2011 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 2011, Revised

Nonfarm business sector labor productivity increased at a 1.8 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 3.2 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 0.7 percent in the first quarter of 2011, as a 2.5 percent increase in hourly compensation outpaced the 1.8 percent gain in productivity. Unit labor costs also rose 0.7 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 2.6 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 4.2 percent in the first quarter of 2011, as output and hours worked increased 7.7 percent and 3.3 percent, respectively. Over the last four quarters, manufacturing productivity increased 4.1 percent. Unit labor costs in manufacturing declined 1.4 percent in the first quarter of 2011 and 0.7 percent over the last four quarters.

Productivity increased 7.5 percent in the durable goods sector and 2.6 percent in the nondurable goods sector in the first quarter of 2011. In durable goods industries, a 14.0 percent jump in output outweighed a 6.1 percent increase in hours worked. Nondurable goods production rose 1.5 percent while hours fell 1.1 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.

Preliminary first quarter 2011 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 4.1 percent in the first quarter of 2011 as output and hours rose 6.2 percent and 2.0 percent, respectively. (See tables C and 6.)

Revised measures

The measures released today were based on more recent source data than were available for the preliminary report. Table B presents previous and revised productivity and related measures for the major sectors: business, nonfarm business, and manufacturing, for the first quarter of 2011 and the fourth quarter of 2010.

In the first quarter of 2011, nonfarm business productivity growth was revised up to 1.8 percent from the 1.6 percent preliminary estimate, reflecting an upward revision to output. Unit labor costs increased 0.7 percent in the first quarter, a slightly smaller gain than reported May 5. In the manufacturing sector, productivity growth in the first quarter was revised down to 4.2 percent from 6.3 percent due to a downward revision to output. Unit labor costs declined 1.4 percent rather than falling 3.5 percent as previously reported.

In the fourth quarter of 2010, nonfarm business productivity was unrevised, while a 1.8 percentage point downward revision to hourly compensation resulted in a larger decline in unit labor costs (-2.8 percent) than was previously reported. In the manufacturing sector, a downward revision to productivity and an upward revision to hourly compensation resulted in a smaller decline in unit labor costs than was reported on May 5. In the nonfinancial corporate sector, productivity growth was revised down to 1.6 percent from a previous estimate of 2.6 percent.

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, first quarter 2011

Percent change, annual rate, fourth quarter 2010

Percent change, annual rate, first quarter 2011

Percent change, annual rate, fourth quarter 2010