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Second Quarter 2008, Preliminary
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 second quarter of 2008. The seasonally adjusted annual rates of productivity change in the second quarter were:
2.3 percent in the business sector and 2.2 percent in the nonfarm business sector.
Productivity gains in both sectors reflected output increases and small declines in hours worked.
In manufacturing, the preliminary productivity changes in the second quarter were:
-1.4 percent in manufacturing, -3.5 percent in durable goods manufacturing, and 0.7 percent in nondurable goods manufacturing.
Productivity in the total manufacturing sector fell 1.4 percent in the second quarter of 2008, as both output and hours worked decreased. The decline in productivity was concentrated in the durable goods subsector. 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. Second-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.
Data in this release reflect the regular multi-year revision to the national income and product accounts released by the Bureau of Economic Analysis of the U.S. Department of Commerce on July 31. See Revised Measures.
Business
Business sector output per hour increased 2.3 percent from the first quarter to the second quarter of 2008, as output increased 1.5 percent and hours of all persons engaged in the sector--employees, proprietors, and unpaid family workers--fell 0.7 percent (seasonally adjusted annual rates). The increase in output was greater and the decline in hours was smaller than in the first quarter, when productivity rose 2.2 percent, as revised (tables A, B, and 1). Historically, from 2000 through 2007, business sector productivity had grown at an average annual rate of 2.5 percent.
Hourly compensation increased 3.8 percent in the second quarter of 2008, less than the 5.0 percent gain in the first quarter. 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, fell 1.2 percent during the second quarter of 2008 as consumer prices increased 5.0 percent (seasonally adjusted annual rates).
Unit labor costs, which reflect changes in both hourly compensation and productivity, increased at an annual rate of 1.5 percent during the second quarter of 2008. The implicit price deflator for the business sector, which reflects changes in both unit labor costs and unit nonlabor payments, increased 0.6 percent in the second quarter of 2008 and 2.0 percent one quarter earlier.
Nonfarm Business
Productivity increased 2.2 percent in the nonfarm business sector during the second quarter of 2008 as output grew 1.7 percent and hours at work declined 0.5 percent. Revised results for first-quarter 2008 show that productivity increased 2.6 percent, output rose 0.9 percent, and hours fell 1.6 percent (tables A, B and 2). Nonfarm business output per hour had increased at an average annual rate of 2.5 percent from 2000 through 2007.
Hourly compensation in the nonfarm business sector increased 3.6 percent in the second quarter of 2008, compared to a 5.2 percent rise one quarter earlier. When the 5.0 percent annual rate of increase in consumer prices is taken into account, real hourly compensation fell 1.4 percent in the second quarter of 2008. This measure rose 0.8 percent in the first quarter.
Unit labor costs increased 1.3 percent in the second quarter of 2008 and 1.5 percent over the last four quarters. The implicit price deflator for nonfarm business output rose 0.5 percent in the second quarter of 2008 and 2.1 percent in the first quarter.
Manufacturing
Productivity decreased 1.4 percent in manufacturing in the second quarter, as output fell 3.5 percent and hours of all persons declined 2.0 percent. In durable goods industries, productivity fell 3.5 percent--the largest drop since fourth-quarter 1990, when output per hour fell 4.6 percent. In nondurable goods industries, productivity grew 0.7 percent in the second quarter as hours fell faster than output (tables A, 3, 4, 5). In total manufacturing, output per hour increased 2.6 percent from the second quarter of 2007 to the second quarter of 2008; output declined slightly over the four quarters, 0.1 percent, whereas hours fell by 2.7 percent. For the entire 2000-2007 period manufacturing productivity increased at a 3.7 percent annual rate.
During the second quarter of 2008, hourly compensation grew 4.6 percent in total manufacturing, 5.0 percent in durable manufacturing and 3.8 percent in nondurable manufacturing (seasonally adjusted annual rates). Manufacturing hourly compensation also increased 4.6 percent over the last four quarters. When the increase in consumer prices is taken into account, the real hourly compensation of all manufacturing workers fell 0.4 percent in the second quarter.
Unit labor costs in manufacturing jumped 6.1 percent in the second quarter of 2008. The growth in unit labor costs from the second quarter of 2007 was 1.9 percent, reversing the 0.8 percent decline from the first quarter of 2007 to the first quarter of 2008. The 2000-2007 long-term average annual rate of growth for unit labor costs is 0.3 percent.
Revised Measures
Output data for the business and nonfarm business sectors, and the compensation series for all sectors, incorporate the revised national income and product accounts (NIPA) data released by the Bureau of Economic Analysis, U.S. Department of Commerce, on July 31. Revisions for these sectors go back to the first quarter of 2005. Table B presents previous and revised productivity and related measures for the major sectors: business, nonfarm business and manufacturing, for the first quarter of 2008 and for the years 2007 through 2005.
In the first quarter of 2008, output and hours were revised up in all three sectors. In both the business and manufacturing sectors the revisions to hours were greater than to output, resulting in downward revisions to productivity. In nonfarm business the revision to hours offset the revision to output, and productivity increased at the same 2.6 percent rate reported June 4. In business and nonfarm business there were small upward revisions to hourly compensation and unit labor costs. In manufacturing, hourly compensation growth was revised down much more than productivity; the downward revision to unit labor costs was due solely to the downward revision to hourly compensation.
Growth in output and output per hour were revised down in the business and nonfarm business sectors in 2007 and 2005, and were little changed in 2006. In both sectors, the average annual rate of productivity growth from 2004 to 2007 was 1.4 percent, compared to 3.3 percent from 2000 to 2004. Manufacturing sector output per hour was not revised historically.
For the year 2007, hourly compensation was revised down in all three sectors, leading to downward revisions to unit labor costs. For 2006, manufacturing hourly compensation and unit labor costs were revised up; for 2005 these same measures were revised down. Revised quarterly series appear in tables 1-5 and appendix tables 1-5. The full historical revisions including the quarterly measures can be found on the productivity and costs home page http://www.bls.gov/lpc/#data.
First Quarter 2008
Annual average 2007
Annual average 2006
Annual average 2005
Revised Measures: Nonfinancial Corporations
Output, based on the income side of the NIPA for nonfinancial corporations, was revised down sharply in the first quarter to -0.1 percent, leading to a corresponding downward revision to productivity (table C). Unit labor costs were revised up as the revision to productivity was greater than a downward revision to hourly compensation. Unit profits fell 14.7 percent, rather than 1.5 percent as reported June 4. From the first quarter of 2007 through the first quarter of 2008, productivity increased 2.1 percent (table 6). Productivity had increased at an average annual rate of 2.7 percent from 2000 through 2007.
First quarter 2008
Annual average 2007
Annual average 2006
Annual average 2005
Source: U.S. Bureau of Labor Statistics · Original release Aug 8, 2008.
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