2003 First Quarter (Revised) 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.

First Quarter 2003

The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data--as measured by output per hour of all persons--for the first quarter of 2003. The revised seasonally adjusted annual rates of productivity change in the first quarter were:

2.5 percent in the business sector and 1.9 percent in the nonfarm business sector.

In both sectors, the first-quarter productivity gains were somewhat higher than those reported initially on May 1.

In manufacturing, the revised productivity changes in the first quarter were: 1.9 percent in manufacturing, 2.1 percent in durable goods manufacturing, and 2.2 percent in nondurable goods manufacturing.

Manufacturing productivity growth was revised down from the figure reported on May 1, reflecting a downward revision to productivity growth in durable goods manufacturing--which comprises about sixty percent of employment in the sector. Productivity in nondurable goods manufacturing was revised up. Output and hours in manufacturing, which includes about 15 percent of U.S. business-sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors. First-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 on data sources.

Business

Productivity increased 2.5 percent in the business sector (seasonally adjusted annual rate) from the fourth quarter of 2002 to the first quarter of 2003, as output increased 2.0 percent and hours worked by all persons decreased 0.5 percent (table 1).

Hourly compensation increased 3.8 percent during the first quarter of 2003. This measure of compensation includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, was unchanged.

Unit labor costs, which reflect changes in hourly compensation and productivity, rose 1.3 percent during the first quarter of 2003. The change in unit labor costs usually approximates the change in hourly compensation less the change in productivity. The implicit price deflator for business output, which reflects changes in both unit labor costs and unit nonlabor payments, grew by 1.7 percent from the fourth quarter of 2002 to the first quarter of 2003.

Nonfarm business

Productivity rose 1.9 percent in the nonfarm business sector during the first quarter of 2003, reflecting a 1.8-percent rise in output and a 0.1- percent decrease in working hours of all persons. Hours worked in the nonfarm business sector now have declined in 10 of the last 12 quarters (table 2).

Hourly compensation increased 3.4 percent in the first quarter of 2003. When the rise in consumer prices is taken into account, real hourly compensation fell 0.4 percent in the first quarter.

Unit labor costs grew 1.5 percent during the first quarter of 2003. The implicit price deflator for nonfarm business output also rose by 1.5 percent.

Manufacturing

Productivity rose 1.9 percent in manufacturing in the first quarter of 2003, as output decreased 0.7 percent and working hours of all persons declined 2.6 percent (seasonally adjusted annual rates). In durable goods industries, productivity grew 2.1 percent, as output edged up by 0.1 percent and hours fell 2.0 percent. In nondurable goods industries, productivity rose 2.2 percent, as output dropped 1.2 percent and hours declined by 3.4 percent (tables 3, 4, and 5).

Hourly compensation in manufacturing rose 4.5 percent during the first quarter. This increase reflects a rise of 4.3 percent in the hourly compensation of persons in durable goods industries and a larger increase, 4.8 percent, in the hourly compensation of workers in nondurable goods industries. Real hourly compensation, which takes account of changes in consumer prices, rose 0.7 percent for all manufacturing workers.

Unit labor costs rose 2.6 percent in manufacturing during the first quarter. In durable goods industries, unit labor costs grew 2.1 percent. In nondurable goods industries, unit labor costs rose 2.5 percent last quarter.

Nonfinancial corporations

Preliminary first-quarter 2003 measures of productivity and costs for nonfinancial corporations also were announced today (tables B and 6). Productivity rose 2.9 percent in the first quarter, less than the 5.0-percent rise recorded in the fourth quarter of 2002. Output increased 2.4 percent in first quarter 2003, while employee-hours declined 0.5 percent (seasonally adjusted annual rates). This marked the 10th consecutive decline in hours of nonfinancial corporate employees. Nonfinancial corporations include all corporations doing business in the United States, except banks, stock and com modity brokers, and finance and insurance agencies.

Hourly compensation increased 4.7 percent during the first quarter of 2003. When the rise in consumer prices is taken into account, real hourly compensation rose 0.8 percent in the first quarter. Unit labor costs in nonfinancial corporations rose 1.7 percent in the first quarter, after falling in the previous seven quarters.

Unit profits grew 2.2 percent in first quarter 2003, less than the 20.8- percent climb in the fourth quarter of 2002. The implicit price deflator for nonfinancial corporate output increased 1.0 percent in the first quarter of 2003.

REVISED MEASURES

Current and previous measures for the first quarter of 2003 for business, nonfarm business, and manufacturing are compared in table C. In the business and nonfarm business sectors, output and productivity were revised up from the data reported on May 1, based on information then available. Unit labor costs were revised downward. In the manufacturing sector, productivity, output, and hourly compensation all were revised down. Because hourly compensation was revised down by more than productivity, unit labor costs also were revised down.