2017 First 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.

First Quarter 2017, Revised

Nonfarm business sector labor productivity was unchanged during the first quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as both output and hours worked increased 1.7 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 1.2 percent, reflecting a 2.5-percent increase in output and a 1.3-percent increase in hours worked. (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. 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 2.2 percent in the first quarter of 2017, reflecting a 2.2-percent increase in hourly compensation; productivity was unchanged. Unit labor costs increased 1.1 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 0.5 percent in the first quarter of 2017, as output increased 2.6 percent and hours worked increased 2.1 percent. Output per hour decreased 0.7 percent in the durable goods manufacturing sector and increased 2.7 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 0.6 percent. (See tables A1, 3, 4 and 5.) Unit labor costs in manufacturing increased 2.4 percent in the first quarter of 2017 and rose 2.9 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 first-quarter 2017 measures were announced today for the nonfinancial corporate sector. Productivity decreased 1.5 percent in the first quarter of 2017 and decreased 0.1 percent over the last four quarters. Unit profits of nonfinancial corporations fell at a 6.6 percent annual rate in the first quarter of 2017 and fell 6.8 percent over the last four quarters. (See tables A2 and 6.)

Revised measures

In the first quarter of 2017, nonfarm business productivity was unchanged, rather than falling 0.6 percent as reported May 4, due to a 0.7-percentage point upward revision to output; hours worked were revised up 0.1 percentage point. Unit labor costs were revised down--due primarily to the upward revision to productivity--and increased 2.2 percent. In the manufacturing sector, productivity was revised up 0.1 percentage point and hourly compensation was revised up 0.4 percentage point, resulting in a 0.3- percentage point upward revision to unit labor costs.

In the fourth quarter of 2016, labor productivity in the business, nonfarm business, and manufacturing sectors increased at the same rates reported May 4. In the nonfarm business sector, hourly compensation was revised down, and decreased 3.0 percent, in contrast to the previously published estimate of a 3.1 percent increase. As a result, unit labor costs fell 4.6 percent in the fourth quarter of 2016, rather than increasing 1.3 percent. In the manufacturing sector, a downward revision to hourly compensation also led directly to a downward revision to unit labor costs, which declined 3.4 percent in the fourth quarter of 2016 rather than increasing 2.2 percent as previously published.

In the nonfinancial corporate sector, productivity fell 4.2 percent in the fourth quarter of 2016 rather than declining 1.0 percent as previously reported, due solely to a downward revision to output. Annual average productivity increased 0.4 percent from 2015 to 2016, slightly less than the 0.6-percent increase reported May 4. Unit profits of nonfinancial corporations fell 15.2 percent in the fourth quarter of 2016, rather than the decline of 17.9 percent reported May 4. (See table 6.)

Complete annual and quarterly data series can be found on the Productivity and Costs home page: www.bls.gov/lpc/#data.

Durable Previous quarter -0.7 2.9 3.6 1.7 -1.4 2.4 manufacturing A year ago 0.9 1.5 0.6 3.6 0.9 2.6

Nondurable Previous quarter 2.7 2.3 -0.4 4.9 1.7 2.1 manufacturing A year ago -0.5 0.2 0.7 2.5 -0.1 3.0

Nonfinancial Previous quarter -1.5 0.5 2.0 1.9 -1.2 3.4 corporate A year ago -0.1 1.2 1.4 2.4 -0.2 2.5