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Third 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 third quarter of 1996. The seasonally-adjusted annual rates of productivity growth in the third quarter were:
0.0 percent in the business sector, and -0.3 percent in the nonfarm business sector.
In the business sector, productivity was unchanged as a 2.1 percent output increase in the third quarter was accompanied by a nearly-equal increase (2.0 percent) in the hours of all persons engaged in the sector. Similarly, labor productivity in the nonfarm business sector fell as hours of all persons rose 2.1 percent, but output grew only 1.8 percent.
In manufacturing, revised productivity increases in the third quarter were:
6.3 percent in manufacturing, 8.3 percent in durable goods manufacturing, and 3.9 percent in nondurable goods manufacturing.
The third-quarter productivity increase in manufacturing occurred as output rose at a 5.6 percent rate and hours fell 0.7 percent. 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. 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 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.
Business
From the second quarter to the third quarter of 1996, business sector productivity was unchanged. As revised, output rose 2.1 percent, and hours of all persons engaged in the sector increased 2.0 percent (seasonally adjusted annual rates). During the second quarter of 1996, productivity had increased 1.2 percent (as revised), as output rose 5.0 percent and hours rose 3.8 percent (table 1).
Hourly compensation increased 3.8 percent during the third quarter of 1996, down from a 4.3 percent rise in the second quarter. This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Unit labor costs rose 3.8 percent in the third quarter and 3.1 percent in the previous quarter.
Real hourly compensation, which takes into account changes in the Consumer Price Index for All Urban Consumers (CPI-U), rose 1.5 percent in the third quarter after increasing 0.4 percent in the second quarter of 1996.
The implicit price deflator for the business sector, which reflects changes in both unit labor costs and unit nonlabor payments, increased at a 1.2 percent annual rate in the third quarter of 1996, down from the 2.4 percent increase posted in the previous quarter.
Nonfarm business
Productivity decreased 0.3 percent in the nonfarm business sector during the third quarter of 1996 as output rose 1.8 percent and hours of all persons increased 2.1 percent. This was the first decline in productivity since a 1.2 percent drop during the fourth quarter of 1995. During the second quarter of 1996, productivity had increased 0.6 percent in the nonfarm business sector, reflecting a gain of 4.8 percent in output coupled with a 4.1 percent rise in hours (table 2).
Hourly compensation increased at a 3.4 percent annual rate in the third quarter, compared with a 3.9 percent increase one quarter earlier. When the rise in the CPI-U is taken into account, real hourly compensation rose at a 1.1 percent annual rate in the third quarter. Real hourly compensation has now risen in eight consecutive quarters.
Unit labor costs increased 3.7 percent in the third quarter of 1996 and 3.3 percent in the second quarter. The implicit price deflator rose 1.1 percent in the third quarter of 1996, reflecting both the increase in unit labor costs and a 3.5 percent drop in unit nonlabor payments. In the second quarter, the implicit price deflator for the nonfarm business sector had increased 2.1 percent.
Manufacturing
Productivity increased 6.3 percent in manufacturing in the third quarter of 1996, as output rose 5.6 percent and hours of all persons fell 0.7 percent (seasonally adjusted annual rates). This increase in labor productivity was more than double the 2.9 percent increase posted in the second quarter, when output rose 7.1 percent and hours increased 4.1 percent. Manufacturing productivity has increased in every quarter since the second quarter of 1993 (when it declined 0.3 percent). In the durable goods industries, productivity grew 8.3 percent in the third quarter as output rose 7.7 percent and hours fell 0.6 percent. In the nondurable goods industries, third- quarter productivity grew 3.9 percent as output rose 3.0 percent and hours dropped 0.9 percent (tables 3, 4, and 5).
Hourly compensation of all manufacturing workers rose 4.6 percent during the third quarter and 5.8 percent during the second quarter (seasonally adjusted annual rates). Real hourly compensation increased 2.3 percent when the increase in the CPI-U is taken into account. During the second quarter, real hourly compensation rose 1.9 percent.
Unit labor costs fell at a 1.6 percent annual rate in the third quarter of 1996 as the 6.3 percent productivity increase in the manufacturing sector exceeded the 4.6 percent increase in hourly compensation. Unit labor costs rose 2.8 percent in the second quarter of 1996. In durable goods industries, these costs fell 3.4 percent in the third quarter of 1996 and have fallen in 10 of the last 12 quarters. A 0.7 percent increase in unit labor costs was recorded in nondurable goods in the third quarter, down from the 1.6 percent increase posted in the second quarter of 1996.
Nonfinancial Corporations
Third-quarter 1996 measures of productivity and costs also were announced today for nonfinancial corporations (tables B and 6). Output per all-employee hour rose at a 3.6 percent annual rate, compared with a 1.5 percent increase during the second quarter (as revised). Output increased 5.8 percent in the third quarter of 1996, while hours of all employees increased 2.2 percent. The sector includes all corporations doing business in the United States, except those classified as depository institutions, nondepository institutions, security and commodity brokers, insurance carriers, regulated investment offices, small business investment offices, and real estate investment trusts.
Hourly compensation increased 4.1 percent in the third quarter; it had risen 3.9 percent in the second quarter. When the rise in the CPI-U is taken into account, real hourly compensation increased 1.7 percent in the third quarter--the first increase reported in 1996. Real hourly compensation was unchanged in the second quarter and had fallen 0.5 percent in the first quarter of the year.
Unit labor costs for nonfinancial corporations rose 0.5 percent in the third quarter, after increasing 2.4 percent during the previous quarter. Unit nonlabor costs fell 1.1 percent in the third quarter, and unit profits dropped at a 1.3 percent annual rate. This was the first decrease in unit profits in calendar year 1996. The implicit price deflator for the output of nonfinancial corporations was unchanged in the third quarter of 1996, after demonstrating an increase in every quarter since a 0.2 percent decline was posted in the first quarter of 1986.
Revised Measures
Current and previous measures for the third quarter of 1996 for the business, nonfarm business, and manufacturing sectors are compared in table C. The quarterly movements differ from those reported on November 7, based on the information available at that time.
The productivity and cost measures also were revised to reflect the results of the 1995 Hours at Work Survey (HWS), which are now available. This survey is used to adjust the number of hours for which private nonfarm employees are paid, as reported in the BLS Current Establishment Survey, to hours at the workplace. For 1995, these new results show that hours of all persons increased more than had originally been reported. In the nonfarm business sector, hours of all persons grew 2.4 percent in 1995 rather than 2.0 percent, as previously reported. All of the increase in the ratio of hours at work to hours paid occurred outside of the manufacturing sector, where the increase in the hours of all persons remained 0.1 percent for the calendar year.
Source: U.S. Bureau of Labor Statistics · Original release Dec 5, 1996.
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