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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 2001. The seasonally adjusted annual rates of productivity change in the fourth quarter and the annual average changes were:
Business sector 3.4 1.8 Nonfarm business sector 3.5 1.8
In the fourth quarter, productivity advanced 3.4 percent in the business sector as output declined 0.3 percent and hours worked fell 3.6 percent (seasonally adjusted annual rates). In the nonfarm business sector, productivity rose 3.5 percent as output decreased 0.4 percent and hours dropped 3.7 percent. On an annual average basis, productivity in both the business and nonfarm business sectors rose 1.8 percent in 2001. This was the smallest annual productivity gain since 1995, when output per hour increased 0.7 percent in business and 0.9 percent in nonfarm business. 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:
Manufacturing sector 3.5 1.0 Durable goods manufacturing 2.3 0.5 Nondurable goods manufacturing 4.3 1.5
Manufacturing productivity grew 3.5 percent in the fourth quarter, reflecting a drop in output of 7.2 percent and a larger decline, 10.4 percent, in hours of all persons. On an annual average basis, output per hour in the manufacturing sector posted a 1.0-percent increase in 2001. Output and hours in manufacturing, which includes about 16 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 for further information on data sources.
THIRD-TO-FOURTH QUARTER CHANGES, 2001
Business
Productivity in the business sector grew 3.4 percent in the fourth quarter of 2001, reflecting a decline of 0.3 percent in output and a 3.6- percent decrease 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 1991, when they dropped 4.6 percent. Revised data for the third quarter of 2001 show that output per hour rose 0.7 percent as output decreased 2.3 percent and hours declined 2.9 percent.
Hourly compensation increased at a 2.3-percent annual rate in the fourth quarter of 2001, following a 3.3-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 an annual rate of 2.7 percent during the fourth quarter of 2001. This measure rose 2.6 percent in the third quarter.
The unit labor cost measure, which relates compensation to output, decreased at a 1.1-percent annual rate during the fourth quarter. During the third quarter of 2001, unit labor costs had increased 2.6 percent. The implicit price deflator for business output, which reflects changes in both unit labor costs and unit nonlabor payments, declined 1.5 percent in fourth- quarter 2001.
Nonfarm business
In the nonfarm business sector, productivity increased 3.5 percent in the fourth quarter of 2001. Output declined 0.4 percent and hours of all persons--employees, proprietors, and unpaid family workers--fell 3.7 percent (seasonally adjusted annual rates). Productivity increased 1.1 percent in the third quarter of 2001 (as revised), when output decreased 2.3 percent and hours dropped 3.4 percent (table 2).
Hourly compensation in the nonfarm business sector rose 2.3 percent in the fourth quarter of 2001, following an increase of 3.7 percent in the third quarter. When the changes in consumer prices were taken into account, real hourly compensation increased 2.8 percent during the fourth quarter of 2001 and 3.0 percent one quarter earlier.
Unit labor costs decreased 1.1 percent in the fourth quarter, after increasing 2.6 percent in the third quarter of 2001. The implicit price deflator for nonfarm business output declined 0.7 percent in the fourth quarter of 2001, after increasing 1.7 percent one quarter earlier.
Manufacturing
Manufacturing productivity grew at a 3.5-percent seasonally adjusted annual rate in the fourth quarter of 2001 as output fell 7.2 percent and hours fell further, 10.4 percent (table 3). The hours decline was the largest since the second quarter of 1982, when hours dropped 11.0 percent. In the third quarter, total manufacturing productivity increased 2.6 percent (as revised), reflecting a 4.9-percent fall in output and a 7.3-percent decrease in hours. In durable goods manufacturing, productivity rose 2.3 percent in the fourth quarter as output fell 10.3 percent and hours dropped 12.3 percent (table 4). Among nondurable goods manufacturers, productivity rose 4.3 percent in the fourth quarter, reflecting a 3.3-percent decline in output and a 7.3-percent drop in hours of all persons (table 5).
Average hourly compensation of manufacturing workers increased 2.6 percent in the fourth quarter of 2001, reflecting increases in hourly compensation of 3.6 percent in durable goods manufacturing and 1.4 percent in nondurable goods manufacturing. When the increase in consumer prices was taken into account, real hourly compensation in total manufacturing rose 3.0 percent.
Unit labor costs for the manufacturing sector declined 0.9 percent. In durable goods manufacturing, unit labor costs rose 1.3 percent. By contrast, unit labor costs of nondurable goods manufacturers fell 2.8 percent in the fourth quarter of 2001.
ANNUAL AVERAGE CHANGES, 2000-2001
Business
Business sector productivity increased 1.8 percent when the annual average for 2001 was compared with the annual average for 2000 (table B). Output increased 0.8 percent and hours of all persons engaged in the sector decreased 1.0 percent. Productivity had increased 3.4 percent in 2000, when output grew 4.6 percent and hours increased 1.1 percent.
Hourly compensation in the business sector increased 6.0 percent in 2001, following a 6.4-percent rise in 2000. Real hourly compensation increased 3.0 percent in both years. Unit labor costs increased 4.0 percent in 2001, compared with a 2.9-percent increase in the previous year. The implicit price deflator rose 1.8 percent in 2001 and 1.9 percent in 2000.
Nonfarm business
Productivity increased 1.8 percent in the nonfarm business sector during 2001, reflecting a 0.8-percent rise in output and a 0.9-percent decline in hours. During 2000, productivity had increased 3.3 percent in nonfarm business, as output grew 4.5 percent and hours of all persons increased 1.1 percent.
In 2001, hourly compensation increased 5.8 percent, following a 6.5 percent rise in 2000. When the increase in consumer prices was taken into account, real hourly compensation rose 2.8 percent in 2001 and 3.1 percent in 2000. Unit labor costs in the nonfarm business sector rose 3.9 percent in 2001, compared with a 3.1-percent increase one year earlier. The implicit price deflator for nonfarm business rose 1.7 percent in 2001 and 2.0 percent in 2000.
Manufacturing
In manufacturing, labor productivity rose 1.0 percent in 2001, compared with a 6.1 percent increase in 2000. The small increase in 2001 occurred when output fell 4.3 percent and hours of all persons fell 5.3 percent (table B). There was a 0.5-percent increase in durable goods manufacturing productivity, where output fell 5.4 percent and hours fell 5.9 percent. A somewhat larger increase in productivity of 1.5 percent was posted in nondurable goods manufacturing, reflecting an output decrease of 2.9 percent and a drop of 4.4 percent in hours of all persons.
Hourly compensation of manufacturing workers increased 7.3 percent in 2001, following a 7.0-percent increase in 2000. Taking into account the rise in consumer prices, real hourly compensation in manufacturing rose 4.4 percent in 2001 and 3.5 percent in 2000.
Unit labor costs in manufacturing grew 6.2 percent in 2001. This was the largest annual increase since 1981, when these costs rose 8.9 percent. Unit labor costs in durable goods manufacturing increased 7.4 percent in 2001, compared with a 4.8 percent rise in unit labor costs in nondurable goods manufacturing.
Revised Measures
Current and previous measures for the third quarter of 2001 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 were slightly higher than the figures published on Dec. 6.
Revised measures: Nonfinancial Corporations
Revised productivity and output measures for the third quarter for nonfinancial corporations also were announced today. Output decreased more and productivity increased less than reported on Dec. 6. The downward revision to productivity led to faster growth in unit labor costs than previously reported (table D).
Third quarter 2001
Source: U.S. Bureau of Labor Statistics · Original release Feb 6, 2002.
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