Productivity and Employment Costs at a Glance
- Business Sector Productivity: Up 5.3%
- Nonfarm Business Productivity: Up 4.9%
- Manufacturing Productivity: Up 4.6%
- Durable Goods Manufacturing Productivity: Up 5.7%
- Nondurable Goods Manufacturing Productivity: Up 4.1%
- Business Unit Labor Costs: Down 0.2%
Technorati Tags: productivity, employment costs
PRODUCTIVITY AND COSTS
Third Quarter 2007, preliminary
The Bureau of Labor Statistics of the U.S. Department of Labor today
reported preliminary productivity data–as measured by output per hour of
all persons–for the third quarter of 2007. The preliminary seasonally-
adjusted annual rates of productivity growth in the third quarter were:
5.3 percent in the business sector and
4.9 percent in the nonfarm business sector.
In both sectors, the productivity gains were the largest since the third
quarter of 2003, and reflected 4.3 percent per year growth in output combined
with small declines in hours worked (See table A).
In manufacturing, productivity increases in the third quarter were:
4.6 percent in manufacturing,
5.7 percent in durable goods manufacturing, and
4.1 percent in nondurable goods manufacturing.
Manufacturing productivity grew faster in the third quarter than it had one
quarter earlier. In the second quarter of 2007, a 2.4 percent gain in
overall manufacturing productivity reflected a 5.2 percent increase in
durable goods output per hour and a 0.8 percent decline in nondurable goods
productivity, as 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. Third-quarter measures are summarized in table A and appear in
detail in tables 1 through 5.
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.
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Table A. Productivity and costs: Preliminary third-quarter 2007 measures
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
——————————————————————————
Percent change from preceding quarter
Business 5.3 4.3 -0.9 5.1 3.1 -0.2
Nonfarm business 4.9 4.3 -0.5 4.7 2.7 -0.2
Manufacturing 4.6 4.3 -0.4 2.3 0.4 -2.2
Durable 5.7 6.6 0.8 1.2 -0.7 -4.3
Nondurable 4.1 1.6 -2.4 4.3 2.4 0.2
Percent change from same quarter a year ago
Business 2.5 2.8 0.3 6.9 4.4 4.3
Nonfarm business 2.4 2.9 0.5 6.7 4.3 4.3
Manufacturing 2.7 1.9 -0.8 7.2 4.7 4.4
Durable 3.8 2.9 -0.8 6.9 4.4 3.0
Nondurable 1.3 0.6 -0.7 7.7 5.2 6.2
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Business
From the second quarter to the third quarter of 2007, labor productivity
in the business sector increased 5.3 percent, the largest gain since the
third quarter of 2003, when it increased 9.1 percent (seasonally adjusted
annual rates). Output per hour had increased 3.6 percent in the second
quarter, as revised. Output grew at about the same rate in the second and
third quarters of 2007–4.4 percent and 4.3 percent, respectively–but
productivity grew faster in the third quarter because hours fell 0.9 percent,
compared to a 0.8 percent increase one quarter earlier (tables B and 1). The
third-quarter hours decline was the first in the business sector since the
second quarter of 2003, when hours fell 2.2 percent. From the third quarter
of 2006 to the third quarter of 2007, productivity increased 2.5 percent,
matching the trend rate of productivity growth for the 1947-2006 period
covered by the measure.
Hourly compensation in the business sector increased at an annual rate
of 5.1 percent during the third quarter of 2007, slower than the 5.8-percent
rise in the second quarter (as revised). This measure includes wages and
salaries, supplements, employer contributions to employee benefit plans, and
taxes. Real hourly compensation, which takes into account changes in
consumer prices, rose by 3.1 percent in the third quarter of 2007.
Changes in unit labor costs are approximately equal to changes in hourly
compensation less changes in productivity. In the third quarter of 2007,
unit labor costs declined 0.2 percent as hourly compensation increased 5.1
percent and productivity increased more, 5.3 percent. Unit labor costs had
increased 2.2 percent in the second quarter, and 5.3 percent in the first
quarter, of 2007. The implicit price deflator for business sector output was
unchanged in the third quarter of 2007 following a 2.2 percent increase in
the second quarter.
Nonfarm business
Productivity grew 4.9 percent in the third quarter of 2007 as output
grew 4.3 percent and hours worked declined 0.5 percent. After revision,
output per hour increased 2.2 percent in the second quarter, as output growth
of 4.2 percent was partially offset by a 2.0 percent increase in hours
worked (table 2). The third-quarter productivity increase was the largest
since a 10.4 percent increase in the third quarter of 2003. Nonfarm business
productivity increased 2.4 percent over the last four quarters, more than the
1.0 percent increase in calendar year 2006, and approaching the 2.7 percent
average from 2000 to 2005.
Nonfarm hourly compensation increased at a 4.7 percent annual rate in
the third quarter of 2007. When the rise in consumer prices is taken into
account, real hourly compensation rose 2.7 percent during the third quarter,
after falling 1.5 percent in the second quarter.
Unit labor costs in the nonfarm business sector edged down 0.2 percent
during the third quarter of 2007, after rising 2.2 percent in the second
quarter. The implicit price deflator for nonfarm business output also
declined in the third quarter of 2007, by 0.4 percent.
Manufacturing
Productivity increased 4.6 percent in manufacturing in the third quarter
of 2007; output grew 4.3 percent and hours of all persons fell 0.4 percent
(seasonally adjusted annual rates). In durable goods industries,
productivity increased 5.7 percent on the strength of 6.6 percent output
growth that was partially offset by a 0.8 percent rise in hours worked.
Productivity increased 4.1 percent in nondurable goods in the third quarter,
but in this sector a 2.4 percent decrease in hours contributed more to the
productivity gain than a 1.6 percent increase in output (tables 3, 4, and 5).
The 2.7 percent increase in total manufacturing productivity from the third
quarter of 2006 to the third quarter of 2007 is smaller than the 4.2 percent
average annual rate of productivity growth from 2000 to 2006.
The hourly compensation of manufacturing workers increased 2.3 percent
during the third quarter of 2007, with a 1.2 percent gain in the durable
goods subsector and a 4.3 percent gain in nondurable goods industries.
Hourly compensation in total manufacturing had increased 3.7 percent in the
second quarter. When the increase in consumer prices is taken into account,
real hourly compensation increased 0.4 percent in the third quarter.
Unit labor costs in manufacturing fell 2.2 percent in the third quarter
of 2007, reflecting a decline of 4.3 percent in durable goods industries and
a 0.2 percent increase in nondurable goods industries. In the overall
manufacturing sector, these costs had increased 1.3 percent in the previous
quarter. Unit labor costs have increased 4.4 percent since the third quarter
of 2006–the largest four-quarter increase since the period ending in the
fourth quarter of 2000, when they increased 5.2 percent.
Revised Measures
Revised and previous measures for the second quarter of 2007 for the
business, nonfarm business, and manufacturing sectors are compared in table
B. In the business sector, similar downward revisions to output and hours
resulted in a revised productivity increase of 3.6 percent, about the same as
reported Sept. 6. In the nonfarm business sector, output was revised down by
more than hours, and productivity growth was revised down to 2.2 percent. In
the manufacturing sector, productivity was revised up due to an upward
revision to output and a small downward revision to hours.
——————————————————————————
Table B. Previous and revised productivity and related measures
Quarterly percent change at seasonally adjusted annual rate
——————————————————————————
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
——————————————————————————-
Second quarter 2007
Business:
Previous 3.5 4.6 1.0 5.5 -0.5 1.9
Revised 3.6 4.4 0.8 5.8 -0.2 2.2
Nonfarm business:
Previous 2.6 5.0 2.3 4.1 -1.8 1.4
Revised 2.2 4.2 2.0 4.4 -1.5 2.2
Manufacturing:
Previous 1.8 4.0 2.1 3.4 -2.4 1.6
Revised 2.4 4.4 2.0 3.7 -2.2 1.3
——————————————————————————-
In all three sectors, hourly compensation was revised up by 0.3
percentage point. In the business and nonfarm business sectors, unit labor
costs rose more than previously reported. Because manufacturing output per
hour was revised up by more than compensation per hour, unit labor costs were
revised downwards.
Hours worked during the second quarter in all sectors now reflect more
current data on the ratios of hours worked to hours paid in private nonfarm
businesses.
Revised measures: Nonfinancial Corporations
Productivity and cost measures for nonfinancial corporations for the
second quarter of 2007 also were revised to incorporate more recent
information than was available on Sept. 6.
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Table C. 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
——————————————————————————
Second quarter 2007
Previous 3.5 4.6 1.0 4.7 -1.2 1.1 8.6 1.5
Revised 3.8 4.6 0.8 4.9 -1.0 1.1 8.6 1.4
——————————————————————————
Productivity rose 3.8 percent in the second quarter of 2007, compared
with the preliminary estimate of a 3.5 percent increase. This was the result
of a downward revision in hours growth, from 1.0 percent to 0.8 percent;
output growth was unchanged. Unit labor costs were not revised, as an upward
revision to hourly compensation was offset by the upward revision to
productivity (tables C and 6).
Productivity and Costs 3rd Quarter 2007 [PDF]
Productivity and Costs 3rd Quarter 2007 [Text]
Source: Bureau of Labor Statistics
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