U.S. Fourth Quarter Productivity and Cost Report (Text)

The following is the text of the U.S. productivity and costs report for the fourth quarter released by the Labor Department.

PRODUCTIVITY AND COSTS

Fourth Quarter and Annual Averages 2010, Revised

Nonfarm business sector labor productivity increased at a 2.6 percent annual rate during the fourth quarter of 2010, the U.S. Bureau of Labor Statistics reported today. The gain in productivity reflects a 4.0 percent increase in output and a 1.4 percent increase in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2009-the fourth quarter of 2010, productivity increased 1.9 percent as output rose faster than hours. Annual average productivity increased 3.9 percent from 2009-2010.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours of all persons, including employees, proprietors, and unpaid family workers. The measures released today were based on more recent source data than were available for the preliminary report.

Unit labor costs in nonfarm businesses fell 0.6 percent in the fourth quarter of 2010, due-productivity increasing faster than hourly compensation. Unit labor costs edged down 0.1 percent from the same quarter a year ago. The annual average index of unit labor costs declined 1.5 percent from 2009-2010.

BLS defines unit labor costs as the ratio of hourly compensation labor productivity; increases in hourly compensation tend-increase unit labor costs and increases in output per hour tend-reduce them.

----------------------------------------------------------------------------- Data in this release reflect the annual benchmark revision of BLS Current Employment Statistics program data on nonfarm employee hours, and revised seasonal adjustment of those data. More detail can be found in tables 1 through 6 and appendix tables 1 through 6. See Revised measures. -----------------------------------------------------------------------------

Manf. sector productivity rose 5.9 percent in the fourth quarter of 2010, as output increased 4.4 percent and hours decreased 1.4 percent. Over the last four quarters, Manf. productivity increased 4.2 percent as output increased faster than hours worked. Unit labor costs in Manf. declined at a 2.7 percent annual rate in the fourth quarter of 2010 and decreased by 2.7 percent over the last four quarters. Annual average productivity grew 6.7 percent from 2009-2010.

The data sources and methods used in the preparation of the Manf. output series differ from those used in preparing the business and nonfarm business output series, and these measures are not directly comparable. See Technical Notes for further information on data sources.

Revised measures

Quarterly and annual measures for all sectors were revised back-2006 to incorporate the annual benchmark adjustment and updated information on seasonal trends from the BLS nonfarm payroll series. Revised and previous measures for the third and fourth quarters of 2010 are shown in table B for the business, nonfarm business and Manf. sectors. Revised third quarter measures for the nonfinancial corporate sector are shown in table D. Quarterly and annual data for all sectors appear in tables 1-6 for 2008 through 2010, and in appendix tables 1-6 for 2006 and 2007. Full historical annual and quarterly measures can be found on the labor productivity and costs home page http://www.bls.gov/lpc/#data.

In the fourth quarter of 2010, changes in nonfarm business productivity and unit labor costs were unrevised; underlying output and hours growth were both revised downward. In Manf., productivity was revised up to 5.9 percent reflecting an upward revision-output and a smaller decline in hours than previously reported.

In the third quarter of 2010, nonfarm business productivity growth was revised down-2.3 percent; unit labor costs rose 0.1 percent rather than declining 0.1 percent as reported February 3. In Manf., productivity growth was revised down slightly-1.3 percent. An upward revision in unit labor costs-1.1 percent was due primarily-an upward revision-hourly compensation. In the nonfinancial corporate sector productivity fell less than previously reported, the result of an upward revision in output.

Annual Average measures of hours, hourly compensation, and productivity were revised for 2009 and 2010, as a result of the benchmark adjustment. Downward revisions-hours in nonfarm business and Manf. in both years contributed-annual productivity growth of 3.9 percent and 6.7 percent respectively for 2010, and 3.7 percent and 2.4 percent for 2009.

The preliminary Productivity and Costs press release for first-quarter 2011 is scheduled-be released on Thursday, May 5, 2011 at 8:30 a.m. (EDT).

============================================================================== Table A. Revised fourth-quarter 2010 measures: percent change from previous quarter, annual rate (Q-Q) and from same quarter a year ago (Y-Y)

Sector Nonfarm Durable Nondurable

Business Business Manf. Manf. Manf.

Q-Q Y-Y Q-Q Y-Y Q-Q Y-Y Q-Q Y-Y Q-Q Y-Y ------------------------------------------------------------------------------

Prod. 2.6 1.9 2.3 1.8 5.9 4.2 4.8 5.5 8.0 3.4 Output 4.0 3.6 3.8 3.6 4.4 6.5 4.7 8.9 4.0 3.9 Hours 1.4 1.6 1.4 1.7 -1.4 2.2 0.0 3.3 -3.7 0.5 Hrly comp 2.0 1.8 1.8 1.8 3.1 1.5 3.0 1.6 2.9 1.0 Real hr -0.6 0.6 -0.7 0.6 0.5 0.3 0.4 0.4 0.3 -0.2 ULC -0.6 -0.1 -0.5 -0.1 -2.7 -2.7 -1.7 -3.7 -4.8 -2.3

============================================================================== Table B. Revised and previous measures: fourth quarter and third quarter 2010

Sector Nonfarm Durable Nondurable

Business Business Manf. Manf. Manf.

Rev. Prev. Rev. Prev. Rev. Prev. Rev. Prev. Rev. Prev. ------------------------------------------------------------------------------

Percent change annual rate, fourth quarter 2010 Prod. 2.6 2.6 2.3 2.4 5.9 5.8 4.8 6.0 8.0 5.8 Output 4.0 4.5 3.8 4.3 4.4 3.7 4.7 4.1 4.0 3.2 ============================================================================== Table C. Annual average changes in productivity and related measures, 2006- 2010

Sector Nonfarm Business Manf.

2006 2007 2008 2009 2010 | 2006 2007 2008 2009 2010 --------------------------------------------------------------|---------------

| Prod. 0.9 1.6 1.0 3.7 3.9 | 0.8 4.2 -0.4 2.4 6.7 Output 3.1 2.1 -1.1 -3.8 3.7 | 1.5 2.4 -4.4 -10.8 6.6 Hours 2.2 0.6 -2.1 -7.2 -0.2 | 0.7 -1.7 -4.0 -13.0 -0.1 Hr comp 3.8 4.0 3.3 2.0 2.4 | 2.0 3.2 3.9 5.7 2.0 Real hr 0.5 1.1 -0.6 2.4 0.7 | -1.2 0.4 0.1 6.1 0.3 ULC 2.8 2.4 2.2 -1.6 -1.5 | 1.2 -0.9 4.3 3.1 -4.4 ==============================================================================

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