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Second Quarter 1995
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 1995. The revised seasonally-adjusted annual rates of productivity change in the second quarter were:
4.7 percent in the business sector, and 4.8 percent in the nonfarm business sector.
In both sectors, productivity rose from the first to the second quarter as output grew while hours of all persons employed fell.
In manufacturing, the revised productivity changes in the second quarter were:
2.6 percent in manufacturing, 0.7 percent in durable goods manufacturing, and 5.3 percent in nondurable goods manufacturing.
The productivity advance in manufacturing reflected a decrease in output combined with a larger decrease in the hours of all persons. Output and hours in manufacturing, which includes about 20 percent of U.S. business-sector employment, tend to vary more from quarter to quarter than in the more 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 August 8 are shown in table C.
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 6).
Business
From the first quarter to the second quarter of 1995, business sector productivity increased at a 4.7 percent annual rate. Business sector output rose 2.1 percent, and hours of all persons engaged in the sector fell 2.4 percent, reflecting a 0.2 percent increase in employment and a 2.7 percent drop in average weekly hours at work. During the first quarter of 1995, productivity had risen 2.1 percent, as output and hours of all persons employed rose 4.3 and 2.2 percent, respectively (table 1).
Hourly compensation increased 3.7 percent during the second quarter of 1995, about the same as the 3.8 percent rise in the first quarter. This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in the Consumer Price Index for All Urban Consumers (CPI-U), increased at a 0.3 percent annual rate in the second quarter; it had risen 0.7 percent in the first quarter of 1995.
Unit labor costs, which reflect changes in hourly compensation and productivity, fell at a 1.0 percent annual rate during the second quarter and have fallen in three of the last four quarters. The implicit price deflator for the business sector, which incorporates changes in both unit labor costs and unit nonlabor payments, increased 1.2 percent in the second quarter and 1.4 percent during the first quarter of 1995.
Nonfarm business
Productivity rose 4.8 percent in the nonfarm business sector during the second quarter of 1995, the largest increase since a 7.0 percent increase was posted in the first quarter of 1986. Output increased at a 2.3 percent rate in the second quarter, and hours of all persons fell 2.3 percent. This drop in hours of all persons reflected a 0.3 percent increase in employment and a 2.6 percent decline in average weekly hours. During the first quarter of 1995, productivity had increased 2.5 percent in the nonfarm business sector, reflecting gains of 4.5 percent in output and 2.0 percent in hours (table 2).
Hourly compensation increased at a 3.5 percent annual rate in the second quarter, compared with a 4.1 percent increase one quarter earlier. When the rise in the CPI-U is taken into account, real hourly compensation rose 0.1 percent in the second quarter.
Unit labor costs fell 1.2 percent, compared with a 1.6 percent rise during the first quarter of 1995. The implicit price deflator for nonfarm business output rose 1.1 percent in the second quarter and 1.3 percent one quarter earlier.
Manufacturing
Productivity increased at a 2.6 percent seasonally adjusted annual rate in manufacturing in the second quarter of 1995, as output fell 3.4 percent and hours of all persons decreased 5.9 percent (seasonally adjusted annual rates). Productivity grew strongly in the nondurable goods industries, 5.3 percent, while posting a smaller gain among durable goods producers, 0.7 percent. In both the durable and nondurable goods subsectors, productivity increases occurred because the hours of persons engaged in the sector fell more than output (tables 4 and 5).
Hourly compensation of all manufacturing workers increased 0.4 percent during the second quarter, compared with a 4.7 percent gain during the January- March period. In durable goods industries, hourly compensation fell 2.6 percent; a 5.2 percent increase occurred in nondurable goods industries. Real hourly compensation in the manufacturing sector fell 2.9 percent in the second quarter when the increase in consumer prices is taken into account. During the first quarter, real hourly compensation had gone up 1.6 percent (seasonally adjusted annual rates).
Unit labor costs fell at a 2.1 percent annual rate in the second quarter of 1995, the seventh decline in the last 10 quarters. Unit labor costs fell 3.3 percent in durable goods industries but only 0.2 percent in nondurable goods industries.
Nonfinancial corporations
Preliminary second-quarter 1995 measures of productivity and costs also were announced today for nonfinancial corporations (tables B and 6). Productivity increased 5.4 percent in the second quarter, as output rose 3.5 percent and hours decreased 1.8 percent (seasonally adjusted annual rates). The productivity increase was the largest since a 5.4 percent increase also was posted in the first quarter of 1986. A 0.9 percent employment increase, combined with a 2.6 percent decline in average weekly hours, caused nonfinancial corporate hours to drop for the first time since the first quarter of 1992 (when they declined 0.2 percent). In the first quarter of 1995, productivity had increased 1.7 percent in nonfinancial corporations, as output increased 4.4 percent and employee hours rose 2.7 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 rose 3.3 percent in the second quarter; it had risen 3.4 percent in the first quarter of 1995. When the rise in the CPI-U is taken into account, real hourly compensation in the second quarter declined 0.1 percent after increasing 0.4 percent in the previous quarter (table 6).
Unit labor costs for nonfinancial corporations fell 2.0 percent in the second quarter, compared with a 1.8 percent rise in the first quarter of 1995. Unit nonlabor costs rose 2.1 percent, and unit profits rose 6.6 percent. During the first quarter, unit nonlabor costs had increased 0.5 percent while unit profits fell 10.4 percent (annual rates). The implicit price deflator for nonfinancial corporate output fell 0.1 percent in the second quarter and rose 0.1 percent in the first quarter.
Revised Measures
Current and previous measures for the second quarter of 1995 for the business, nonfarm business, and manufacturing sectors are compared in table C. The quarterly movements differ from those reported on August 8 based on information then available. In the business and nonfarm business sectors, the growth in output (which is based on information from the national income and product accounts prepared by the U.S. Department of Commerce) and productivity were revised upward. Manufacturing output (which is based on information from the Federal Reserve Board) and productivity also were revised up.
Source: U.S. Bureau of Labor Statistics · Original release Sep 7, 1995.
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