2014 First 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.

First Quarter 2014, Preliminary

Nonfarm business sector labor productivity decreased at a 1.7 percent annual rate during the first quarter of 2014, the U.S. Bureau of Labor Statistics reported today. The decrease in productivity reflects increases of 0.3 percent in output and 2.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2013 to the first quarter of 2014, productivity increased 1.4 percent as output and hours worked rose 3.2 percent and 1.7 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 4.2 percent in the first quarter of 2014, due to both the decline in productivity and a 2.4 percent increase in hourly compensation. Unit labor costs increased 0.9 percent over the last four quarters. (See tables A and 2.)

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 3.3 percent in the first quarter of 2014, as output increased 1.8 percent and hours worked decreased 1.4 percent. Productivity increased 3.6 percent in the durable goods sector and increased 2.5 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 2.2 percent, as output increased 2.4 percent and hours increased 0.2 percent. Unit labor costs in manufacturing increased 0.1 percent in the first quarter of 2014 and declined 0.2 percent from the same quarter a year ago. (See tables A and 3.)

The concepts, sources, and methods used for the manufacturing 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.

Preliminary fourth quarter and annual 2013 measures were announced today for the nonfinancial corporate sector. Productivity increased 2.1 percent in the fourth quarter of 2013 and was unchanged over the last four quarters. Annual average productivity was unchanged from 2012 to 2013. (See tables C and 6).

Revised measures

Revised measures of real hourly compensation for all sectors, from 2009 onward, reflect revisions in the consumer price series based on new and revised data from the BLS Office of Prices and Living Conditions. Output data for the manufacturing sector incorporate historically revised indexes of industrial production published by the Board of Governors of the Federal Reserve System on March 28. These revisions affected quarterly manufacturing output, productivity, and unit labor cost measures for the data series beginning in 1987 and recent annual measures. Full historical annual and quarterly measures are available on the labor productivity and costs home page: www.bls.gov/lpc/#data.

In the fourth quarter of 2013, nonfarm business sector productivity increased 2.3 percent, which is a larger increase than reported March 6; this revision is due to both an upward revision to output and a downward revision to hours. Unit labor costs fell 0.4 percent, a larger decline than previously reported. Manufacturing sector productivity rose 1.3 percent in the fourth quarter, the same rate as was previously reported. Unit labor costs in the manufacturing sector rose 0.1 percent, rather than falling 0.1 percent as reported March 6. (See table B.)

2013 Annual Average measures for productivity and unit labor costs in the nonfarm business sector were unrevised from the March 6 release. In the manufacturing sector, an upward revision to output led to an upward revision to productivity and a downward revision to unit labor costs. (See table B.)

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 2013

Percent change, annual average 2013

Percent change, annual rate, fourth quarter 2013

Percent change, annual average 2013