2015 Fourth 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.

Fourth Quarter and Annual Averages 2015, Revised

Nonfarm business sector labor productivity decreased at a 2.2-percent annual rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 1.0 percent and hours worked increased 3.2 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 0.5 percent. (See table A.) Annual average productivity increased 0.7 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. Measures released today were based on more recent source data than were available for the preliminary report.

Unit labor costs in the nonfarm business sector increased 3.3 percent in the fourth quarter of 2015, reflecting a 1.1-percent increase in hourly compensation and a 2.2-percent decrease in productivity. Unit labor costs increased 2.1 percent over the last four quarters. (See tables A and 2.)

Data in this release reflect the annual benchmark revision of BLS Current Employment Statistics program data on nonfarm employment and hours, and the revised seasonal adjustment of those data. More detail can be found in tables 1-6 and appendix tables 1-6. See Revised measures.

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 0.7 percent in the fourth quarter of 2015, as output increased 0.1 percent and hours worked rose 0.8 percent. Productivity declined 1.8 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 1.4 percent, as output increased 1.0 percent and hours declined 0.4 percent. Unit labor costs in manufacturing increased 3.2 percent in the fourth quarter of 2015 and rose 1.0 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

Quarterly and annual measures of hours and related series–including productivity–were revised back to 1990 for all major sectors. The revisions incorporate revised Current Employment Statistics (CES) program data published February 5, 2016. From 2011 forward, the data were subject to revision as a result of annual benchmarking of CES data and revised seasonal adjustment of those data. Prior to 2011, there were small revisions due to CES coverage changes affecting selected industries. Index measures related to hours show full historical revisions because the 2009 base year values were revised; resulting revisions to percent changes are small. Third quarter, fourth quarter, and annual average data for 2015 were also revised to incorporate regular updates of source data on output and compensation.

Revised and previous measures for the third and fourth quarters of 2015 are shown in table B for the business, nonfarm business, and manufacturing sectors. In the fourth quarter of 2015, nonfarm business productivity decreased 2.2 percent rather than 3.0 percent as reported February 4. The revised figure reflects a 0.9 percentage point upward revision to output and a 0.1 percentage point downward revision to hours. Unit labor costs increased 3.3 percent, a smaller increase than was previously reported, as productivity was revised upward and hourly compensation was revised downward.

Manufacturing productivity declined 0.7 percent rather than 0.4 percent, reflecting a downward revision to output and a small downward revision to hours. Because the downward revision to productivity was smaller than a downward revision to hourly compensation, manufacturing unit labor costs increased 3.2 percent, rather than 3.6 percent as reported in the preliminary release. (See table B.)

In the third quarter of 2015, nonfarm business productivity growth was revised down slightly to an increase of 2.0 percent, reflecting a slight upward revision to hours. Unit labor costs increased 0.4 percent, less than previously reported, due to a 1.8 percentage point downward revision to hourly compensation. In the manufacturing sector, productivity was unrevised at 5.0 percent. Unit labor costs decreased 0.9 percent, rather than increasing 2.3 percent, reflecting a large downward revision to hourly compensation. (See table B.) Nonfinancial corporate sector productivity increased 1.6 percent in the third quarter of 2015. (See table D.)

Unit labor costs in the nonfarm business sector rose 2.1 percent in 2015, reflecting increases of 2.8 percent in hourly compensation and 0.7 percent in productivity. Real hourly compensation, which takes into account changes in consumer prices, increased 2.7 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 0.8 percent in 2015. (See table C.)

Quarterly and annual data for all sectors appear in tables 1-6 for 2013 through 2015 and in appendix tables 1-6 for 2010 through 2012. Full historical annual and quarterly measures can be found on the labor productivity and costs home page at 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