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Second Quarter 1996
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 1996. The revised seasonally-adjusted annual rates of productivity change in the second quarter were:
1.1 percent in the business sector, and 0.5 percent in the nonfarm business sector.
In both sectors, productivity growth was slower than in the first quarter of 1996, when output per hour increased at annual rates of 2.0 percent in the business sector and 1.8 percent in the nonfarm business sector. The modest second-quarter increases in productivity resulted from strong growth in both output and hours.
In manufacturing, the revised productivity changes in the second quarter were:
2.2 percent in manufacturing, 3.9 percent in durable goods manufacturing, and 0.5 percent in nondurable goods manufacturing.
The second-quarter increase in manufacturing productivity was concentrated in durable goods industries, where a 3.9 percent productivity gain reflected a 10.9 percent increase in output and a 6.8 percent rise in hours worked in that subsector (seasonally adjusted annual rates). Output and hours in manufacturing, which includes about 18 percent of U.S. business-sector employment, tend to vary more from quarter to quarter than data for 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 14 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 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 1996, business sector productivity increased at a 1.1 percent annual rate. Business sector output rose 5.2 percent and hours of all persons rose 4.0 percent. These were the largest increases in both series since the second quarter of 1994, when output and hours grew 6.9 percent and 6.3 percent, respectively. The hours increase reflected a 2.4 percent increase in employment and a 1.6 percent rise in average weekly hours. During the first quarter of 1996, productivity had increased 2.0 percent, as output grew 3.0 percent and hours of all persons engaged in the sector rose 1.0 percent (table 1).
Hourly compensation increased 4.0 percent in the second quarter of 1996, following a 3.0 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 0.2 percent annual rate in the second quarter of 1996 after falling 0.2 percent in the first quarter.
Unit labor costs, which reflect changes in hourly compensation and productivity, grew at a 2.9 percent annual rate during the second quarter, compared with a 1.0 percent rise in the first quarter. The implicit price deflator for the business sector, which incorporates changes in both unit labor costs and unit nonlabor payments, increased 2.4 percent in the second quarter and 1.5 percent during the first quarter of 1996 (seasonally adjusted annual rates).
Nonfarm business
Productivity edged up 0.5 percent in the nonfarm business sector during the second quarter of 1996, as output increased 4.9 percent and hours of all persons increased 4.4 percent (seasonally adjusted annual rates). The rise in hours reflected increases of 2.6 percent in employment and 1.7 percent in average weekly hours at work. During the first quarter of 1996, productivity had increased 1.8 percent in the nonfarm business sector, reflecting gains of 2.7 percent in output and 1.0 percent in hours (table 2).
Hourly compensation increased at a 3.7 percent annual rate in the second quarter, compared with a 3.3 percent increase one quarter earlier. When the rise in the CPI-U is taken into account, real hourly compensation fell 0.1 percent in the second quarter, after remaining unchanged in the first quarter.
Unit labor costs rose 3.2 percent during the second quarter of 1996, compared with a 1.5 percent rise in the first quarter. The implicit price deflator for nonfarm business output rose 2.1 percent in the second quarter and 1.4 percent one quarter earlier.
Manufacturing
Productivity increased 2.2 percent in manufacturing in the second quarter of 1996, as output grew 6.4 percent and hours of all persons increased 4.1 percent (seasonally adjusted annual rates). The increase in hours was due entirely to a 5.0 percent increase in average weekly hours. Productivity increased at a 3.9 percent annual rate in durable goods industries, compared with a 0.5 percent rise in output per hour worked among nondurable goods producers (tables 4 and 5). In the durable goods subsector, output increased at a 10.9 percent annual rate and hours of all persons rose 6.8 percent.
Hourly compensation of all manufacturing workers increased 5.8 percent during the second quarter, the largest gain since the second quarter of 1990. Hourly compensation grew 6.8 percent in the durable goods industries and 3.9 percent in nondurable goods industries. Real hourly compensation in the manufacturing sector rose 1.9 percent in the second quarter when the increase in consumer prices is taken into account. During the first quarter, real hourly compensation fell 2.8 percent (seasonally adjusted annual rates).
Manufacturing unit labor costs rose at a 3.6 percent annual rate in the second quarter of 1996, the largest increase since a 6.0 percent rise in the first quarter of 1991. Unit labor costs increased 2.8 percent in durable goods industries in the second quarter of 1996, after falling 9.3 percent in the first quarter. In nondurable manufacturing, unit labor costs increased 3.4 percent in the second quarter and 1.6 percent in the first quarter of 1996.
Real Hourly hourly Unit Imp. Produc- compen- compen- labor Unit price Qtr. tivity Output Hours sation sation costs profits def.
Nonfinancial corporations
Preliminary second-quarter 1996 measures of productivity and costs also were announced today for nonfinancial corporations (tables B and 6). Productivity increased 1.7 percent during the second quarter, as output rose 6.1 percent and hours increased 4.4 percent (seasonally adjusted annual rates). In the first quarter of 1996, productivity had increased 1.1 percent in nonfinancial corporations, as output increased 2.2 percent and employee hours rose 1.0 percent. Nonfinancial corporations include all corporations doing business in the United States, except for financial corporations, which include depository institutions, nondepository institutions, security and commodity brokers, insurance carriers, regulated investment offices, small business investment offices, and real estate investment trusts.
Hourly compensation rose 3.6 percent in the second quarter; it had increased 2.6 percent one quarter earlier. When the rise in the CPI-U is taken into account, real hourly compensation declined 0.2 percent in the second quarter of 1996, after decreasing 0.6 percent in the first quarter (table 6).
Unit labor costs for nonfinancial corporations rose 1.9 percent in the second quarter, following a 1.5 percent rise in the first quarter of 1996. Unit nonlabor costs fell 1.6 percent, and unit profits rose 6.9 percent. During the first quarter, unit nonlabor costs had dropped 2.6 percent, while unit profits rose 14.3 percent (seasonally adjusted annual rates). The implicit price deflator for nonfinancial corporate output rose 1.6 percent in the second quarter and 1.7 percent in the first quarter.
Revised Measures
Current and previous measures for the second quarter of 1996 for the business, nonfarm business, and manufacturing sectors are compared in table C. The quarterly movements differ from those reported on August 14 based on information then available. In the business and nonfarm business sectors, changes 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. A productivity gain of 0.5 percent is now reported for the nonfarm business sector, rather than a decline of 0.1 percent. 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 10, 1996.
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