2012 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 2012, Preliminary

Nonfarm business sector labor productivity decreased at a 2.0 percent annual rate during the fourth quarter of 2012, the U.S. Bureau of Labor Statistics reported today. The decrease in productivity reflects increases of 0.1 percent in output and 2.2 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2011 to the fourth quarter of 2012, productivity increased 0.6 percent as output and hours worked rose 2.4 percent and 1.8 percent, respectively. (See table A.) Annual average productivity increased 1.0 percent from 2011 to 2012. (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 4.5 percent in the fourth quarter of 2012, the combined effect of the 2.0 percent decrease in productivity and a 2.4 percent increase in hourly compensation. Unit labor costs rose 1.9 percent over the last four quarters. (See table A.)

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 increased 0.5 percent in the fourth quarter of 2012, as output increased 0.7 percent and hours increased 0.1 percent. Productivity increased 1.6 percent in the durable goods sector and decreased 0.5 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.3 percent, as output increased 2.8 percent and hours worked rose 1.5 percent. Unit labor costs in manufacturing increased 0.4 percent in the fourth quarter of 2012 and increased 3.4 percent from the same quarter a year ago. (See tables A and 3.)

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

Revised and previous measures for the third quarter of 2012 are shown in tables B and D and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

In the third quarter of 2012, nonfarm business productivity was revised to a 3.2 percent increase, as an upward revision to output was greater than an upward revision to hours. (See table B.) Unit labor costs for the nonfarm business sector fell 2.3 percent in the third quarter, more than previously reported.

In the manufacturing sector, productivity declined 0.9 percent in the third quarter of 2012--a slightly larger decline than previously reported--after a small upward revision to hours growth in the quarter.

In the nonfinancial corporate sector, productivity declined 4.7 percent in third-quarter 2012, a greater decline than previously reported. As a result of the downward revision to productivity, unit labor costs rose more than the preliminary estimate. (See table D.)

Quarterly and annual data for all sectors from 2010 to 2012 appear in tables 1-6. 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 released February 1, 2013. This benchmark revision will be incorporated in our next release on March 7, 2013.

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, third quarter 2012