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The Bureau of Labor Statistics of the U.S. Department of Labor today reported preliminary productivity data--as measured by output per hour of all persons--for the fourth quarter and for the full year 2000. The seasonally adjusted annual rates of productivity in the fourth quarter and the annual average changes were:
In the fourth quarter, productivity advanced 3.2 percent in the business sector as output rose 1.2 percent and hours worked dropped 2.0 percent (seasonally adjusted annual rates). In the nonfarm business sector, productivity rose 2.4 percent as output increased 1.2 percent and hours fell 1.1 percent. On an annual average basis, productivity in both the business and the nonfarm business sectors rose 4.3 percent in 2000. In the business sector, it was the largest increase since a 4.4-percent increase in 1971; in nonfarm business, the increase was the biggest since a 4.5-percent rise in 1983. Fourth-quarter productivity and related measures are summarized in table A and annual average data in table B. Detailed information is presented in tables 1 through 5.
In the manufacturing sector, increases in productivity were:
Measures of hours for private nonfarm employees have been adjusted to incorporate the results of the 1999 Hours at Work Survey. In addition, output measures for the manufacturing sector now include information released by the Board of Governors of the Federal Reserve System on Dec. 5. See Revised Measures on page 6.
Manufacturing productivity grew 4.8 percent in the fourth quarter, reflecting a drop in output of 2.1 percent and a larger decline, 6.6 percent, in hours of all persons. On an annual average basis, labor productivity in manufacturing posted a record increase of 7.1 percent in 2000. 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.
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 (page 9) for further information on data sources.
THIRD-TO-FOURTH QUARTER CHANGES, 2000
Business
Productivity in the business sector grew 3.2 percent in the fourth quarter of 2000, reflecting a rise of 1.2 percent in output and a 2.0-percent drop in hours of all persons engaged in the sector (seasonally adjusted annual rates). Hours fell faster in the fourth quarter than at any time since the first quarter of 1992, when they decreased 2.5 percent. Revised data for the third quarter of 2000 show that output per hour rose 2.4 percent as output increased 2.3 percent and hours declined 0.1 percent.
Hourly compensation increased at a 7.5 percent annual rate in the fourth quarter of 2000, following a 5.7-percent increase one quarter earlier. This measure includes wages and salaries, supplements, employer contributions to employee-benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, grew at a 4.6 percent annual rate during the fourth quarter of 2000. This measure rose 2.5 percent in the third quarter.
The unit labor cost measure, which relates compensation to output, increased at a 4.1-percent annual rate during the fourth quarter. During the third quarter of 2000, unit labor costs had increased 3.1 percent. The implicit price deflator for business output, which reflects changes in both unit labor costs and unit nonlabor payments, increased at an annual rate of 1.8 percent in the fourth quarter of 2000.
Nonfarm business
In the nonfarm business sector, productivity increased 2.4 percent in the fourth quarter of 2000. Output rose 1.2 percent and hours of all persons- -employees, proprietors, and unpaid family workers--fell 1.1 percent (seasonally adjusted annual rates). Productivity increased 3.0 percent in the third quarter of 2000 (as revised), when output increased 2.3 percent and hours declined 0.7 percent (table 2).
Hourly compensation in the nonfarm business sector rose 6.6 percent in the fourth quarter of 2000, following an increase of 6.2 percent in the third quarter. When the increase in consumer prices was taken into account, real hourly compensation increased 3.8 percent during the fourth quarter of 2000 and 3.1 percent one quarter earlier.
Unit labor costs increased 4.1 percent in the fourth quarter and 3.2 percent in the third quarter of 2000. The implicit price deflator for nonfarm business output rose 1.7 percent in the fourth quarter, when a 2.1 percent drop in unit nonlabor payments partially offset the rise in unit labor costs. Manufacturing
Manufacturing productivity grew at a 4.8 percent seasonally adjusted annual rate in the fourth quarter of 2000 as output fell 2.1 percent and hours fell further, 6.6 percent (table 3). In durable goods manufacturing, productivity rose 4.7 percent, as output fell 2.2 percent and hours dropped 6.6 percent (table 4). Among nondurable goods manufacturers, productivity rose 5.0 percent in the fourth quarter, reflecting a 2.0-percent drop in output and a 6.6-percent decline in hours of all persons (table 5). In the third quarter, total manufacturing productivity increased 6.7 percent (as revised), reflecting a 3.8-percent rise in output and a 2.8-percent decrease in hours.
The average hourly compensation of manufacturing workers increased 8.6 percent in the fourth quarter--the largest increase since a rise of 12.0 percent in the second quarter of 1982. This fourth-quarter increase reflected increases of 9.6 percent in hourly compensation in durable goods manufacturing and 6.8 percent in nondurable goods manufacturing. When the increase in consumer prices was taken into account, real hourly compensation in total manufacturing rose 5.7 percent.
Unit labor costs for the manufacturing sector rose 3.6 percent. In durable goods manufacturing, unit labor costs rose 4.6 percent. This was the first increase in these costs since a 0.9-percent rise in the second quarter of 1995. The unit labor costs of nondurable goods manufacturers rose 1.8 percent in the fourth quarter of 2000.
ANNUAL AVERAGE CHANGES, 1999-2000
Business
Business sector productivity increased 4.3 percent when the annual average for 2000 was compared with the annual average for 1999 (table B). Output increased 5.7 percent and hours of all persons engaged in the sector rose 1.4 percent. Productivity had increased 2.8 percent in both 1998 and 1999.
Hourly compensation in the business sector increased 5.0 percent in 2000, following a 4.6 percent rise in 1999. Real hourly compensation rose 1.6 percent in 2000, slightly less than the 2.4-percent increase in 1999. Unit labor costs rose 0.7 percent in 2000, compared with a 1.8 percent increase in the previous year. The implicit price deflator rose 1.8 percent in 2000 and 1.1 percent in 1999.
Nonfarm business
Productivity increased 4.3 percent in the nonfarm business sector during 2000 due to a 5.7 percent growth in output and a 1.3 percent rise in hours. During 1999, productivity increased 2.6 percent, as output grew 4.8 percent and hours of all persons increased 2.2 percent.
In 2000, hourly compensation increased 5.1 percent, following a 4.4 percent rise in 1999. When the increase in consumer prices was taken into account, real hourly compensation rose 1.7 percent in 2000 and 2.3 percent in 1999. Unit labor costs in the nonfarm business sector rose 0.7 percent in 2000, compared with a 1.8-percent increase one year earlier. The implicit price deflator for nonfarm business rose 1.8 percent in 2000 and 1.3 percent in 1999.
Manufacturing
In manufacturing, labor productivity rose 7.1 percent in 2000, the largest annual average increase since the beginning of the measure in 1949. The increase occurred as output rose 5.9 percent and hours of all persons fell 1.1 percent (table B). The manufacturing increase was led by a 10.4- percent increase in durable goods manufacturing productivity, where output rose 9.9 percent and hours fell 0.5 percent. A much smaller increase in labor productivity was posted in nondurable goods manufacturing, 3.3 percent, reflecting an output increase of 1.3 percent and a drop of 2.0 percent in hours of all persons.
Hourly compensation of manufacturing workers increased 5.2 percent in 2000, more than the 4.0-percent increase one year earlier (as revised). Taking into account the rise in consumer prices, real hourly compensation in manufacturing rose 1.8 percent in 2000. This increase was about the same as the 1.9-percent growth recorded in 1999.
Unit labor costs in manufacturing fell 1.7 percent in 2000; these costs have now dropped in eight of the past nine years. Unit labor costs in durable goods manufacturing fell 4.7 percent in 2000--the ninth consecutive drop in unit labor costs in this sector. In contrast, unit labor costs in nondurable goods rose 1.7 percent in 2000. This increase was larger than the 0.8-percent rise recorded in the previous year.
Revised Measures
Current and previous measures for the third quarter of 2000 for the business, nonfarm business, and manufacturing sectors are compared in table C. In the business and nonfarm business sectors, output and productivity measures were lower than those published on Dec. 6; unit labor costs were higher. Output and productivity growth in the manufacturing sector also were lower than the figures published on Dec. 6. In addition, hourly compensation growth in manufacturing was higher and unit labor costs showed a slight increase of 0.2 percent rather than a decline. Table C. Previous and revised productivity and related measures Quarterly percent change at seasonally adjusted annual rate
Productivity and cost measures were revised to reflect the results of the 1999 Hours at Work Survey, 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 Employment Survey) to hours at the workplace. For 1999, these new results show that hours of all persons were higher than had originally been reported. In the nonfarm business sector, hours of all persons grew 2.2 percent in 1999 rather than 1.8 percent, as previously reported. The difference in the ratio of hours at work to hours paid was even greater in the manufacturing sector, where hours of all persons fell 0.8 in 1999, rather than decreasing 1.7 percent, as previously reported.
In addition, the results of the Dec. 5 revision to the Indexes of Industrial Production have been incorporated into the manufacturing output measures.
Revised measures: Nonfinancial Corporations
Revised productivity and output measures for the third quarter for nonfinancial corporations also were announced today. As in the other sectors, the increases in output and productivity were lower than those reported on Dec. 6, and unit labor costs were higher (table D).
Source: U.S. Bureau of Labor Statistics · Original release Feb 7, 2001.
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