Internet address: http://www.bls.gov/lpc/ USDL 08-1616
Historical, technical TRANSMISSION OF THIS
information: (202) 691-5606 MATERIAL IS EMBARGOED
Current data: (202) 691-5200 UNTIL 8:30 A.M. EST,
Media contact: (202) 691-5902 THURSDAY, NOVEMBER 6, 2008.
PRODUCTIVITY AND COSTS
Third Quarter 2008, preliminary
The Bureau of Labor Statistics of the U.S. Department of Labor today
reported preliminary productivity data--as measured by output per hour of all
persons--for the third quarter of 2008. The preliminary seasonally-adjusted
annual rates of productivity growth in the third quarter were:
1.3 percent in the business sector and
1.1 percent in the nonfarm business sector.
In both sectors, productivity gains were smaller than in the first two
quarters of 2008, and were the result of hours at work falling faster than
output. (See table A)
.
In manufacturing, productivity changes in the third quarter were:
-1.0 percent in manufacturing,
3.3 percent in durable goods manufacturing, and
-7.3 percent in nondurable goods manufacturing.
Manufacturing productivity fell for the second consecutive quarter; the
third-quarter decline was concentrated in the nondurable goods sector,
whereas the second-quarter decrease was due to a drop in durable goods
productivity. Output and hours in manufacturing, which includes about 12
percent of U.S. business sector employment, tend to vary more from quarter to
quarter than data for the aggregate business and nonfarm business sectors.
Third-quarter measures are summarized in table A and appear in detail in
tables 1 through 5.
The data sources and methods used in the preparation of the
manufacturing series differ from those used in preparing the business and
nonfarm business series, and these measures are not directly comparable.
Output measures for business and nonfarm business are based on measures of
gross domestic product prepared by the Bureau of Economic Analysis of the
U.S. Department of Commerce. Quarterly output measures for manufacturing
reflect indexes of industrial production independently prepared by the Board
of Governors of the Federal Reserve System. See Technical Notes for further
information on data sources.
------------------------------------------------------------------------------
Table A. Productivity and costs: Preliminary third-quarter 2008 measures
(Seasonally adjusted annual rates)
------------------------------------------------------------------------------
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
------------------------------------------------------------------------------
Percent change from preceding quarter
Business 1.3 -1.5 -2.8 4.7 -1.9 3.4
Nonfarm business 1.1 -1.7 -2.7 4.7 -1.9 3.6
Manufacturing -1.0 -5.8 -4.9 5.0 -1.6 6.1
Durable 3.3 -4.7 -7.7 6.0 -0.7 2.6
Nondurable -7.3 -7.0 0.4 3.7 -2.9 11.8
------------------------------------------------------------------------------
Percent change from same quarter a year ago
Business 1.8 0.3 -1.5 4.1 -1.1 2.3
Nonfarm business 2.0 0.3 -1.7 4.3 -0.9 2.3
Manufacturing 1.1 -2.6 -3.7 5.1 -0.2 3.9
Durable 1.9 -2.6 -4.4 5.1 -0.2 3.1
Nondurable -0.2 -2.7 -2.5 5.3 0.0 5.5
------------------------------------------------------------------------------
Business
Business sector output per hour grew 1.3 percent in the
third quarter of 2008 as output decreased 1.5 percent and hours
worked by all persons--employees, proprietors, and unpaid family
workers--fell 2.8 percent (seasonally adjusted annual rates).
The decline in output was the largest since the third quarter of
2001, when output fell 3.1 percent. Hours had not dropped as
much in one quarter since the first quarter of 2002, (-3.1
percent). From the third quarter of 2007 to the third quarter of
2008, productivity increased 1.8 percent; output edged up 0.3
percent and hours decreased 1.5 percent in the business sector.
Hourly compensation in the business sector increased at an
annual rate of 4.7 percent during the third quarter of 2008. This
measure includes wages and salaries, supplements, employer
contributions to employee benefit plans, and taxes. Real hourly
compensation, which takes into account changes in consumer
prices, decreased by 1.9 percent in the third quarter of 2008.
Changes in unit labor costs approximate the change in hourly
compensation less the change in productivity. In the third
quarter of 2008, unit labor costs rose at a 3.4 percent annual
rate. The implicit price deflator for business sector output,
which reflects changes in both unit labor cost and unit nonlabor
payments, rose 4.5 percent in the third quarter of 2008.
Nonfarm business
Productivity increased 1.1 percent in the nonfarm business
sector in the third quarter of 2008; output and hours fell 1.7
percent and 2.7 percent, respectively. The decline in output was
the largest since third-quarter 2001 (-2.9 percent), and the drop
in hours was the largest since the first quarter of 2002 (-3.4
percent). Over the last four quarters, nonfarm business output
per hour increased 2.0 percent; output rose 0.3 percent, and
hours fell 1.7 percent. From 2000 to 2007, nonfarm productivity
increased at a 2.5 percent average annual rate, as output grew
2.5 percent and hours edged up 0.1 percent on average.
Nonfarm hourly compensation increased at a 4.7 percent
annual rate in the third quarter of 2008. Real hourly
compensation decreased 1.9 percent in the third quarter, as
consumer prices increased 6.7 percent (seasonally adjusted annual
rates).
Unit labor costs in the nonfarm business sector increased
3.6 percent during the third quarter of 2008 and 2.3 percent over
the last four quarters. The implicit price deflator for nonfarm
business output increased 5.0 percent in the third quarter of
2008.
Manufacturing
Manufacturing output per hour decreased 1.0 percent in the
third quarter of 2008; output fell 5.8 percent and hours of all
persons declined 4.9 percent (seasonally adjusted annual rates).
Productivity increased 3.3 percent in durable goods industries as
the 4.7 percent decline in output was outpaced by a 7.7 percent
decline in hours. By contrast, productivity declined 7.3 percent
in the nondurable goods sector in the third quarter as output
fell 7.0 percent while hours increased 0.4 percent. Total
manufacturing productivity grew 1.1 percent from the third
quarter of 2007 to the third quarter of 2008, compared to a 3.7
percent average annual growth rate from 2000 to 2007.
Hourly compensation of manufacturing workers increased 5.0
percent during the third quarter of 2008, reflecting a 6.0
percent gain in the durable goods subsector and a 3.7 percent
gain in nondurable goods industries. Real hourly compensation
for total manufacturing decreased 1.6 percent in the third
quarter.
Unit labor costs in manufacturing rose 6.1 percent in the
third quarter of 2008, reflecting a 2.6 percent increase in
durable goods industries and an 11.8 percent jump in nondurable
goods industries. Total manufacturing sector unit labor costs
have increased 3.9 percent since the third quarter of 2007.
Revised Measures
Revised and previous measures for the second quarter of
2008, for the business, nonfarm business, and manufacturing
sectors are compared in table B. Hours declined at the same
rates reported September 4 in all sectors. In the business and
nonfarm business sectors output was revised downward, resulting
in a corresponding downward revision to productivity. In the
manufacturing sector productivity change, while negative, was
revised up due to a small upward revision to output.
------------------------------------------------------------------------------
Table B. Previous and revised productivity and related measures
Quarterly percent change at seasonally adjusted annual rate
------------------------------------------------------------------------------
Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
-------------------------------------------------------------------------------
Second quarter 2008
Business:
Previous 4.3 3.2 -1.0 4.0 -1.0 -0.4
Revised 3.7 2.6 -1.0 3.8 -1.2 0.1
Nonfarm business:
Previous 4.3 3.4 -0.8 3.7 -1.3 -0.5
Revised 3.6 2.8 -0.8 3.5 -1.4 -0.1
Manufacturing:
Previous -2.2 -3.7 -1.5 3.9 -1.1 6.2
Revised -1.9 -3.4 -1.5 3.8 -1.2 5.8
-------------------------------------------------------------------------------
In all three sectors, hourly compensation was revised down
slightly. In the business and nonfarm business sectors, unit
labor costs were revised upwards--this was the result of
productivity being revised down more than hourly compensation.
In manufacturing both the upward revision to productivity and the
downward revision to hourly compensation contributed to a
downward revision to unit labor costs.
Revised measures: Nonfinancial Corporations
Productivity and cost measures for nonfinancial corporations
for the second quarter of 2008 also were revised. Revised
productivity growth was 8.6 percent due to an upward revision in
output; hours were virtually unchanged (table C). Productivity
grew 3.0 percent in the sector when measured over the four
quarters ending with the second quarter (table 6).
------------------------------------------------------------------------------
Table C. Nonfinancial corporations: Previous and revised productivity and
cost measures
Quarterly percent changes at seasonally adjusted annual rates
------------------------------------------------------------------------------
Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
tivity Output Hours sation sation costs profits deflator
------------------------------------------------------------------------------
Second quarter 2008
Previous 5.6 3.8 -1.7 3.7 -1.2 -1.8 -24.7 -3.6
Revised 8.6 6.9 -1.6 3.7 -1.3 -4.6 -8.4 -3.9
------------------------------------------------------------------------------
Unit labor costs were revised down from -1.8 percent to -4.6
percent--the result of productivity being revised up while hourly
compensation remained unrevised.
Next release date
The next release of Productivity and Costs is scheduled for
8:30 AM EST, Wednesday, December 3, 2008. It will present third-
quarter measures for nonfinancial corporations and revised third-
quarter measures for business, nonfarm business, and
manufacturing.
Bureau of Labor Statistics
