2015 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 2015, Revised

Nonfarm business sector labor productivity increased at a 2.2-percent annual rate during the third quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 1.8 percent and hours worked decreased 0.3 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 0.6 percent, reflecting increases in output and hours worked of 2.5 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. 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 increased 1.8 percent in the third quarter of 2015, reflecting a 4.0-percent increase in hourly compensation and a 2.2-percent increase in productivity. Unit labor costs increased 3.0 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.

Manufacturing sector labor productivity increased 5.1 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 3.2 percent and hours worked decreased 1.8 percent. Productivity increased 6.9 percent in the durable goods manufacturing sector and increased 2.3 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 2.0 percent and hours increased 0.4 percent. Unit labor costs in manufacturing increased 2.3 percent in the third quarter of 2015 and increased 2.1 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.

Preliminary third-quarter 2015 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 2.9 percent in the third quarter of 2015, as output increased 4.3 percent and hours worked increased 1.4 percent. Unit labor costs increased 1.2 percent.

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 2015.

In the third quarter of 2015, nonfarm business labor productivity increased 2.2 percent, rather than 1.6 percent as reported on November 5. The revised figure reflects an upward revision to output that was larger than a small upward revision to hours. Unit labor costs were revised up, and increased 1.8 percent rather than increasing 1.4 percent, as the upward revision to productivity was smaller than a 1.0 percentage point upward revision to hourly compensation growth. In the manufacturing sector, productivity increased 5.1 percent rather than increasing 4.9 percent as previously reported, as the upward revision to output was larger than the upward revision to hours. Unit labor costs increased 2.3 percent, a larger increase than the preliminary estimate.

In the second quarter of 2015, nonfarm business labor productivity, output, and hours were unrevised. Unit labor costs increased 2.0 percent, rather than decreasing 1.8 percent as previously reported, the result of a large upward revision to hourly compensation. In the manufacturing sector, output growth and productivity growth were both revised up by 0.1 percentage point. Hourly compensation was revised up to a 5.5-percent increase from a preliminary estimate of 0.0 percent. As a result, unit labor costs were revised up, and increased 3.3 percent instead of decreasing 2.0 percent.

Second-quarter 2015 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity increased 1.6 percent rather than decreasing 0.5 percent as reported on November 5, due to a 2.0 percentage point upward revision to output. (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 2016 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 2015

Percent change, annual rate, second quarter 2015