2010 First 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.

First Quarter 2010, Preliminary

Nonfarm business sector labor productivity increased at a 3.6 percent annual rate during the first quarter of 2010, the U.S. Bureau of Labor Statistics reported today, with output rising 4.4 percent and hours worked rising 0.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2009 to the first quarter of 2010, output increased 3.1 percent while hours fell 3.0 percent, yielding an increase in productivity of 6.3 percent (tables A and 2). This gain in productivity from the same quarter a year ago was the largest since output per hour increased 7.0 percent over the four-quarter period ending in the first quarter of 1962.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours of all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in nonfarm businesses fell 1.6 percent in the first quarter of 2010, as the 3.6 percent increase in productivity outpaced a 1.9 percent gain in hourly compensation. Unit labor costs fell 3.7 percent over the last four quarters, as the 6.3 percent increase in productivity outpaced a 2.3 percent rise in hourly compensation (tables A and 2).

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.

Manufacturing sector productivity grew 2.5 percent in the first quarter of 2010, as output rose 7.5 percent and hours worked increased 4.9 percent, the first increase in hours since the second quarter of 2007. Gains in productivity, output, and hours were each larger in the durable goods sector than in the nondurable goods sector (tables A, 3, 4 and 5). Unit labor costs in manufacturing declined 3.7 percent in the first quarter of 2010 and fell 6.1 percent over the last four quarters. The four-quarter decline was the largest in the series, which begins in the first quarter of 1988.

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.

Fourth quarter and annual 2009 measures of productivity and costs were announced for the nonfinancial corporate sector (tables C and 6). Output per employee hour rose 8.2 percent for the fourth quarter of 2009 as output and hours rose 8.5 percent and 0.3 percent, respectively.

Revised measures

Revised measures of real hourly compensation for all sectors for 2005 onward reflect revisions in the consumer price series based on new and revised data from the BLS Office of Prices and Living Conditions. Output data for the manufacturing sectors incorporates revised output indexes constructed by BLS using data from the U.S. Department of Commerce. Accordingly, manufacturing output, productivity and unit labor costs were revised back to 1987, the first year in the series (appendix tables 1-3). Table B presents previous and revised productivity and related measures for the major sectors: business, nonfarm business and manufacturing, for the fourth quarter and annual averages of 2009.

In the fourth quarter of 2009, nonfarm business productivity growth was revised down to 6.3 percent, reflecting a 0.6 percentage point downward revision to output and a 0.1 percentage point upward revision to hours. After revision, unit labor costs fell 5.6 percent--a smaller decline than previously reported. In the manufacturing sector, fourth-quarter productivity growth was revised down slightly to 6.5 percent.

Full historical annual and quarterly measures are available on the productivity and costs home page: http://www.bls.gov/lpc/#data

Beginning with the Productivity and Costs news release scheduled for August 10, 2010, index series will be rebased from 1992=100 to 2005=100. Also, the presentation of the data in tables 1-6 will be reformatted. In the new format, the three panels in each table will be rearranged. The first panel will present percent changes from the previous quarter, the second will show percent changes from the corresponding quarter of the previous year, and the third will show indexes. Also, all data will be presented in reverse chronological order, listing the most recent data first.

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, fourth quarter 2009

Percent change, annual average 2009

Percent change, annual rate, fourth quarter 2009

Percent change, annual average 2009