2014 Third 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.

Third Quarter 2014, Revised

Nonfarm business sector labor productivity increased at a 2.3 percent annual rate during the third quarter of 2014, the U.S. Bureau of Labor Statistics reported today, as output increased 4.9 percent and hours worked increased 2.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2013 to the third quarter of 2014, productivity rose 1.0 percent as output and hours worked increased 3.1 percent and 2.1 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. Measures released today are based on more recent source data than were available for the preliminary report.

Unit labor costs in the nonfarm business sector fell 1.0 percent in the third quarter of 2014, as a 1.3 percent increase in hourly compensation was smaller than the 2.3 percent gain in productivity. Unit labor costs increased 1.2 percent over the last four quarters. (See tables A and 2.)

BLS calculates 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 2.9 percent in the third quarter of 2014, as output increased 4.2 percent and hours worked increased 1.3 percent. Productivity increased 3.2 percent in the durable goods sector and increased 3.5 percent in the nondurable goods sector. (See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing productivity increased 2.7 percent, as output increased 4.4 percent and hours increased 1.6 percent. Unit labor costs in manufacturing fell 1.3 percent in the third quarter of 2014 and decreased 0.5 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 third-quarter 2014 measures were announced today for the nonfinancial corporate sector. Productivity increased 1.1 percent as output and hours rose 4.0 percent and 2.9 percent, respectively. (See tables C and 6.)

Revised measures

The measures released today are based on more recent source data than were available for the preliminary report. Table B presents previous and revised productivity and related measures for the business, nonfarm business, and manufacturing sectors, for the second and third quarters of 2014.

In the third quarter of 2014, nonfarm business productivity increased 2.3 percent, rather than 2.0 percent as reported November 6. The revised figure reflects an upward revision to output that was partially offset by a small upward revision to hours. Unit labor costs were revised down, and decreased 1.0 percent rather than increasing 0.3 percent, reflecting both the upward revision to productivity and a 1.0 percentage point downward revision to hourly compensation growth. In the manufacturing sector, productivity increased 2.9 percent rather than increasing 3.2 percent as previously reported, as the upward revision to hours was larger than a small upward revision to output. Unit labor costs decreased 1.3 percent, a larger decrease than the preliminary estimate.

In the second quarter of 2014, nonfarm business productivity, output, and hours were unrevised. Unit labor costs fell 3.7 percent, rather than 0.5 percent as previously reported, the result of a large downward revision to hourly compensation. In the manufacturing sector, output and productivity growth were both revised up by 0.1 percentage point. Unit labor costs decreased 5.4 percent, a larger decrease than previously reported, due primarily to a downward revision to hourly compensation.

Second-quarter 2014 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity increased 2.0 percent rather than 4.0 percent as reported November 6. (See table C.)

Complete annual and quarterly data series can be found on the Productivity and Costs home page: www.bls.gov/lpc/#data.

Calendar year 2015 release dates for Productivity and Costs news releases are now available at www.bls.gov/schedule/news_release/prod2.htm.

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 2014

Percent change, annual rate, second quarter 2014

Percent change, annual rate, third quarter 2014

Percent change, annual rate, second quarter 2014