1995 First Quarter (Revised) Productivity and Costs

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

First Quarter 1995

The June 14, 1995, Productivity and Costs news release contained some incorrect data for manufacturing and durable and nondurable manufacturing. Revised manufacturing output measures based on 1993 gross product originating data were incompletely incorporated into the release. Data in those industries for 1993, 1994, and 1995 are corrected in this release. Except for the growth rate of manufacturing output for the first quarter of 1995 being reported as 5.0 percent instead of the correct figure of 5.1 percent in tables A and D, all errors were confined to tables 3-5. All data for business, nonfarm business, and nonfinancial corporations in the June 14 release were correct.

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 first quarter of 1995. The revised seasonally-adjusted annual rates of productivity change in the first quarter were:

2.2 percent in the business sector, and 2.7 percent in the nonfarm business sector.

In both sectors, productivity and output gains were smaller than in the fourth quarter of 1994.

In manufacturing, productivity changes in the first quarter were:

3.4 percent in manufacturing, 4.2 percent in durable goods manufacturing, and 2.1 percent in nondurable goods manufacturing.

Growth in manufacturing productivity in the first quarter was only slightly less than in the fourth quarter of 1994, although increases in output and hours were much lower. Output and hours in manufacturing, which includes about 20 percent of U.S. business-sector employment, tend to change more from quarter to quarter than in the business and nonfarm business sectors. First- quarter measures are summarized in table A and appear in detail in tables 1 through 5.

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 independent indexes of industrial production prepared by the Board of Governors of the Federal Reserve System. See Technical Notes for further information on data sources (page 7).

In nonfinancial corporations, productivity rose 1.8 percent in the first quarter of 1995, reflecting increases of 4.5 percent in output and 2.7 percent in employee hours (tables B and 6).

Business

From the fourth quarter of 1994 to the first quarter of 1995, business productivity increased at a 2.2 percent annual rate. Output rose 4.4 percent, and hours of all persons engaged in the sector increased 2.2 percent (seasonally adjusted annual rates). During the fourth quarter of 1994, productivity had gone up 4.3 percent (as revised), and output and hours rose 7.8 and 3.3 percent, respectively (table 1).

Hourly compensation increased 4.0 percent during the first quarter of 1995, similar to the 3.6 percent rise in the fourth quarter of 1994. This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Unit labor costs, which reflect changes in hourly compensation and productivity, increased at a 1.8 percent annual rate during the first quarter. These costs had declined in the previous two quarters, 0.7 percent in the fourth quarter of 1994 and 0.1 percent in the third quarter.

Real hourly compensation, which takes into account changes in the Consumer Price Index for All Urban Consumers (CPI-U), increased at a 0.9 percent annual rate in the first quarter; it had risen 1.3 percent in the fourth quarter of 1994.

The implicit price deflator for business output, which reflects changes in unit labor costs and unit nonlabor payments, increased 1.6 percent in the first quarter, compared with a 0.7 percent increase during the fourth quarter of 1994.

Nonfarm business

Productivity rose 2.7 percent in nonfarm businesses during the first quarter of 1995 as output rose 4.7 percent and hours of all persons increased 2.0 percent. During the fourth quarter of 1994, productivity rose 4.3 percent in nonfarm businesses, reflecting gains of 7.7 percent in output and 3.3 percent in hours (table 2).

Hourly compensation increased at a 4.3 percent annual rate in the first quarter, compared with a 3.8 percent increase one quarter earlier. When the rise in the CPI-U is taken into account, real hourly compensation rose 1.2, about the same as the 1.5 percent gain recorded in the fourth quarter of 1994. Unit labor costs rose 1.6 percent, after having dropped 0.4 percent the previous quarter.

The implicit price deflator for nonfarm business output rose 1.5 percent in the first quarter, compared with a 0.5 percent rise one quarter earlier.

Manufacturing

Productivity increased 3.4 percent in manufacturing in the first quarter of 1995, as output rose 5.1 percent and hours of all persons increased 1.6 percent (seasonally adjusted annual rates). Productivity, output, and hours all showed larger increases in durable goods industries than in nondurables (tables 4 and 5).

Hourly compensation of all manufacturing workers increased 4.7 percent during the first quarter, compared with an increase of 3.8 percent in the previous quarter. Real hourly compensation rose 1.6 percent when the increase in consumer prices is taken into account.

Unit labor costs rose at a 1.3 percent annual rate in the first quarter of 1995, compared with an increase of 0.1 percent during the fourth quarter of 1994.

Percent change from preceding year

Nonfinancial corporations

Preliminary first-quarter 1995 measures of productivity and costs also were announced today for nonfinancial corporations (tables B and 6). Productivity rose 1.8 percent in the first quarter, output 4.5 percent, and hours 2.7 percent (seasonally adjusted annual rates). In the fourth quarter of 1994, productivity had increased 3.4 percent. Nonfinancial corporations include all corporations doing business in the United States, except banks, stock and commodity brokers, and finance and insurance agencies.

Hourly compensation increased 3.8 percent, or 0.8 percent when the rise in the CPI-U is taken into account (table 6).

Unit labor costs for nonfinancial corporations increased 2.0 percent in the first quarter, the largest increase since the first quarter of 1993 when they had increased 4.4 percent. Unit nonlabor costs rose 0.8 percent, and unit profits fell 9.0 percent. During the fourth quarter of 1994, unit labor costs fell 0.3 percent and unit nonlabor costs 1.1 percent, while unit profits rose 2.5 percent (annual rates). The implicit price deflator for nonfinancial corporate output rose 0.4 percent in the first quarter.

REVISED MEASURES

Current and previous measures for the first quarter of 1995 for business, nonfarm business, and manufacturing are compared in table D. The quarterly movements differ from those reported on May 9, based on information then available.

With this release of Productivity and Costs, labor input measures have been revised to reflect the regular annual benchmarking of employment levels derived from the monthly Current Employment Statistics survey to more comprehensive counts from unemployment insurance records. Revised seasonal adjustment factors computed for labor input measures also affected measures that depend on these series. Measures of output for the manufacturing sector also were revised to incorporate new data on real gross product originating (GPO) for 1993. See tables 1-6 and appendix tables 1-6 for the revised data for the years beginning with 1990.

The BLS plans to switch to annually-weighted output indexes for computations underlying its regular Productivity and Costs news releases, beginning in late 1995 or early 1996. These output indexes are designed to eliminate a source of bias in aggregate measures and to reduce the size of future historical revisions to these measures. A statement containing information about these measures can be obtained from the Division of Productivity Research (202-606-5606).