2009 Fourth Quarter (Preliminary) 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.

Fourth Quarter and Annual Averages 2009, Preliminary

Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 7.2 percent in output and 1.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) This was the first quarterly increase in hours worked since the second quarter of 2007 (0.9 percent). Productivity increased 5.1 percent over the last four quarters --more than during any similar period since output per hour rose 6.1 percent from the first quarter of 2001 to the first quarter of 2002 (table A).

Labor productivity is calculated by dividing an index of real output by an index of the combined hours worked of all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in nonfarm businesses fell 4.4 percent in the fourth quarter of 2009, a result of the increase in productivity (6.2 percent) outpacing the increase in hourly compensation (1.5 percent). BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them. Over the last four quarters, unit labor costs declined 2.8 percent, as hourly compensation and productivity increased 2.2 percent and 5.1 percent, respectively (table A). This decline in unit labor costs was the largest since unit labor costs fell 3.2 percent over the four quarters ending with the first quarter of 2002.

Data in this release do not reflect the annual benchmark revision of the BLS Current Employment Statistics program data to be released February 5, 2010. This benchmark will be incorporated in our next release on March 4, 2010.

Manufacturing sector productivity grew 7.8 percent in the fourth quarter of 2009, as output rose 6.1 percent and hours worked declined 1.6 percent. Productivity grew 6.2 percent in durable goods industries and 9.8 percent in nondurable goods industries in the fourth quarter. Over the last four quarters, manufacturing productivity increased 6.5 percent as output decreased 4.4 percent and hours fell 10.2 percent (table A). Unit labor costs in manufacturing declined 7.4 percent in the fourth quarter of 2009 and decreased 3.2 percent from the same quarter a year earlier (table A).

The data sources and methods used in the preparation of the manufacturing output series differ from those used in preparing the business and nonfarm business output series, and these measures are not directly comparable. See Technical Notes for further information on data sources.

Revised measures

Revised and previous measures for the third quarter of 2009 in tables B and D cover the major sectors: nonfarm business, business, manufacturing and nonfinancial corporations.

In the third quarter of 2009, nonfarm business productivity growth was revised down from 8.1 percent to 7.2 percent compared to the estimate published on December 3, reflecting a downward revision to output and a slight upward revision to hours. Unit labor costs for nonfarm business fell 1.5 percent, a smaller decline than previously reported. In both the manufacturing and nonfinancial corporate sectors productivity was revised upward due to upward revisions in output.

Quarterly and annual data for all sectors for 2007 to 2009 appear in tables 1-6. Full historical measures can be found on the productivity and costs home page http://www.bls.gov/lpc/#data.

Sector Nonfarm Durable Nondurable Business Business Manufacturing Manufacturing Manufacturing Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y

Sector Nonfarm Durable Nondurable Business Business Manufacturing Manufacturing Manufacturing Revised Previous Revised Previous Revised Previous Revised Previous Revised Previous

Percent change, annual rate