (PDF) (TXT), news release USDL 07-0338.