2011 Fourth 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.

Fourth Quarter and Annual Averages 2011, Revised

Nonfarm business sector labor productivity increased at a 0.9 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 3.7 percent in output and 2.7 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 0.3 percent, as output rose 2.3 percent and hours rose 1.9 percent. (See table A.) Annual average productivity increased 0.4 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. The measures released today were based on more recent source data than were available for the preliminary report.

Unit labor costs in nonfarm businesses increased 2.8 percent in the fourth quarter of 2011, as productivity grew at a slower rate (+0.9 percent) than hourly compensation (+3.7 percent). Unit labor costs rose 3.1 percent over the last four quarters. (See table A.) Annual average unit labor costs increased 2.0 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.

Data in this release reflect the annual benchmark revision of BLS Current Employment Statistics program data on nonfarm employee hours, and revised seasonal adjustment of those data. More detail can be found in tables 1 through 6 and appendix tables 1 through 6. See Revised measures.

Manufacturing sector productivity edged down 0.1 percent in the fourth quarter of 2011, as output rose 4.8 percent and hours worked increased 4.9 percent; this is the largest quarterly gain in hours worked since the second quarter of 1996 (6.2 percent). Over the last four quarters, manufacturing productivity increased 1.7 percent. Annual average productivity grew 2.6 percent from 2010 to 2011. Unit labor costs in manufacturing increased 2.0 percent in the fourth quarter of 2011 but were unchanged 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.

Revised measures

Quarterly and annual measures of hours and related series--including productivity--for all sectors were revised back to 2007 to incorporate the annual benchmark adjustment and updated information on seasonal trends from the BLS nonfarm payroll series. Third quarter, fourth quarter, and annual average data for 2011 were also revised for regular updates of source data on output and compensation. Revised and previous measures for the third and fourth quarters of 2011 are shown in table B for the business, nonfarm business, and manufacturing sectors. Revised annual average measures for 2007 to 2011 are shown in table C for the nonfarm business and manufacturing sectors. Revised third quarter measures for the nonfinancial corporate sector are shown in table D. Quarterly and annual data for all sectors appear in tables 1-6 for 2009 through 2011, and in appendix tables 1-6 for 2007 and 2008. Full historical annual and quarterly measures can be found on the labor productivity and costs home page at http://www.bls.gov/lpc/#data.

In the fourth quarter of 2011, nonfarm business productivity growth was 0.9 percent, reflecting an upward revision to output combined with a downward revision to hours worked. Unit labor costs rose 2.8 percent, due to an upward revision to hourly compensation. Manufacturing productivity decreased less than the preliminary estimate, edging down 0.1 percent during the quarter. (See table B.)

In the third quarter of 2011, nonfarm business productivity growth was little changed, at 1.8 percent. However, unit labor costs increased 3.9 percent rather than falling 2.1 percent as reported February 2, due to a 6.0 percentage point upward revision to hourly compensation and the slight downward revision to productivity. In the manufacturing sector, productivity grew slightly less than previously reported. Unit labor costs fell less than previously reported due primarily to a large upward revision to hourly compensation. (See table D).

Annual Average productivity growth for 2011 in both the nonfarm business and manufacturing sectors was slightly less than previously reported, due to upward revisions to hours worked; output increased at the same rates reported February 2. The 0.4 percent increase in nonfarm business productivity was the smallest annual gain in the series since a 0.4 percent gain in 1995. In both the nonfarm business and manufacturing sectors, unit labor costs were revised upward for 2011; this was due both to upward revisions to hourly compensation and downward revisions to productivity. Unit labor costs rose 2.0 percent in the nonfarm business sector and declined 0.8 percent in the manufacturing sector. Real hourly compensation, which takes into account changes in consumer prices, decreased 0.7 percent in 2011 in the nonfarm business sector. This is the largest annual decline in the measure since a 1.7 percent decline in 1989. (See table C.)

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 2011

Percent change, annual rate, third quarter 2011

Percent change, annual rate, third quarter 2011