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Fourth Quarter and Annual Averages, 2000
The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised fourth-quarter seasonally-adjusted annual rates of productivity change--as measured by output per hour of all persons--and revised annual changes for the full year 2000. Percent changes in business and nonfarm business productivity were:
Business sector 3.1 4.2 Nonfarm business sector 2.2 4.3
In both sectors, fourth-quarter productivity increases reflected small gains in output combined with drops in hours of all persons. Fourth-quarter productivity and related measures are summarized in table A and appear in detail in tables 1 through 5; the preliminary and revised fourth-quarter and annual data appear in table C.
In the manufacturing sector, increases in productivity were:
Manufacturing 5.3 7.1 Durable goods manufacturing 6.6 10.5 Nondurable goods manufacturing 3.8 3.2
Manufacturing productivity rose 5.3 percent (seasonally adjusted annual rate) in the fourth quarter. This increase was higher than originally reported, reflecting an upward revision to output per hour in durable goods-- labor productivity was revised down in nondurable goods manufacturing. (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 data 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.
THIRD-TO-FOURTH QUARTER 2000 CHANGES
Business
Business sector productivity rose 3.1 percent (seasonally adjusted annual rate) in the fourth quarter of 2000, as output increased 0.8 percent and hours of all persons engaged in the sector decreased 2.2 percent (table 1). The fourth-quarter decrease in hours was the largest since the first quarter of 1992, when hours fell 2.5 percent. During third-quarter 2000, productivity had increased 2.4 percent as output grew 2.3 percent and hours edged down by 0.1 percent.
Hourly compensation grew at a 7.5-percent annual rate in the fourth quarter, compared with a 5.7-percent rise in the third 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 consumer prices, rose 4.5 percent in the fourth quarter and 2.0 percent in the third quarter.
Unit labor costs, which reflect changes in both hourly compensation and productivity, increased 4.3 percent during the fourth quarter. The implicit price deflator for business output, which reflects changes in unit labor costs and unit nonlabor payments, increased 1.6 percent in the fourth quarter. This measure rose 1.2 percent during the third quarter.
Nonfarm business
In the nonfarm business sector, productivity rose at an annual rate of 2.2 percent in the fourth quarter of 2000, as output grew 0.8 percent and hours of all persons--employees, proprietors, and unpaid family workers--fell 1.4 percent (seasonally adjusted annual rates). During the third quarter, productivity had increased 3.0 percent, output had increased 2.3 percent, and hours had declined 0.7 percent (table 2).
Hourly compensation rose 6.6 percent in the fourth quarter. This was the largest increase in this measure since the first quarter of 1992, when hourly compensation increased 8.8 percent. When the increase in consumer prices was taken into account, real hourly compensation rose 3.6 percent in the fourth quarter of 2000.
Unit labor costs rose 4.3 percent in the fourth quarter and 3.2 percent in the third quarter. The implicit price deflator for nonfarm business rose 1.5 percent in the fourth quarter, as a 2.9 percent decline in unit nonlabor payments offset much of the rise in unit labor costs.
Manufacturing
Manufacturing productivity rose 5.3 percent (seasonally adjusted annual rate) in the fourth quarter of 2000, as output fell 1.8 percent and hours dropped by 6.7 percent (table 3). Productivity rose in both of the manufacturing subsectors. In durable goods, productivity increased 6.6 percent in the fourth quarter, reflecting declines of 0.5 percent in output and 6.7 percent in hours. In nondurable goods, productivity grew 3.8 percent in the fourth quarter, reflecting a 3.2-percent drop in output and a 6.7- percent decline in hours (tables 4 and 5).
Hourly compensation of all manufacturing workers rose 8.4 percent during the fourth quarter. This was the largest increase in hourly compensation in the sector since a 12.0-percent rise in the second quarter of 1982. Hourly compensation rose in both of the manufacturing subsectors in fourth-quarter 2000, rising 9.4 percent for durable goods manufacturers and 6.8 percent for nondurable goods manufacturers. When the increase in consumer prices was taken into account, real hourly compensation for all manufacturing workers rose 5.4 percent in the fourth quarter.
Unit labor costs in manufacturing rose 3.0 percent in the fourth quarter of 2000--2.6 percent in durable goods and 2.9 percent in nondurable goods. For durable goods manufacturers, this was the first increase in unit labor costs since the second quarter of 1995, when they rose 0.9 percent, and the largest increase in these costs since the third quarter of 1993, when they rose 5.7 percent.
ANNUAL AVERAGE CHANGES, 1999-2000
Business
In calendar year 2000, business sector productivity increased 4.2 percent, after having increased 2.8 percent in both 1998 and 1999 (table 1). Output grew 5.6 percent in 2000 and 4.8 percent in 1999. Hours of all persons in the business sector rose less in 2000, 1.3 percent, than in 1999, 2.0 percent.
Percent change from previous year
Hourly compensation increased 5.0 percent in 2000, after having increased 4.6 percent in 1999. Real hourly compensation increased 1.7 percent in 2000 and 2.4 percent in 1999. Calendar year 2000 was the fifth consecutive year of growth in this series, following three years of declining real hourly compensation (1993-95).
Unit labor costs increased 0.8 percent in 2000, less than the 1.8- percent increase in the previous year. The implicit price deflator rose 1.8 percent in 2000, compared with a 1.1-percent increase in 1999.
Nonfarm business
Productivity increased 4.3 percent in the nonfarm business sector during 2000, more than in any year since 1983, when output per hour increased 4.5 percent. Productivity rose rapidly in 2000 because output grew 5.7 percent while hours of all persons rose just 1.3 percent. In 1999, productivity rose 2.6 percent as output grew 4.8 percent and hours of all persons rose 2.2 percent.
Hourly compensation grew 5.1 percent in 2000, compared with a 4.4- percent increase in 1999. The increase in real hourly compensation in 2000, 1.7 percent, was smaller than during the previous year, when it had increased 2.3 percent.
Unit labor costs in the nonfarm business sector rose 0.7 percent in 2000, less than the 1.8-percent increase posted in 1999. The implicit price deflator, which reflects nonlabor payments as well as labor costs, rose 1.8 percent in 2000, following a 1.3-percent rise in 1999.
Manufacturing
Manufacturing productivity grew 7.1 percent in 2000, continuing a trend of annual increases that began in 1980. Output in the manufacturing sector increased 6.0 percent in 2000, and hours of all persons fell 1.1 percent. The 2000 increase in output per hour was the largest recorded over the 51- year history of the measure. In 2000, labor productivity increased 10.5 percent in durable goods manufacturing (also the largest in the history of this measure), reflecting a 10.0-percent output increase and a decline of 0.5 percent in hours. In nondurable goods manufacturing, productivity rose 3.2 percent in 2000, as output grew 1.2 percent and hours of all persons declined 2.0 percent (tables B, 3, 4, and 5).
Hourly compensation of manufacturing workers increased 5.2 percent in 2000, faster than the 4.0 percent increase a year earlier. Real hourly compensation rose 1.9 percent in both 1999 and 2000. In 2000, hourly compensation increases in the two subsectors were similar to the manufacturing total, 5.2 percent in durable goods and 5.1 percent in nondurable goods.
Unit labor costs fell 1.8 percent in the manufacturing sector, the seventh consecutive decline. This trend of declining unit labor costs was due almost entirely to decreases in durable goods manufacturing, where these costs have fallen for nine consecutive years. In 2000, unit labor costs in durable goods industries fell 4.8 percent. In contrast, unit labor costs rose 1.8 percent in nondurable goods industries.
REVISED MEASURES
Productivity and cost data for the fourth-quarter and full-year 2000 for business, nonfarm business, and manufacturing were revised to incorporate the most recent information (table C). In the business and nonfarm business sectors, productivity, output, and hours measures for the fourth quarter are lower--and increases in unit labor costs are higher--than those reported on Feb. 7, based on information available at that time. Fourth-quarter measures of manufacturing productivity were revised up from those reported on Feb. 7, reflecting a smaller decline in output and a greater decrease in hours than originally reported. Unit labor costs in manufacturing show a smaller increase than originally reported. Annual measures of productivity and costs are similar to those reported on Feb. 7. Measures of real hourly compensation in the business, nonfarm business, and manufacturing sectors for 2000 were revised to incorporate the annual recalculation of seasonal factors for the Consumer Price Index.
Percent change, third to fourth quarter 2000
Source: U.S. Bureau of Labor Statistics · Original release Mar 6, 2001.
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