2010 Second 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.

Second Quarter 2010, Revised

Nonfarm business sector labor productivity decreased at a 1.8 percent annual rate during the second quarter of 2010, the U.S. Bureau of Labor Statistics reported today as hours increased 3.5 percent and output increased 1.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The second-quarter gain in hours worked was the largest since the first quarter of 2006. From the second quarter of 2009 to the second quarter of 2010, productivity and output both grew 3.7 percent and hours were unchanged (tables A and 2). Nonfarm business productivity increased at an average annual rate of 2.5 percent from 2000 through 2009.

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

Unit labor costs in nonfarm businesses rose 1.1 percent in the second quarter of 2010, as the 1.8 percent decline in productivity was partially offset by a 0.7 percent decline in hourly compensation. Unit labor costs decreased 2.8 percent over the last four quarters, as output per hour increased faster than 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 4.1 percent in the second quarter of 2010, as output rose 8.4 percent and hours worked increased 4.1 percent. Productivity performance differed between the two manufacturing subsectors. In durable manufacturing, output per hour increased 9.9 percent as output grew 13.6 percent and hours rose 3.4 percent. In nondurable goods industries, productivity fell 2.4 percent as output grew 2.8 percent but hours grew 5.3 percent (tables A, 3, 4 and 5). Total manufacturing productivity increased 7.5 percent over the last four quarters and 3.0 percent per year on average from 2000 through 2009.

Unit labor costs in manufacturing declined 5.9 percent in the second quarter of 2010 due to both the 4.1 percent increase in productivity and a 2.0 percent decline in hourly compensation (tables A and 3). Unit labor costs fell 7.3 percent over the last four quarters, the largest four- quarter decrease since the series began in 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.

Preliminary data for the second quarter of 2010 for the nonfinancial corporate sector also were released today. Productivity declined 0.5 percent as output and hours increased 4.0 percent and 4.5 percent, respectively (tables C and 6).

Revised measures

Tables B and C present previous and revised productivity and related measures for the major sectors: nonfarm business, business and manufacturing, as well as nonfinancial corporations.

In the second quarter of 2010, nonfarm business sector productivity was revised down and unit labor costs were revised up as a result of a downward revision to output. In the manufacturing sector, productivity was revised down to 4.1 percent from 4.5 percent; hours were revised up more than output. Unit labor costs did not fall as fast as previously reported due to the downward revision to productivity.

In the first quarter of 2010, nonfarm business sector productivity was not revised, and manufacturing sector productivity was revised upwards. In both sectors, unit labor costs fell more than previously reported as hourly compensation was revised downward.

Nonfinancial corporate sector productivity growth in the first quarter of 2010 was revised down to 8.6 percent from 9.1 percent reflecting a downward revision to output. Unit labor costs were revised down as hourly compensation was revised down more than productivity.

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, second quarter 2010

Percent change, annual rate, first quarter 2010

Percent change, annual rate, second quarter 2010

Percent change, annual rate, first quarter 2010