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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 2007. The seasonally adjusted annual rates of productivity change in the fourth quarter and the annual average changes were:
Business sector 0.6 1.6 Nonfarm business sector 1.8 1.6
In the fourth quarter of 2007, productivity increased 0.6 percent in the business sector, with output increasing 0.2 percent and hours decreasing 0.5 percent. In the nonfarm business sector, productivity rose 1.8 percent as output grew 0.4 percent and hours fell 1.5 percent. When the annual averages for 2007 were compared with annual averages for 2006, productivity rose 1.6 percent in the business and nonfarm business sectors--slightly more than the 1.0 percent gain in both sectors from 2005 to 2006.
In the manufacturing sector, increases in productivity were:
Manufacturing sector 2.5 2.9 Durable goods manufacturing 4.6 4.3 Nondurable goods manufacturing -0.9 1.1
Manufacturing productivity grew at a 2.5 percent annual rate in the fourth quarter, as output fell but hours fell faster. On an annual average basis, output per hour in the manufacturing sector posted a 2.9 percent increase in 2007. Output and hours in manufacturing, which includes about 12 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. 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.
The data in this release do not reflect the annual benchmark revision of the BLS Current Employment Statistics program data released on February 1, 2008. This benchmark will be incorporated in our next release on March 5, 2008.
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, 2007
Business
Productivity in the business sector increased by 0.6 percent in the fourth quarter of 2007, reflecting an increase of 0.2 percent in output and a decrease of 0.5 percent in hours of all persons (seasonally adjusted annual rates). Output per hour had risen 6.5 percent in the third quarter of 2007, as output rose 5.7 percent and hours fell 0.7 percent. When the fourth quarter of 2007 is compared to the fourth quarter of 2006, business sector productivity grew 2.7 percent--the same as the average rate of growth for the 2000-2006 period.
Hourly compensation grew 2.8 percent in the fourth quarter of 2007, down from a 4.4 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, decreased 1.4 percent in the fourth quarter of 2007. Consumer prices increased at a 4.3 percent annual rate in the fourth quarter of 2007, contributing to the decline in real hourly compensation.
Unit labor costs, which relate hourly compensation to output per hour, increased 2.2 percent in the fourth quarter of 2007 after falling 2.0 percent in the third quarter and 1.1 percent in the second quarter.
Nonfarm business
In the nonfarm business sector, productivity rose 1.8 percent in the fourth quarter of 2007, as output grew 0.4 percent and hours of all persons-- employees, proprietors, and unpaid family workers--fell 1.5 percent (seasonally adjusted annual rates). Productivity grew 6.0 percent in the third quarter of 2007 as output rose 5.6 percent and hours fell 0.3 percent (table 2). During the four-quarter period ending with the fourth quarter of 2007, nonfarm business sector productivity grew 2.6 percent--similar to the 2.7 percent average rate of growth from 2000 to 2006.
Hourly compensation in the nonfarm business sector rose 3.9 percent in the fourth quarter of 2007 following a 4.0 percent increase in the third quarter. When the 4.3 percent increase in consumer prices was taken into account, real hourly compensation edged down 0.3 percent during the fourth quarter of 2007 (seasonally-adjusted annual rates).
Unit labor costs rose 2.1 percent in the fourth quarter of 2007, after declining 1.9 percent in the third quarter and 1.1 percent the second quarter. The implicit price deflator for nonfarm business output rose 1.6 percent in the fourth quarter after rising 0.1 percent one quarter earlier.
Manufacturing
Manufacturing productivity grew 2.5 percent in the fourth quarter of 2007 as output declined 1.9 percent and hours dropped 4.3 percent (seasonally adjusted annual rates). The decrease in hours was the largest since the third quarter of 2003, when hours fell 6.0 percent. In the third quarter of 2007, manufacturing productivity increased 4.0 percent, reflecting a 3.9 percent rise in output and a 0.1 percent decrease in hours (table 3). In the durable goods manufacturing sector, productivity rose 4.6 percent in the fourth quarter of 2007, as output declined 1.5 percent and hours fell 5.9 percent (table 4). In the nondurable goods sector, productivity, output and hours all fell in the fourth quarter; output per hour declined 0.9 percent, output decreased 2.4 percent and hours declined 1.5 percent (table 5).
Hourly compensation of all manufacturing workers increased 4.2 percent during the fourth quarter of 2007, reflecting increases of 5.2 percent in durable goods industries and 2.6 percent in nondurable goods industries. When the increase in consumer prices was taken into account, real hourly compensation in total manufacturing decreased 0.1 percent in the fourth quarter.
Unit labor costs for the manufacturing sector rose 1.7 percent in fourth-quarter 2007 following declines of 2.9 percent in the third quarter and 3.7 percent in the second quarter. Unit labor costs rose 0.6 percent in durable goods manufacturing and 3.5 percent in nondurable goods industries in the fourth quarter.
ANNUAL AVERAGE CHANGES, 2006-2007
Business and Nonfarm business
When annual averages for 2007 were compared with annual averages for 2006, labor productivity increased 1.6 percent in both the business and nonfarm business sectors (table B). Productivity grew at 1.0 percent in both sectors from 2005 to 2006. From 2000 to 2005, output per hour grew at an average annual rate of 3.1 percent in the business sector and 3.0 percent in the nonfarm business sector. Between 1990 and 2000, productivity rose 2.1 percent per year in the business sector and 2.0 percent per year in nonfarm businesses.
Business:
Nonfarm Business:
Manufacturing:
In 2007, hourly compensation increased 4.8 percent in both the business and nonfarm business sectors, following 3.9 percent gains in both sectors during 2006. Real hourly compensation increased 1.9 percent in the business sector and 1.8 percent in the nonfarm business sector during 2007 and 0.6 percent in both sectors during 2006.
Unit labor costs increased 3.1 percent in both the business and nonfarm sectors in 2007--more than in any year since 2000, when unit labor costs increased 4.1 percent and 4.2 percent in the business and nonfarm business sectors, respectively.
Manufacturing
In manufacturing, labor productivity rose 2.9 percent in 2007, less than the 4.2 percent average annual rate from 2000 through 2006. Output increased 2.0 percent and hours decreased 1.0 percent in 2007 (table B). There was a 4.3 percent increase in durable goods manufacturing productivity in 2007, as output rose 2.9 percent and hours fell 1.4 percent. In nondurable goods manufacturing, output per hour increased 1.1 percent; output rose 0.9 percent and hours edged down 0.2 percent.
The hourly compensation of manufacturing workers increased 4.6 percent in 2007, slightly more than the average annual growth rate of 4.2 percent for the 2000-2006 time period. In 2007, hourly compensation rose 4.9 percent in durable goods manufacturing and 4.1 percent in nondurable goods manufacturing. Taking into account the rise in consumer prices, real hourly compensation in total manufacturing rose 1.7 percent in 2007 after decreasing 0.8 percent the previous year.
Unit labor costs in manufacturing increased 1.6 percent in 2007, a reversal from the 1.5 percent decline in 2006. In the durable goods manufacturing sector unit labor costs edged up 0.6 percent in 2007 following a 2.9 percent decline in 2006. Unit labor costs in nondurable goods industries rose 3.0 percent in 2007 after declining 0.5 percent in 2006.
Revised Measures
Current and previous measures for the third quarter of 2007 for the business, nonfarm business, and manufacturing sectors are compared in table C. In both the business and nonfarm business sectors, productivity growth was lower than reported on Dec. 5. In the business sector, productivity growth was revised down from 6.7 percent to 6.5 percent due to an upward revision to hours; output was unchanged. Nonfarm business sector productivity was also revised down--from 6.3 percent to 6.0 percent-- reflecting both a downward revision to output and an upward revision to hours.
In both the business and nonfarm business sectors, hourly compensation grew less than previously reported. Unit labor costs were similar to those previously reported for both the business and nonfarm business sectors, as downward revisions to productivity were coupled with downward revisions to hourly compensation.
In the manufacturing sector productivity was revised down in the third quarter, reflecting a downward revision to output and an upward revision to hours. Unit labor costs fell less than previously reported as the downward revision to productivity was partially offset by a downward revision to hourly compensation.
Revised measures: Nonfinancial Corporations
Revised third-quarter productivity and costs measures for nonfinancial corporations also were announced today. In the third quarter of 2007, productivity grew less than reported on Dec. 5, reflecting a small downward revision to output and a slightly larger upward revision to hours. Unit labor costs were revised up as the downward revision to productivity was larger than the downward revision to hourly compensation (table D).
Third quarter 2007
Source: U.S. Bureau of Labor Statistics · Original release Feb 6, 2008.
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