2011 Fourth 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.

Fourth Quarter and Annual Averages 2011, Preliminary

Nonfarm business sector labor productivity increased at a 0.7 percent annual rate during the fourth quarter of 2011, the U.S. Bureau of Labor Statistics reported today. The gain in productivity reflects increases of 3.6 percent in output and 2.9 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2010 to the fourth quarter of 2011, productivity grew 0.5 percent, as output rose 2.3 percent and hours rose 1.8 percent. (See table A.) Annual average productivity increased 0.7 percent from 2010 to 2011. (See table C.)

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 increased 1.2 percent in the fourth quarter of 2011, as productivity grew at a slower rate (0.7 percent) than hourly compensation (1.9 percent). Unit labor costs rose 1.3 percent over the last four quarters. (See table A.) Annual average unit labor costs increased 1.2 percent from 2010 to 2011. (See table C.)

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 declined 0.4 percent in the fourth quarter of 2011, as output rose 3.8 percent and hours worked increased 4.2 percent; this is the largest quarterly gain in hours worked since the fourth quarter of 2005 (4.8 percent). Over the last four quarters, manufacturing productivity increased 1.7 percent. Annual average productivity grew 2.8 percent from 2010 to 2011. Unit labor costs in manufacturing increased 1.6 percent in the fourth quarter of 2011 but decreased 1.1 percent from the same quarter a year ago. (See tables A, C and 3.)

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.

In the manufacturing sector, productivity grew 2.8 percent in 2011, reflecting a 4.9 percent increase in output combined with a 2.0 percent increase in hours; this is the largest annual increase in manufacturing sector hours since a 2.3 percent gain in 1994. Unit labor costs in the manufacturing sector fell 1.3 percent in 2011.

Revised measures

Revised and previous measures for the third quarter of 2011 are shown in tables B and D and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations. Measures for the nonfinancial corporate sector include historically revised gross product of nonfinancial corporate business in chained (2005) dollars, published December 22, 2011 by the Bureau of Economic Analysis of the U.S. Department of Commerce.

In the third quarter of 2011, nonfarm business productivity growth was 1.9 percent, reflecting a downward revision to output and a slight upward revision to hours. (See table B.) Unit labor costs for the nonfarm business sector fell 2.1 percent in the third quarter, less than previously reported.

In the nonfinancial corporate (NFC) sector, quarterly percent changes in productivity and unit labor costs were not revised for the third quarter, although indexes for these and other measures related to output were revised historically.

Effective with this release, measures for the NFC sector, previously beginning in 1958, have been extended back to 1947. These newly-introduced data for the pre-1958 period are based upon the same methodology and data sources as those for 1958 forward. Nonfinancial corporate sector productivity grew at a 2.4 percent average annual rate from 1947 to 2010.

Quarterly and annual data for all sectors from 2009 to 2011 appear in tables 1-6 and revised historical annual data for the nonfinancial corporate sector in appendix table 1. Full historical measures can be found on the productivity and costs home page at http://www.bls.gov/lpc/#data.

Data in this release do not reflect the annual benchmark revision of the BLS Current Employment Statistics program data to be released February 3, 2012. This benchmark will be incorporated in our next release on March 7, 2012.

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

Percent change, annual rate, third quarter 2011