2012 Second 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.

Second Quarter 2012, Preliminary

Nonfarm business sector labor productivity increased at a 1.6 percent annual rate during the second quarter of 2012, the U.S. Bureau of Labor Statistics reported today. The increase in productivity reflects increases of 2.0 percent in output and 0.4 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the second quarter of 2011 to the second quarter of 2012, productivity increased 1.1 percent as output and hours worked rose 2.9 percent and 1.8 percent, respectively. (See table A.)

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 1.7 percent in the second quarter of 2012, while hourly compensation increased 3.3 percent. Unit labor costs rose 0.8 percent over the last four quarters. (See table A.)

Data in this release reflect the regular multi-year revision to the National Income and Product Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. Department of Commerce on July 27, 2012. See Revised measures.

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 rose 0.2 percent in the second quarter of 2012, as output grew 1.7 percent and hours worked increased 1.4 percent. Over the last four quarters, manufacturing productivity increased 2.9 percent, as output increased 5.6 percent and hours rose 2.6 percent. Unit labor costs in manufacturing rose 0.3 percent in the second quarter of 2012 and decreased 2.9 percent from the same quarter a year ago. (See tables A and 3.)

Revised first-quarter 2012 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 1.2 percent in the first quarter of 2012, as output and hours rose 4.7 percent and 3.4 percent, respectively. (See tables D and 6.)

The concepts, sources, and methods used for the manufacturing and nonfinancial corporate output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See Technical Notes for a more detailed explanation.

Revised measures

Measures of output for the business, nonfarm business, and nonfinancial corporate (NFC) sectors, and compensation for all sectors incorporate the revised National Income and Product Accounts (NIPA) data released on July 27 by the Bureau of Economic Analysis, U.S. Department of Commerce. As a result, output was revised back to the first quarter of 2009 for the business, nonfarm business, and NFC sectors. Compensation was subject to revisions back to the first quarter of 2008 for the business and nonfarm business sectors, and back to the first quarter of 2009 for the manufacturing and NFC sectors. Furthermore, hours were subject to revisions back to the first quarter of 2008 for the business, nonfarm business, and NFC sectors, due to revised NIPA data on compensation of all employees and employment in government enterprises. Measures of manufacturing output were revised back to 1987 to reflect revised output indexes constructed by BLS using data from the U.S. Department of Commerce; manufacturing hours were revised back to the first quarter of 2012.

As a result of the revisions, productivity and related measures were revised in the business, nonfarm business, and NFC sectors back to the first quarter of 2008. In the manufacturing sector, productivity and related measures were subject to revisions back to 1987.

In the first quarter of 2012, nonfarm business productivity declined 0.5 percent, a smaller decline than reported in the preliminary estimate. The revised figure reflects an upward revision to output and a slight downward revision to hours. Unit labor costs grew 5.6 percent in the first quarter, due primarily to a large upward revision to hourly compensation. In the manufacturing sector, productivity growth in the first quarter was 5.5 percent, as output growth was revised up and hours were revised down. Unit labor costs declined 0.4 percent, rather than decreasing 4.9 percent as previously reported.

For the year 2011, nonfarm business productivity growth was 0.7 percent, an upward revision from the previous estimate of 0.4 percent. (See table C.) Unit labor costs increased 2.0 percent, a larger increase than reported June 6. Manufacturing productivity increased at the same 2.5 percent rate that was reported previously. The 0.1 percent increase in unit labor costs was more than the 1.0 percent decline published June 6, due to an upward revision to hourly compensation.

For the year 2010, nonfarm business productivity growth was revised down to 3.1 percent from the previous estimate of 4.0 percent due to a downward revision in output. (See table C.) Unit labor costs declined 1.0 percent, a smaller decline than reported June 6. Manufacturing productivity increased 6.4 percent, slightly less than reported previously. The 5.0 percent decline in unit labor costs was more than the 4.7 percent decline published June 6.

For the year 2009, nonfarm business productivity growth was 2.9 percent, as the decline in output was less than previously reported. (See table C.) Unit labor costs showed a decline of 1.5 percent, after revision. In manufacturing, productivity grew 0.1 percent, rather than 0.5 percent. Unit labor costs were not revised, increasing 4.0 percent.

Over the most recent ten-year period (2001-2011) nonfarm business productivity increased at an average annual rate of 2.2 percent. Manufacturing productivity grew at an annual average rate of 3.3 percent.

In the nonfinancial corporate sector, first-quarter 2012 productivity growth was 1.2 percent; the preliminary estimate was 0.3 percent. For the years 2011 and 2010, productivity growth was greater than previously reported, due to an upward revision in output. (See tables D and 6.)

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 2012

Percent change, annual average