2017 Third 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.

Third Quarter 2017, Preliminary

Nonfarm business sector labor productivity increased 3.0 percent during the third quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as output increased 3.8 percent and hours worked increased 0.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2016 to the third quarter of 2017, productivity increased 1.5 percent, reflecting a 2.9-percent increase in output and a 1.4-percent increase in hours worked. (See tables A1 and 2.)

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 0.5 percent in the third quarter of 2017, reflecting a 3.5-percent increase in hourly compensation and a 3.0-percent increase in productivity. Unit labor costs decreased 0.1 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 fell 5.0 percent in the third quarter of 2017, as output decreased 2.1 percent and hours worked increased 3.1 percent. The decrease in manufacturing output per hour is the largest since the first quarter of 2009, when the measure fell 16.3 percent. Productivity decreased 5.7 percent in the durable goods manufacturing sector and 4.6 percent in the nondurable goods sector in the third quarter of 2017. Over the last four quarters, total manufacturing sector productivity increased 0.1 percent, as output increased 1.2 percent and hours worked increased 1.1 percent. (See tables A1, 3, 4 and 5.) Unit labor costs in manufacturing increased 6.2 percent in the third quarter of 2017 and rose 0.7 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.

Revised measures

Revised and previous measures for the second quarter of 2017 are shown in tables A2 and B1, covering the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.

In the second quarter of 2017, nonfarm business sector productivity increased 1.5 percent, the same as reported on September 7; both output and hours were revised down 0.1 percentage point. Unit labor costs rose 0.3 percent during the second quarter. In the manufacturing sector, productivity was revised up 0.5 percentage point to an increase of 3.4 percent, due to an upward revision to output. Unit labor costs decreased 1.0 percent rather than declining 0.4 percent as previously reported.

Second-quarter 2017 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity increased 4.4 percent rather than 4.6 percent as previously reported. Unit labor costs decreased 2.3 percent rather than the preliminary estimate of a 2.6-percent decline. (See table A2.)

Full historical annual and quarterly measures can be found on the productivity and costs home page: www.bls.gov/lpc/#data.

Methodology change for manufacturing output

Beginning with the Productivity and Costs news release scheduled for December 6, 2017, BLS plans to incorporate source data reflecting a change in methodology for estimating manufacturing output. For more information see: www.bls.gov/mfp/sectoraloutputrevisions.htm.