2015 Third 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.

Third Quarter 2015, Preliminary

Nonfarm business sector labor productivity increased at a 1.6-percent annual rate during the third quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 1.2 percent and hours worked decreased 0.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The decline in hours worked was the first decline in this series since a 4.8-percent decline in the third quarter of 2009. From the third quarter of 2014 to the third quarter of 2015, productivity increased 0.4 percent, reflecting increases in output and hours worked of 2.3 percent and 1.9 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 the nonfarm business sector increased 1.4 percent in the third quarter of 2015, reflecting a 3.0-percent increase in hourly compensation and a 1.6-percent increase in productivity. Unit labor costs increased 2.0 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.

Nonfarm business sector hours worked declined 0.5 percent in the third quarter of 2015, reflecting a decline of 0.9 percent in average weekly hours worked that was partially offset by an increase of 0.5 percent in employment. The increase in employment--which includes employees, proprietors, and unpaid family workers--was the smallest since a 0.3-percent increase in the third quarter of 2010. Over the last four quarters, hours worked increased 1.9 percent, employment increased 2.2 percent, and average weekly hours worked declined 0.4 percent.

Manufacturing sector labor productivity increased 4.9 percent in the third quarter of 2015--the largest gain since a 6.1-percent increase in the third quarter of 2011--as output increased 2.7 percent and hours worked decreased 2.1 percent. Productivity increased 7.3 percent in the durable goods manufacturing sector--also the largest gain since the third quarter of 2011, when this series increased 8.7 percent. Productivity increased 1.3 percent in the nondurable goods sector. (See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing productivity increased 1.5 percent, as output increased 1.8 percent and hours increased 0.4 percent. Unit labor costs in manufacturing increased 0.9 percent in the third quarter of 2015 and increased 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 the Technical Notes for a more detailed explanation.

Revised measures

Revised and previous measures for the second quarter of 2015 are shown in tables B and C, covering the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

In the second quarter of 2015, nonfarm business sector productivity increased 3.5 percent, rather than 3.3 percent as reported on September 2. The revised figure reflects a 0.4 percentage point upward revision to output which was larger than a 0.1 percentage point upward revision to hours worked. Unit labor costs decreased 1.8 percent during the second quarter-- rather than decreasing 1.4 percent as previously reported--due to both a 0.2 percentage point upward revision to productivity and a 0.1 percentage point downward revision to hourly compensation. In the manufacturing sector, productivity growth was revised down to 2.1 percent from a previous estimate of 2.3 percent, reflecting a small downward revision to output and a small upward revision to hours. Unit labor costs decreased 2.0 percent rather than 2.2 percent.

Second-quarter 2015 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity decreased 0.5 percent rather than 0.6 percent as reported on September 2. Unit labor costs increased 2.6 percent rather than increasing 2.8 percent as previously reported. (See table C.)

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

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, second quarter 2015