2016 First 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.

First Quarter 2016, Preliminary

Nonfarm business sector labor productivity decreased at a 1.0-percent annual rate during the first quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 0.4 percent and hours worked increased 1.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2015 to the first quarter of 2016, productivity increased 0.6 percent. (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 4.1 percent in the first quarter of 2016, reflecting a 3.0-percent increase in hourly compensation and a 1.0-percent decrease in productivity. Unit labor costs increased 2.3 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 1.9 percent in the first quarter of 2016, as output increased 0.7 percent and hours worked decreased 1.1 percent. Productivity increased 0.1 percent in the durable goods manufacturing sector and increased 4.4 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.5 percent, as output increased 0.7 percent and hours declined 0.8 percent. (See tables A, 3, 4, and 5.) Unit labor costs in manufacturing decreased 1.2 percent in the first quarter of 2016 and rose 1.6 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 fourth quarter and annual 2015 measures were announced today for the nonfinancial corporate sector. Productivity decreased 2.2 percent in the fourth quarter of 2015 and decreased 0.5 percent over the last four quarters. Annual average productivity increased 0.8 percent from 2014 to 2015. Unit profits of nonfinancial corporations fell 35.7 percent in the fourth quarter of 2015, which is the largest quarterly decline since a 41.8-percent decline in the fourth quarter of 2008. The measure has declined 15.2 percent over the last four quarters, which is the largest four-quarter decline since a 15.8- percent decline in the third quarter of 2009. (See tables C and 6.)

Revised measures

Measures of real hourly compensation for all sectors were revised from the second quarter of 2011 forward, due to incorporation of new and revised data from the BLS Office of Prices and Living Conditions. Output data for the manufacturing sector incorporate historically revised indexes of industrial production published by the Board of Governors of the Federal Reserve System on April 1.

In the fourth quarter of 2015, nonfarm business sector productivity decreased 1.7 percent--a smaller decline than reported March 3--reflecting an upward revision to output. Unit labor costs increased 2.7 percent, a smaller increase than previously reported. Total manufacturing sector productivity decreased 1.0 percent in the fourth quarter of 2015, as output was revised down more than hours. Unit labor costs in the total manufacturing sector increased 3.6 percent during the quarter. There were also revisions to measures for the durable and nondurable manufacturing sectors. (See table B.)

There were historical revisions to manufacturing labor productivity. The annual average rate of productivity growth for 2015 was revised down from 1.3 percent to 0.2 percent and the rate for 2014 was revised down from 1.3 percent to negative 0.1 percent. (See table 3.)

Quarterly and annual data for all sectors for recent years appear in tables 1-6 and appendix tables 1-6. 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