U.S. Third Quarter Productivity and Cost Report (Text)
The following is the text of the U.S. productivity and costs report for the third quarter released by the Labor Department.
Nonfarm business sector labor productivity increased at a 2.3 percent annual rate during the third quarter of 2011, the U.S. Bureau of Labor Statistics reported today, with output and hours worked rising 3.2 percent and 0.8 percent, respectively. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2010 to the third quarter of 2011, output increased 2.4 percent as hours rose 1.4 percent, resulting in a 0.9 percent increase in productivity. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
The productivity measures released today are based on more recent and more complete data than were available for the preliminary report issued November 3. (See Revised measures.)
Unit labor costs in nonfarm businesses fell 2.5 percent in the third quarter of 2011, reflecting the 2.3 percent increase in output per hour combined with a 0.2 percent decline in hourly compensation. Unit labor costs rose 0.4 percent over the last four quarters. BLS defines 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.
Nonfarm business real hourly compensation decreased 3.2 percent in the third quarter of 2011, reflecting a 0.2 percent decline in hourly compensation combined with a 3.1 percent increase in consumer prices (seasonally adjusted annual rates). Real hourly compensation is the ratio of hourly compensation to consumer prices. This measure declined 2.3 percent from the same quarter a year ago; this is the largest decline in this series which begins in 1948.
Manufacturing sector productivity grew 5.0 percent in the third quarter of 2011, as output rose 4.6 percent and hours decreased 0.4 percent. Productivity jumped 9.5 percent in the durable goods sector and edged up 0.1 percent in the nondurable goods sector. From the third quarter of 2010 to the third quarter of 2011, manufacturing sector productivity increased 2.9 percent. Unit labor costs in manufacturing fell 5.1 percent in the third quarter of 2011 and decreased 1.9 percent over the last four quarters.
The data sources and methods used in the preparation of the manufacturing 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.
Third quarter data for the nonfinancial corporate sector was released today. Output per hour decreased 2.6 percent as output declined 0.8 percent and hours grew 1.9 percent. Unit labor costs rose 3.0 percent.
Previous and revised productivity and related measures for the second and third quarters for the nonfarm business, business, and manufacturing sectors and for the second quarter for nonfinancial corporations are presented in tables B and C, respectively.
In the third quarter of 2011, nonfarm business sector productivity growth was 2.3 percent reflecting a downward revision to output combined with a slight upward revision to hours worked. Unit labor costs were little changed, as the downward revision to productivity was offset by a downward revision to hourly compensation. In the manufacturing sector, productivity growth was 5.0 percent rather than 5.4 percent as previously reported. Unit labor costs declined 5.1 percent.
In the second quarter of 2011, nonfarm business sector productivity, output, and hours were unrevised. Unit labor costs fell 0.1 percent rather than increasing 2.8 percent due solely to a downward revision to hourly compensation. Manufacturing sector productivity declined 2.2 percent in the second quarter, slightly less than reported November 3. Unit labor costs increased 0.1 percent, much less than the 5.5 percent preliminary estimate, due to a steep downward revision to hourly compensation and the slight upward revision to productivity. The large downward revision to manufacturing hourly compensation was concentrated in durable goods manufacturing industries.
Nonfinancial corporate sector productivity grew 3.2 percent in the second quarter of 2011, as revised. (See tables C and 6.)
The preliminary Productivity and Costs press release for the fourth quarter of 2011 is scheduled to be released on Thursday, February 2, 2012 at 8:30 a.m. (EST)