2010 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 2010, Revised

Nonfarm business sector labor productivity increased at a 2.8 percent annual rate during the first quarter of 2010, the U.S. Bureau of Labor Statistics reported today, with output rising 4.0 percent and hours rising 1.1 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 3.0 percent while hours fell 3.0 percent, yielding an increase in productivity of 6.1 percent (tables A, and 2). This gain in productivity from the same quarter a year ago was the largest since output per hour increased 6.1 percent over the four-quarter period ending in the first quarter of 2002.

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. The measures released today were based on more recent source data than were available for the preliminary report.

Beginning with the Productivity and Costs news release scheduled for August 10, 2010, the 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. All data will be presented in reverse chronological order, listing the most recent data first.

Unit labor costs in nonfarm businesses fell 1.3 percent in the first quarter of 2010, as the 2.8 percent increase in productivity outpaced a 1.5 percent gain in hourly compensation. Unit labor costs fell 4.2 percent over the last four quarters, as the 6.1 percent increase in output per hour over that period outpaced a 1.6 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 1.5 percent in the first quarter of 2010, as output rose 7.2 percent and hours worked increased 5.6 percent. 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 1.5 percent in the first quarter of 2010 and fell 5.1 percent over the last four quarters (tables A, and 3). 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.

Nonfinancial corporate sector productivity increased 4.2 percent in the first quarter of 2010 as output and hours rose 6.4 percent and 2.1 percent, respectively (tables C and 6).

Revised measures

In the first quarter of 2010, nonfarm business productivity growth was revised down to 2.8 percent from the 3.6 percent preliminary estimate, reflecting a downward revision to output and an upward revision to hours. Unit labor costs fell 1.3 percent in the first quarter, a slightly smaller decline than reported May 6. In the manufacturing sector, productivity growth in the first quarter was revised down to 1.5 percent from 2.5 percent. Unit labor costs declined 1.5 percent rather than falling 3.7 percent as previously reported.

In the fourth quarter of 2009, nonfarm business productivity was unrevised, while a 2.3 percentage point downward revision to hourly compensation resulted in a larger decline in unit labor costs (-7.8 percent) than was previously reported. In the manufacturing sector, fourth quarter productivity was unrevised, while an upward revision to hourly compensation slowed the rate of decline in unit labor costs to 4.2 percent.

Nonfarm Durable Nondurable Sector 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

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

Percent change, annual rate, first quarter 2010

Percent change, annual rate, fourth quarter 2009

Percent change, annual rate, first quarter 2010

Percent change, annual rate, fourth quarter 2009