EconoIndicators

Productivity and Employment Costs at a Glance

• Business Sector Productivity: Up 3.5%
• Nonfarm Business Productivity: Up 2.6%
• Manufacturing Productivity: Up 1.8%
• Durable Goods Manufacturing Productivity: Up 4.7%
• Nondurable Goods Manufacturing Productivity: Down 1.4%
• Business Unit Labor Costs: Up 1.9%

Technorati Tags: productivity, employment costs

PRODUCTIVITY AND COSTS
Second Quarter 2007, Revised

The Bureau of Labor Statistics of the U.S. Department of Labor today
reported revised productivity data–as measured by output per hour of all
persons–for the second quarter of 2007. The seasonally adjusted annual
rates of productivity change in the second quarter were:

3.5 percent in the business sector and
2.6 percent in the nonfarm business sector.

In both sectors, the second-quarter productivity gains were larger than the
preliminary estimates reported on August 7. (See table C).

In manufacturing, the revised productivity changes in the second quarter
were:

1.8 percent in manufacturing,
4.7 percent in durable goods manufacturing, and
-1.4 percent in nondurable goods manufacturing.

Manufacturing productivity grew slightly faster in the second quarter of
2007 than was reported on Aug. 7, reflecting upward revisions to output per
hour in nondurable manufacturing; durable manufacturing productivity was not
revised. Output and hours in manufacturing, which includes about 12 percent
of U.S. business-sector employment, tend to vary more from quarter to quarter
than data for the aggregate business and nonfarm business sectors. Second-
quarter measures are summarized in table A and appear in detail in tables 1
through 5; the differences between these measures and the preliminary second-
quarter figures issued on Aug. 7 are shown in table C.

The data sources and methods used in the preparation of the
manufacturing series differ from those used in preparing the business and
nonfarm business series, and these measures are not directly comparable.
Output measures for business and nonfarm business are based on measures of
gross domestic product prepared by the Bureau of Economic Analysis of the
U.S. Department of Commerce. Quarterly output measures for manufacturing
reflect indexes of industrial production independently prepared by the Board
of Governors of the Federal Reserve System. See Technical Notes for further
information on data sources.

——————————————————————————
Table A. Productivity and costs: Revised second-quarter 2007 measures
(Seasonally adjusted annual rates)
——————————————————————————
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
——————————————————————————
Percent change from preceding quarter

Business 3.5 4.6 1.0 5.5 -0.5 1.9
Nonfarm business 2.6 5.0 2.3 4.1 -1.8 1.4
Manufacturing 1.8 4.0 2.1 3.4 -2.4 1.6
Durable 4.7 6.8 2.0 1.7 -4.1 -2.8
Nondurable -1.4 0.8 2.3 6.8 0.8 8.4
——————————————————————————
Percent change from same quarter a year ago

Business 0.8 2.0 1.1 5.9 3.2 5.1
Nonfarm business 0.9 2.1 1.3 5.8 3.0 4.9
Manufacturing 3.0 1.9 -1.1 6.8 4.0 3.7
Durable 4.5 2.5 -1.9 7.0 4.1 2.3
Nondurable 0.8 1.1 0.4 6.8 4.0 6.0
——————————————————————————

Business

From the first quarter to the second quarter of 2007, productivity in
the business sector grew 3.5 percent as output increased 4.6 percent and
hours worked by all persons engaged in the sector–employees, proprietors,
and unpaid family workers–rose 1.0 percent (tables A and 1).
Productivity had increased 0.2 percent during the first quarter of 2007, as
output increased 0.2 percent and hours were unchanged (seasonally adjusted
annual rates).

Hourly compensation in the business sector grew at a 5.5 percent annual
rate in the second quarter of 2007, the same rate of growth as one quarter
earlier. Hourly compensation includes wages and salaries, supplements,
employer contributions to employee benefit plans, and taxes. Real hourly
compensation, which takes into account changes in consumer prices, fell 0.5
percent in the second quarter of 2007 after increasing 1.6 percent in the
first quarter of the year.

Unit labor costs, which reflect changes in hourly compensation and
productivity, rose 1.9 percent in the second quarter of 2007. Unit labor
costs had increased 5.3 percent in the first quarter of 2007. From the
second quarter of 2006 to the second quarter of 2007, these costs increased
5.1 percent–the largest four-quarter increase since unit labor costs
increased 5.2 percent between the fourth quarter of 1989 and the fourth
quarter of 1990. The implicit price deflator for business output, which
exhibits changes in unit labor costs and unit nonlabor payments, rose 2.5
percent in the second quarter of 2007 and 4.1 percent in the first quarter.

Nonfarm business

Productivity in the nonfarm business sector grew at a 2.6 percent annual
rate in the second quarter of 2007, reflecting increases of 5.0 percent in
output and 2.3 percent in hours of all persons (tables A and 2). In the
first quarter of 2007, productivity increased 0.7 percent, output rose 0.3
percent, and hours fell 0.3 percent.

Hourly compensation increased 4.1 percent in the second quarter of 2007,
but when the 6.0 percent jump in consumer prices was taken into account, real
hourly compensation fell 1.8 percent in the second quarter. As revised,
hourly compensation increased 5.9 percent in the first quarter of 2007.

Unit labor costs rose 1.4 percent in the second quarter of 2007,
following a 5.2-percent increase in the first quarter. Unit labor costs
increased 4.9 percent from the second quarter of 2006 to the second quarter
of 2007, more than during any four-quarter period since third-quarter 1999 to
third-quarter 2000, when they increased 5.0 percent. The implicit price
deflator for nonfarm business output increased 2.4 percent in the second
quarter of 2007 and 3.6 percent one quarter earlier.

Manufacturing

Productivity increased 1.8 percent in manufacturing in the second
quarter of 2007, as output grew 4.0 percent and hours of all persons
increased 2.1 percent (seasonally adjusted annual rates). Productivity grew
4.7 percent in the durable goods sector, reflecting a 6.8-percent increase in
output and 2.0-percent rise in hours. In nondurable goods, productivity fell
1.4 percent when output grew 0.8 percent but hours grew faster, 2.3 percent
(tables 3, 4, and 5).

The hourly compensation of all manufacturing workers increased 3.4
percent during the second quarter of 2007, reflecting increases in hourly
compensation of 1.7 percent in durable goods industries and 6.8 percent in
the nondurable goods sector. Real hourly compensation in the total
manufacturing sector fell 2.4 percent in the second quarter after consumer
prices were taken into account. Revised results for the first quarter of
2007 show that hourly compensation had increased 8.9 percent and real hourly
compensation had increased 4.8 percent in total manufacturing.

Unit labor costs in manufacturing increased 1.6 percent in the second
quarter of 2007 following a revised first-quarter increase of 7.0 percent.
Unit labor costs fell 2.8 percent in durable goods and rose 8.4 percent in
nondurable goods in the second quarter.

Nonfinancial corporations

Preliminary second-quarter 2007 measures of productivity and costs were
reported today for nonfinancial corporations (tables B and 6). Productivity
increased 3.5 percent during the second quarter, reflecting 4.6-percent
growth in output and a 1.0-percent rise in employee hours (seasonally
adjusted annual rates). In the first quarter of 2007, output per hour rose
0.7 percent, output increased 0.9 percent, and employee hours rose 0.2
percent (as revised). Nonfinancial corporations include all corporations
doing business in the United States except those classified as depository
institutions, nondepository institutions, security and commodity brokers,
insurance carriers, regulated investment offices, small business investment
offices, and real estate investment trusts.

——————————————————————————
Table B. Nonfinancial corporations: Preliminary second-quarter 2007
productivity and cost measures
(Seasonally adjusted annual rates)
——————————————————————————
Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
Period tivity Output Hours sation sation costs profits deflator
——————————————————————————
Percent change from preceding quarter

2007 II 3.5 4.6 1.0 4.7 -1.2 1.1 8.6 1.5
——————————————————————————
Percent change from same quarter a year ago

2007 II 2.1 3.2 1.1 5.6 2.8 3.4 -4.4 1.7
——————————————————————————

Hourly compensation rose 4.7 percent in the second quarter of 2007,
following a 4.5 percent gain in the first quarter (as revised). When the
rise in consumer prices is taken into account, real hourly compensation fell
1.2 percent in the second quarter after increasing 0.6 percent one quarter
earlier. Unit labor costs for nonfinancial corporations increased 1.1
percent in the second quarter of 2007.

Unit profits increased 8.6 percent in second quarter 2007, following an
11.8-percent increase in the first quarter. The implicit price deflator for
nonfinancial corporate output rose 1.5 percent in the second quarter.

Revised Measures

Current and previous measures for the second quarter of 2007 for the
business, nonfarm business, and manufacturing sectors are compared in table
C. The quarterly movements differ from those reported on Aug. 7 based on
information then available. In the business sector, productivity was revised
up in the second quarter as output was revised up and hours increased
slightly less than previously reported. In the nonfarm business sector,
productivity also was revised up in the second quarter, as output was revised
up while hours were unchanged. In both of these sectors, upward revisions to
productivity were larger than those to hourly compensation, so unit labor
costs were revised down in the second quarter. In the manufacturing sector,
an upward revision to productivity in the second quarter resulted when output
posted a larger upward revision than hours. An upward revision to
manufacturing hourly compensation was larger than the revision to
productivity, resulting in a faster rise in unit labor costs than was
previously reported.

——————————————————————————
Table C. Business, nonfarm business, and manufacturing: Previous and revised
productivity and related measures
(Quarterly percent changes at seasonally adjusted annual rates)
——————————————————————————
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
——————————————————————————
Second quarter 2007

Business:
Previous 2.6 3.8 1.1 5.3 -0.7 2.6
Revised 3.5 4.6 1.0 5.5 -0.5 1.9
Nonfarm business:
Previous 1.8 4.2 2.3 3.9 -2.0 2.1
Revised 2.6 5.0 2.3 4.1 -1.8 1.4
Manufacturing:
Previous 1.6 3.5 1.8 2.8 -3.0 1.2
Revised 1.8 4.0 2.1 3.4 -2.4 1.6

First quarter 2007

Business:
Previous 0.2 0.2 0.0 3.3 -0.5 3.1
Revised 0.2 0.2 0.0 5.5 1.6 5.3
Nonfarm business:
Previous 0.7 0.3 -0.3 3.7 -0.2 3.0
Revised 0.7 0.3 -0.3 5.9 2.0 5.2
Manufacturing:
Previous 1.7 0.9 -0.8 6.8 2.8 5.0
Revised 1.7 0.9 -0.8 8.9 4.8 7.0
——————————————————————————

Hourly compensation growth in the first quarter also was revised to reflect
new estimates of compensation. In all of the major sectors, hourly
compensation grew faster in the first quarter than was reported on Aug. 7.
As a result, unit labor costs in these sectors increased more than in
preliminary estimates.

Revised Measures: Nonfinancial Corporations

Data for the first quarter of 2007 were revised for the nonfinancial
corporate sector. Productivity was revised up along with output; hours were
not revised. Hourly compensation was revised up more than productivity,
causing unit labor costs to increase 3.8 percent rather than 3.6 percent, as
reported on August 7.

——————————————————————————
Table D. Nonfinancial corporations: Previous and revised productivity and
cost measures
(Quarterly percent changes at seasonally adjusted annual rates)
——————————————————————————
Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
tivity Output Hours sation sation costs profits deflator
——————————————————————————
First quarter 2007

Previous 0.2 0.4 0.2 3.8 -0.1 3.6 12.4 3.9
Revised 0.7 0.9 0.2 4.5 0.6 3.8 11.8 3.9
——————————————————————————

Productivity and Costs 2nd Quarter 2007 Revised [PDF file]

Productivity and Costs 2nd Quarter 2007 Revised [text file]

Source: Bureau of Labor Statistics