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Second Quarter 1997
The Bureau of Labor Statistics of the U.S. Department of Labor reported preliminary productivity data--as measured by output per hour of all persons--for the second quarter of 1997. The preliminary seasonally adjusted annual rates of productivity change in the second quarter were:
0.7 percent in the business sector, and 0.6 percent in the nonfarm business sector.
In both the business and nonfarm business sectors, productivity growth in the second quarter was slower than in the first quarter, as the increases in both output and hours slowed. In the first quarter of 1997, output per hour of all persons (as revised) rose 1.8 percent in the business sector and 1.4 percent in the nonfarm business sector.
In manufacturing, productivity changes in the second quarter were:
3.2 percent in manufacturing, 5.1 percent in durable goods manufacturing, and 0.9 percent in nondurable goods manufacturing.
The second-quarter increase in manufacturing productivity was the result of a 4.4 percent increase in output and a 1.2 percent rise in hours of all persons. 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 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.
Business
From the first to the second quarter of 1997, business sector productivity increased at a 0.7 percent annual rate, as output rose 2.4 percent and hours of all persons engaged in the sector rose 1.7 percent. The second-quarter increase in labor productivity was smaller than those recorded in the previous two quarters. In the first quarter, productivity had increased 1.8 percent as output increased 5.9 percent and hours rose 4.0 percent (table 1).
Hourly compensation increased 3.0 percent in the second quarter and 4.4 percent in the first quarter of 1997. This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Unit labor costs, which reflect changes in both hourly compensation and productivity, increased at a 2.3 percent annual rate during the second quarter, similar to the 2.5 percent increase posted during the first quarter.
Real hourly compensation, which takes into account changes in the Consumer Price Index for All Urban Consumers (CPI-U), increased at a 1.9 percent annual rate in both the first and second quarters of 1997, after falling 0.1 percent in the fourth quarter of 1996. The first- and second- quarter increases in real hourly compensation were the largest since a 5.0 percent rise in the first quarter of 1992.
The implicit price deflator for the business sector, which reflects changes in unit labor costs and unit nonlabor payments, increased 1.1 percent in the second quarter. This increase was smaller than the 2.0 percent rise in the first quarter.
Nonfarm business
Productivity increased 0.6 percent in the nonfarm business sector during the second quarter of 1997, compared with a 1.4 percent increase in the first quarter (table 2). Output grew more slowly in the second quarter, 2.3 percent, than during the first quarter of the year, when it grew 5.6 percent. Hours of all persons in the nonfarm business sector increased 1.7 percent in the second quarter, much less than the 4.2 percent increase registered during the previous quarter.
Hourly compensation increased at a 3.1 percent annual rate in the second quarter, down from the 4.5 percent rise posted one quarter earlier. However, when the rise in the CPI-U is taken into account, increases in real hourly compensation for the first and second quarters of the year were about the same--2.0 percent in the second quarter and 2.1 percent in the first quarter. As in the larger business sector, the increases in real hourly compensation during the first two quarters of 1997 are the largest since the first quarter of 1992, when real hourly compensation rose 4.8 percent.
Unit labor costs grew 2.4 percent in the second quarter, down from the 3.1 percent increase posted in the previous quarter. The implicit price deflator for nonfarm business output rose 0.9 percent in the second quarter and 2.4 percent in the first quarter of 1997.
Manufacturing
Productivity increased 3.2 percent in manufacturing, as output rose 4.4 percent and hours of all persons rose 1.2 percent (seasonally adjusted annual rates). In the first quarter, productivity increased 2.5 percent, as output rose 5.4 percent and hours increased 2.8 percent (table 3). Labor productivity in manufacturing has risen in every quarter since the third quarter of 1993, when it fell 0.2 percent. In durable goods, productivity increased 5.1 in the second quarter of 1997, up from the 3.0 percent increase posted in the first quarter. In nondurable goods manufacturing, productivity rose 0.9 percent in the second quarter and 2.7 percent in the first quarter. The second-quarter increase in nondurables was the smallest since a 0.9 percent drop in the third quarter of 1994 (tables 4 and 5).
Hourly compensation of all manufacturing workers increased 2.7 percent during the second quarter, less than the 4.4 percent increase in the first quarter. When the increase in consumer prices is taken into account, real hourly compensation rose 1.6 percent in the second quarter, somewhat less than the 2.0 percent increase in the previous period.
Unit labor costs fell at a 0.4 percent annual rate in the second quarter after rising 1.8 percent one quarter earlier. In durable goods manufacturing, unit labor costs fell 2.7 percent in the second quarter after rising 1.7 percent during the first quarter of 1997. In nondurable goods manufacturing, unit labor costs rose 2.5 percent during the second quarter, up from the 0.7 percent increase of the first quarter.
Revised Measures
Current and previous measures for the first quarter of 1997 for the business, nonfarm business, and manufacturing sectors are compared in table B. In the business and nonfarm business sectors, increases in productivity, output, and hourly compensation are smaller--and increases in unit labor costs are higher--than reported on June 18, based on information then available. In manufacturing, productivity and output increased slightly less than originally reported.
Output measures for the business, nonfarm business, and nonfinancial corporate sectors and compensation measures for all sectors incorporate the revisions of the national income and product accounts produced by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce (BEA 97-23). These revisions extend back to the first quarter of 1993. Appendix tables 1-6 present quarterly and annual measures for 1992-94. Output measures for the manufacturing, durable manufacturing, and nondurable manufacturing sectors were revised back to 1949 to incorporate the following: revised 1994 and newly available 1995 shipments data from the Annual Survey of Manufactures published by the Census Bureau; revised inventory data from BEA for 1949-95; and the incorporation of new annual-weighted deflators, for detailed industry outputs, for 1987-95 from BEA. Appendix tables 7-9 contain revised annual indexes for these three sectors.
Revised measures: Nonfinancial Corporations
Productivity and cost measures for the first quarter for nonfinancial corporations also were revised to incorporate the most recent information from the Bureau of Economic Analysis. The revised data for the first quarter show that productivity, output, hourly compensation, and unit profits grew more slowly than reported on June 18. Growth in unit labor costs and the implicit price deflator were higher than reported in June, based on information then available (table C).
Source: U.S. Bureau of Labor Statistics · Original release Aug 12, 1997.
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