2011 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 2011, Preliminary

Nonfarm business sector labor productivity increased at a 1.6 percent annual rate during the first quarter of 2011, the U.S. Bureau of Labor Statistics reported today. The gain in productivity reflects increases of 3.1 percent in output and 1.4 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2010 to the first quarter of 2011, output increased 3.2 percent while hours rose 1.9 percent, yielding an increase in productivity of 1.3 percent. (See tables A and 2.)

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 1.0 percent in the first quarter of 2011, as a 2.6 percent increase in hourly compensation outpaced the 1.6 percent gain in productivity. Unit labor costs rose 1.2 percent from the same quarter a year ago. (See tables A and 2.) In the first quarter of 2011, the consumer price series increased at a 5.3 percent annual rate, resulting in a decline of 2.5 percent in real hourly compensation.

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. Real hourly compensation is equal to hourly compensation divided by the consumer price series.

Manufacturing sector productivity grew 6.3 percent in the first quarter of 2011, as output and hours worked increased 9.7 percent and 3.3 percent, respectively. Over the last four quarters, manufacturing productivity increased 4.7 percent. Unit labor costs in manufacturing declined 3.5 percent in the first quarter of 2011 and 1.4 percent over the last four quarters.

Productivity increased 9.8 percent in the durable goods sector and 4.5 percent in the nondurable goods sector in the first quarter of 2011. In durable goods industries, a 16.4 percent jump in output outweighed a 6.1 percent increase in hours worked; this gain in output is the largest in the series. Nondurable goods production rose 3.3 percent while hours fell 1.2 percent. (See tables A, 3, 4 and 5.)

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 2010 measures of productivity and costs were announced for the nonfinancial corporate sector. Output per employee hour rose 2.6 percent for the fourth quarter of 2010 as output and hours rose 4.5 percent and 1.8 percent, respectively. Annual average productivity grew 5.7 percent in 2010. (See tables C and 6.)

Revised measures

Revised measures of real hourly compensation for all sectors for 2006 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 reflects historically revised indexes of industrial production published by the Board of Governors of the Federal Reserve System on March 25. Accordingly, manufacturing output, productivity and unit labor costs were revised back to 1987 (See appendix tables 1-3). Full historical annual and quarterly measures are available on the productivity and costs home page: http://www.bls.gov/lpc/#data.

In the fourth quarter of 2010, nonfarm business productivity growth was revised up to 2.9 percent due to a small upward revision to output. After revision, unit labor costs fell 1.0 percent. In the manufacturing sector, fourth-quarter productivity growth was revised down to 5.1 percent.

For the year 2010, nonfarm business sector productivity grew 3.9 percent and unit labor costs fell 1.5 percent, the same as the preliminary estimates published March 3. In the manufacturing sector, productivity grew 5.9 percent and unit labor costs fell 3.7 percent, as revised.

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 2010

Percent change, annual average 2010

Percent change, annual rate, fourth quarter 2010

Percent change, annual average 2010