2015 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 2015, Preliminary

Nonfarm business sector labor productivity decreased at a 3.0-percent annual rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 0.1 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter of 2015, productivity increased 0.3 percent. (See table A.) Annual average productivity increased 0.6 percent from 2014 to 2015. (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 the nonfarm business sector increased 4.5 percent in the fourth quarter of 2015, reflecting a 1.3-percent increase in hourly compensation and a 3.0-percent decrease in productivity. Unit labor costs increased 2.8 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 decreased 0.4 percent in the fourth quarter of 2015, as output increased 0.5 percent and hours worked increased 0.9 percent. Productivity decreased 1.0 percent in the durable goods manufacturing sector and increased 0.3 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 1.1 percent and hours decreased 0.4 percent. Unit labor costs in manufacturing increased 3.6 percent in the fourth quarter of 2015 and increased 1.9 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.

Unit labor costs in the nonfarm business sector rose 2.4 percent in 2015, reflecting increases of 3.0 percent in hourly compensation and 0.6 percent in productivity. The increases in unit labor costs and hourly compensation are the largest since 2007, when these series rose 2.7 percent and 4.3 percent, respectively. Real hourly compensation, which takes into account changes in consumer prices, increased 2.8 percent in 2015. This is the largest annual increase in real hourly compensation since a 3.9-percent increase in 2000.

In the manufacturing sector, productivity increased 1.3 percent in 2015, which is the same rate of increase as in 2014. The average annual rate of productivity growth from 2007 to 2015 is 2.1 percent, which is below the long- term rate from 1987 to 2015 of 3.4 percent. Unit labor costs increased 1.3 percent in 2015, which is similar to a 1.4-percent increase in 2014. Real hourly compensation in manufacturing increased 2.4 percent in 2015.

Revised measures

Revised and previous measures for the third quarter of 2015 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 2015, nonfarm business productivity was revised down 0.1 percentage point, to an increase of 2.1 percent. (See table B.) Unit labor costs in the nonfarm business sector increased 1.9 percent in the third quarter--rather than 1.8 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.1 percentage point, to an increase of 5.0 percent. Manufacturing unit labor costs increased 2.3 percent, the same rate as previously reported.

In the nonfinancial corporate sector, productivity was revised down 1.2 percentage points in the third quarter of 2015, to an increase of 1.7 percent. This downward revision to productivity is due solely to a 1.2 percentage point downward revision to output. (See table D.)

Quarterly and annual data for all sectors from 2013 to 2015 appear in tables 1-6. Full historical measures 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