2000 Second Quarter (Preliminary) 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.

Second Quarter 2000

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 2000. The preliminary seasonally adjusted annual rates of productivity change in the second quarter were:

6.2 percent in the business sector and 5.3 percent in the nonfarm business sector.

In both the business and nonfarm business sectors, productivity grew more rapidly in the second quarter than in the first quarter, when output per hour of all persons (as revised) rose 1.6 percent in the business sector and 1.9 percent in the nonfarm business sector.

In manufacturing, productivity changes in the second quarter were:

5.1 percent in manufacturing, 9.6 percent in durable goods manufacturing, and 0.0 percent in nondurable goods manufacturing.

Productivity rose 5.1 percent in the manufacturing sector in the second quarter as output and hours of all persons increased 7.0 percent and 1.7 percent, respectively. In the first quarter, manufacturing productivity rose 7.9 percent (as revised). Output and hours in manufacturing, which includes about 17 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 in this release reflect the regular multi-year GDP revisions released by the Bureau of Economic Analysis of the U.S. Department of Commerce on July 28. They also reflect the annual benchmark revision to the BLS establishment survey data and revisions to hours series released by BLS on June 2. All employment and hours series incorporate new information on seasonal patterns. In addition, measures of output for the manufacturing sectors were revised. See Revised Measures. Appendix tables 1-6 show revised historical series.

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 on data sources.

Business

From the first to the second quarter of 2000, business sector productivity increased at a 6.2-percent annual rate, as output rose 5.7 percent and hours of all persons engaged in the sector fell at a 0.4-percent annual rate. As revised, labor productivity rose 1.6 percent in the first quarter as output and hours increased 5.3 and 3.7 percent, respectively (table 1).

Hourly compensation increased 6.3 percent in the second quarter and 3.5 percent in the first quarter of 2000 (seasonally adjusted annual rates). 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, edged up 0.1 percent during the second quarter, following a 1.9-percent rise in the first quarter of 2000.

Real hourly compensation, which takes into account changes in consumer prices, rose at a 2.6 percent annual rate during the second quarter of 2000 after declining 0.4 percent in the previous quarter.

The implicit price deflator for the business sector, which reflects changes in unit labor costs and unit nonlabor payments, increased 2.5 percent in the second quarter and 3.0 percent in the first quarter of 2000.

Nonfarm business

Productivity increased 5.3 percent in the nonfarm business sector during the second quarter of 2000, after rising 1.9 percent in the first quarter (table 2). Output rose 5.9 percent in the second quarter, after increasing 5.2 percent during the first quarter of 2000. Hours of all persons working in the sector increased 0.5 percent in the second quarter. This was the smallest increase in hours since the first quarter of 1996 (when they fell 0.1 percent) and followed a 3.2 percent rise in the first quarter of 2000.

Hourly compensation increased 5.3 percent in the second quarter, after posting a 3.9-percent gain in the first quarter of 2000. When the rise in consumer prices is taken into account, real hourly compensation for the second quarter of 2000 rose 1.6 percent.

Unit labor costs decreased 0.1 percent in the second quarter of 2000, after rising 1.9 percent one quarter earlier. The implicit price deflator for nonfarm business output grew 2.2 percent in the second quarter and 3.2 percent in the first quarter of 2000.

Manufacturing

Productivity increased 5.1 percent in manufacturing, as output rose 7.0 percent and hours of all persons increased 1.7 percent (seasonally adjusted annual rates). Growth in productivity, output, and hours was quite different in the durable and nondurable goods subsectors. In durable goods, productivity rose 9.6 percent, reflecting output growth of 13.3 percent and a 3.4-percent rise in hours of all persons. In nondurable goods, productivity remained unchanged in the second quarter, as output and hours both fell 0.8 percent (tables 3, 4, and 5).

Hourly compensation of all manufacturing workers increased 4.4 percent during the second quarter. This reflects growth of 3.8 percent in durable goods and 5.1 percent in nondurable goods. When the increase in consumer prices is taken into account, the real hourly compensation of all manu- facturing workers rose 0.8 percent in the second quarter.

Unit labor costs in manufacturing dropped 0.7 percent in the second quarter. This marked the third consecutive quarter of falling unit labor costs for the total manufacturing sector; unit labor costs fell 3.0 percent in the first quarter of 2000 and 5.1 percent in the fourth quarter of 1999. In the second quarter of 2000, trends in unit labor costs in the two sub- sectors were quite different, reflecting the very different growth rates in productivity. Unit labor costs fell 5.3 percent in durable goods manu- facturing and rose 5.1 percent in nondurable goods manufacturing. The increase in unit labor costs in nondurable goods manufacturing was the largest since a 5.8-percent rise was posted in the second quarter of 1993.

Revised Measures

Current and previous measures for the first quarter of 2000 for the business, nonfarm business, and manufacturing sectors are compared in table B. In the business and nonfarm business sectors, both the output and hours measures grew less than reported on June 6, based on information then available. Labor productivity growth was revised down. In manufacturing, productivity growth was revised up to reflect higher output growth and a larger drop in hours than originally reported.

Data on manufacturing output for 1997 and 1998 were revised to reflect newly available data on shipments from the U.S. Census Bureau. There also were small revisions to earlier years reflecting the incorporation of new data associated with the 1999 comprehensive revisions to the National Income and Product Accounts.

Output data for the business and nonfarm business sectors and compensation series for all sectors incorporate the revisions of the national income and product accounts produced by the Bureau of Economic Analysis, U.S. Department of Commerce. In addition, small changes have been made to the historical estimates of employment in for-profit organizations and corporations. Labor input measures have been revised further to reflect the annual benchmarking of employment levels derived from the monthly Current Employment Statistics (CES) survey that occurred on June 2. Updated seasonal adjustment factors also have been incorporated into the labor input measures. These revisions extend back to the first quarter of 1995. Appendix tables 1-6 present quarterly and annual measures for all sectors for 1995-97.

Revised measures: Nonfinancial Corporations

Productivity and cost measures for the first quarter for nonfinancial corporations also were revised to incorporate more recent information than was available on June 6. Productivity, output, employee hours, and hourly compensation grew more slowly than previously reported. Unit profits and the implicit price deflator were revised up from the preliminary estimates reported in June (table C).