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PRODUCTIVITY AND COSTS
Second Quarter 2008, 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 second quarter of 2008. The seasonally adjusted annual
rates of productivity change in the second quarter were:
2.3 percent in the business sector and
2.2 percent in the nonfarm business sector.
Productivity gains in both sectors reflected output increases and small
declines in hours worked.
In manufacturing, the preliminary productivity changes in the second
quarter were:
-1.4 percent in manufacturing,
-3.5 percent in durable goods manufacturing, and
0.7 percent in nondurable goods manufacturing.
Productivity in the total manufacturing sector fell 1.4 percent in the
second quarter of 2008, as both output and hours worked decreased. The
decline in productivity was concentrated in the durable goods subsector.
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 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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Data in this release reflect the regular multi-year revision to the national
income and product accounts released by the Bureau of Economic Analysis of
the U.S. Department of Commerce on July 31. See Revised Measures.
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Table A. Productivity and costs: Preliminary second-quarter 2008 measures
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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Percent change from preceding quarter
Business 2.3 1.5 -0.7 3.8 -1.2 1.5
Nonfarm business 2.2 1.7 -0.5 3.6 -1.4 1.3
Manufacturing -1.4 -3.5 -2.0 4.6 -0.4 6.1
Durable -3.5 -5.5 -2.1 5.0 0.0 8.8
Nondurable 0.7 -1.3 -2.0 3.8 -1.2 3.0
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Percent change from same quarter a year ago
Business 2.7 1.7 -0.9 4.2 -0.1 1.5
Nonfarm business 2.8 1.8 -1.0 4.3 0.1 1.5
Manufacturing 2.6 -0.1 -2.7 4.6 0.3 1.9
Durable 2.7 0.2 -2.5 4.3 0.0 1.6
Nondurable 2.6 -0.5 -3.1 5.0 0.7 2.3
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Business
Business sector output per hour increased 2.3 percent from the first
quarter to the second quarter of 2008, as output increased 1.5 percent and
hours of all persons engaged in the sector--employees, proprietors, and
unpaid family workers--fell 0.7 percent (seasonally adjusted annual rates).
The increase in output was greater and the decline in hours was smaller than
in the first quarter, when productivity rose 2.2 percent, as revised (tables
A, B, and 1). Historically, from 2000 through 2007, business sector
productivity had grown at an average annual rate of 2.5 percent.
Hourly compensation increased 3.8 percent in the second quarter of 2008,
less than the 5.0 percent gain in the first quarter. This measure of
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 1.2 percent during the second
quarter of 2008 as consumer prices increased 5.0 percent (seasonally adjusted
annual rates).
Unit labor costs, which reflect changes in both hourly compensation and
productivity, increased at an annual rate of 1.5 percent during the second
quarter of 2008. The implicit price deflator for the business sector, which
reflects changes in both unit labor costs and unit nonlabor payments,
increased 0.6 percent in the second quarter of 2008 and 2.0 percent one
quarter earlier.
Nonfarm Business
Productivity increased 2.2 percent in the nonfarm business sector during
the second quarter of 2008 as output grew 1.7 percent and hours at work
declined 0.5 percent. Revised results for first-quarter 2008 show that
productivity increased 2.6 percent, output rose 0.9 percent, and hours fell
1.6 percent (tables A, B and 2). Nonfarm business output per hour had
increased at an average annual rate of 2.5 percent from 2000 through 2007.
Hourly compensation in the nonfarm business sector increased 3.6 percent
in the second quarter of 2008, compared to a 5.2 percent rise one quarter
earlier. When the 5.0 percent annual rate of increase in consumer prices is
taken into account, real hourly compensation fell 1.4 percent in the second
quarter of 2008. This measure rose 0.8 percent in the first quarter.
Unit labor costs increased 1.3 percent in the second quarter of 2008 and
1.5 percent over the last four quarters. The implicit price deflator for
nonfarm business output rose 0.5 percent in the second quarter of 2008 and
2.1 percent in the first quarter.
Manufacturing
Productivity decreased 1.4 percent in manufacturing in the second
quarter, as output fell 3.5 percent and hours of all persons declined 2.0
percent. In durable goods industries, productivity fell 3.5 percent--the
largest drop since fourth-quarter 1990, when output per hour fell 4.6
percent. In nondurable goods industries, productivity grew 0.7 percent in
the second quarter as hours fell faster than output (tables A, 3, 4, 5). In
total manufacturing, output per hour increased 2.6 percent from the second
quarter of 2007 to the second quarter of 2008; output declined slightly over
the four quarters, 0.1 percent, whereas hours fell by 2.7 percent. For the
entire 2000-2007 period manufacturing productivity increased at a 3.7 percent
annual rate.
During the second quarter of 2008, hourly compensation grew 4.6 percent
in total manufacturing, 5.0 percent in durable manufacturing and 3.8 percent
in nondurable manufacturing (seasonally adjusted annual rates).
Manufacturing hourly compensation also increased 4.6 percent over the last
four quarters. When the increase in consumer prices is taken into account,
the real hourly compensation of all manufacturing workers fell 0.4 percent in
the second quarter.
Unit labor costs in manufacturing jumped 6.1 percent in the second
quarter of 2008. The growth in unit labor costs from the second quarter of
2007 was 1.9 percent, reversing the 0.8 percent decline from the first
quarter of 2007 to the first quarter of 2008. The 2000-2007 long-term
average annual rate of growth for unit labor costs is 0.3 percent.
Revised Measures
Output data for the business and nonfarm business sectors, and the
compensation series for all sectors, incorporate the revised national income
and product accounts (NIPA) data released by the Bureau of Economic Analysis,
U.S. Department of Commerce, on July 31. Revisions for these sectors go back
to the first quarter of 2005. Table B presents previous and revised
productivity and related measures for the major sectors: business, nonfarm
business and manufacturing, for the first quarter of 2008 and for the years
2007 through 2005.
In the first quarter of 2008, output and hours were revised up in all
three sectors. In both the business and manufacturing sectors the revisions
to hours were greater than to output, resulting in downward revisions to
productivity. In nonfarm business the revision to hours offset the revision
to output, and productivity increased at the same 2.6 percent rate reported
June 4. In business and nonfarm business there were small upward revisions
to hourly compensation and unit labor costs. In manufacturing, hourly
compensation growth was revised down much more than productivity; the
downward revision to unit labor costs was due solely to the downward revision
to hourly compensation.
Growth in output and output per hour were revised down in the business
and nonfarm business sectors in 2007 and 2005, and were little changed in
2006. In both sectors, the average annual rate of productivity growth from
2004 to 2007 was 1.4 percent, compared to 3.3 percent from 2000 to 2004.
Manufacturing sector output per hour was not revised historically.
For the year 2007, hourly compensation was revised down in all three
sectors, leading to downward revisions to unit labor costs. For 2006,
manufacturing hourly compensation and unit labor costs were revised up; for
2005 these same measures were revised down. Revised quarterly series appear
in tables 1-5 and appendix tables 1-5. The full historical revisions
including the quarterly measures can be found on the productivity and costs
home page http://www.bls.gov/lpc/#data.
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Table B. Previous and revised productivity and related measures
Percent changes at annual rates
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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First Quarter 2008
Business:
Previous 2.4 0.6 -1.7 4.8 0.4 2.3
Revised 2.2 0.7 -1.5 5.0 0.6 2.7
Nonfarm business:
Previous 2.6 0.7 -1.8 4.9 0.6 2.2
Revised 2.6 0.9 -1.6 5.2 0.8 2.5
Manufacturing:
Previous 3.6 -1.2 -4.7 7.9 3.5 4.2
Revised 3.4 -0.8 -4.0 6.2 1.8 2.8
Annual average 2007
Business:
Previous 1.9 2.3 0.4 5.1 2.2 3.2
Revised 1.5 2.0 0.5 4.2 1.3 2.6
Nonfarm business:
Previous 1.8 2.3 0.5 5.1 2.2 3.2
Revised 1.4 2.0 0.5 4.1 1.3 2.7
Manufacturing:
Previous 3.4 1.6 -1.7 5.6 2.7 2.1
Revised 3.4 1.6 -1.7 3.5 0.7 0.1
Annual average 2006
Business:
Previous 1.0 3.1 2.1 4.0 0.7 2.9
Revised 0.9 3.0 2.1 3.8 0.5 2.9
Nonfarm business:
Previous 1.0 3.2 2.2 3.9 0.6 2.9
Revised 1.0 3.2 2.2 3.8 0.5 2.8
Manufacturing:
Previous 1.1 1.8 0.8 2.8 -0.5 1.7
Revised 1.1 1.8 0.8 4.1 0.8 3.0
Annual average 2005
Business:
Previous 2.0 3.6 1.6 4.0 0.6 2.0
Revised 1.8 3.5 1.6 4.0 0.6 2.1
Nonfarm business:
Previous 1.9 3.6 1.7 4.0 0.6 2.1
Revised 1.7 3.4 1.7 4.0 0.6 2.2
Manufacturing:
Previous 4.9 3.7 -1.2 4.2 0.9 -0.6
Revised 4.9 3.7 -1.2 1.9 -1.4 -2.8
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Revised Measures: Nonfinancial Corporations
Output, based on the income side of the NIPA for nonfinancial
corporations, was revised down sharply in the first quarter to -0.1 percent,
leading to a corresponding downward revision to productivity (table C). Unit
labor costs were revised up as the revision to productivity was greater than
a downward revision to hourly compensation. Unit profits fell 14.7 percent,
rather than 1.5 percent as reported June 4. From the first quarter of 2007
through the first quarter of 2008, productivity increased 2.1 percent (table
6). Productivity had increased at an average annual rate of 2.7 percent from
2000 through 2007.
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Table C. Nonfinancial corporations: Previous and revised productivity and
cost measures
Percent changes at annual rates
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Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
tivity Output Hours sation sation costs profits deflator
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First quarter 2008
Previous 4.6 3.2 -1.4 5.9 1.5 1.2 -1.5 0.5
Revised 1.0 -0.1 -1.1 4.9 0.6 3.9 -14.7 0.5
Annual average 2007
Previous 1.5 2.2 0.7 4.8 1.9 3.2 -5.8 1.6
Revised 0.9 1.6 0.7 4.1 1.3 3.2 -9.0 1.5
Annual average 2006
Previous 0.7 3.0 2.2 3.5 0.2 2.8 5.5 2.8
Revised 2.1 4.4 2.2 3.6 0.3 1.5 12.2 2.8
Annual average 2005
Previous 1.4 3.1 1.7 3.8 0.4 2.4 6.6 2.9
Revised 2.6 4.3 1.7 3.7 0.4 1.1 12.7 2.9
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Next release date
The next release of Productivity and Costs is scheduled for 8:30 a.m.
EDT, Thursday, Sept. 4, 2008. Revised second-quarter measures for business,
nonfarm business, and manufacturing will be released at that time, along with
preliminary measures for nonfinancial corporations.
Bureau of Labor Statistics
