2017 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 2017, Preliminary

Nonfarm business sector labor productivity decreased at a 0.6-percent annual rate during the first quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as output increased 1.0 percent and hours worked increased 1.6 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the first quarter of 2016 to the first quarter of 2017, productivity increased 1.1 percent, reflecting increases in output and hours worked of 2.4 percent and 1.3 percent, respectively. (See table A1.)

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 3.0 percent in the first quarter of 2017, reflecting a 2.4-percent increase in hourly compensation and a 0.6-percent decline in productivity. Unit labor costs increased 2.8 percent over the last four quarters. (See tables A1 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 0.4 percent in the first quarter of 2017, as output increased 2.8 percent and hours worked increased 2.4 percent. Output per hour decreased 1.1 percent in the durable goods manufacturing sector and increased 3.2 percent in the nondurable goods sector. Over the last four quarters, manufacturing sector productivity increased 0.3 percent, as output increased 0.9 percent and hours worked increased 0.7 percent. (See tables A1, 3, 4, and 5.) Unit labor costs in manufacturing increased 2.1 percent in the first quarter of 2017 and rose 4.3 percent from the same quarter a year ago.

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 2016 measures were announced today for the nonfinancial corporate sector. Productivity decreased 1.0 percent in the fourth quarter of 2016 and increased 1.4 percent over the last four quarters. Annual average productivity increased 0.6 percent from 2015 to 2016. The historical average annual rate of productivity growth in the nonfinancial corporate sector between 1947 and 2016 is 2.2 percent. (See tables A2, C1, and 6.)

Revised measures

Hours and related measures, including productivity, were revised back to 1990 to incorporate updated ratios of hours worked to hours paid by detailed industry; resulting revisions are small. Measures of real hourly compensation for all sectors were revised from 1979 forward, due to incorporation of new and revised data from the BLS Office of Prices and Living Conditions. Output data for the manufacturing sector, which begins in 1987, incorporate historically revised indexes of industrial production published by the Board of Governors of the Federal Reserve System on March 31, 2017.

In the fourth quarter of 2016, nonfarm business sector productivity increased 1.8 percent--a larger increase than reported March 8--reflecting an upward revision to output. Unit labor costs increased 1.3 percent, a smaller increase than previously reported. Total manufacturing sector productivity increased 2.0 percent in the fourth quarter of 2016, the same as previously reported. Unit labor costs in the manufacturing sector increased 2.2 percent during the fourth quarter. Fourth-quarter 2016 labor productivity was revised up 0.3 percentage point in the durable goods sector to an increase of 1.8 percent, and was revised down 0.4 percentage point in the nondurable goods sector to an increase of 2.3 percent. (See table B1.) The annual average rate of manufacturing productivity growth for 2016 was revised down slightly from 0.3 percent to 0.2 percent, and the rate for 2015 was revised down from 0.2 percent to negative 0.6 percent. (See table 3.) The average annual rate of productivity growth in the manufacturing sector from 1987 to 2016 was unchanged at 3.2 percent.

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.

Durable Previous quarter -1.1 2.8 4.0 1.4 -1.7 2.5 Manufacturing A year ago 0.8 1.5 0.7 4.8 2.2 4.0

Nondurable Previous quarter 3.2 2.8 -0.4 4.6 1.4 1.3 Manufacturing A year ago -0.4 0.3 0.7 4.2 1.6 4.6

Nonfinancial Previous quarter -1.0 -0.3 0.6 3.3 0.2 4.3 Corporations A year ago 1.4 2.4 1.0 2.8 1.0 1.4