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

The following is the text of the U.S. productivity and costs report for the second quarter released


Second Quarter 2013, Revised

Nonfarm business sector labor productivity increased at a 2.3 percent annual rate during the second quarter of 2013, the U.S. Bureau of Labor Statistics reported today. The increase in productivity reflects increases of 3.7 percent in output and 1.4 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the second quarter of 2012 to the second quarter of 2013, productivity increased 0.3 percent as output and hours worked rose 2.1 percent and 1.7 percent, respectively. (See table A.)

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 measures released today were based on more recent source data than were available for the preliminary report.

Unit labor costs in nonfarm businesses were unchanged in the second quarter of 2013, as hourly compensation increased at the same 2.3 percent rate as productivity. Unit labor costs rose 1.5 percent over the last four quarters. (See table A.)

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.

Manufacturing sector productivity rose 1.9 percent in the second quarter of 2013, as output declined 0.6 percent and hours worked declined 2.4 percent. Productivity increased 3.3 percent in the durable goods sector and 0.2 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.9 percent, as output increased 1.9 percent and hours were unchanged. Unit labor costs in manufacturing rose 2.3 percent in the second quarter of 2013 and decreased 0.5 percent from the same quarter a year ago. (See tables A and 3.)

Preliminary second-quarter 2013 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 3.2 percent in the second quarter of 2013, as output and hours rose 4.8 percent and 1.5 percent, respectively. Unit labor costs fell 0.9 percent, as the 2.3 percent gain in hourly compensation was less than the 3.2 percent gain in productivity. (See tables C and 6.)

The concepts, sources, and methods used for the manufacturing and nonfinancial corporate output series differ from those used in the business and nonfarm business output series; these output measures are not directly comparable. See Technical Notes for a more detailed explanation.

Revised measures

The measures released today are based on more recent source data than were available for the preliminary report. Tables B and C present previous and revised productivity and related measures for the major sectors: nonfarm business, business, and manufacturing, as well as nonfinancial corporations.

In the second quarter of 2013, nonfarm business productivity increased 2.3 percent, rather than 0.9 percent as reported August 16. The revised figure reflects both an upward revision to output and a downward revision to hours worked. Unit labor costs were revised down due solely to the upward revision to productivity. In the manufacturing sector, productivity growth was revised down due to a downward revision to output and an upward revision to hours. Due to the downward revision to productivity, unit labor costs increased more than previously reported, 2.3 percent.

In the first quarter of 2013, nonfarm business productivity was unrevised, and manufacturing productivity was revised down slightly from the August 16 release. In the nonfarm business sector, hourly compensation and unit labor costs decreased less than previously reported.

In the nonfinancial corporate sector, productivity, output, and unit labor costs were subject to revisions for the full period of these series, which begin in 1947. Measures of output and compensation for the nonfinancial corporate (NFC) sector now incorporate the revised National Income and Product Accounts (NIPA) data released on July 31 and corrected on August 15 by the Bureau of Economic Analysis, U.S. Department of Commerce. Hours were also revised for the NFC sector for 2001 forward, to include revised NIPA data on the proportion of sector compensation paid to employees of corporations and of nonprofit institutions. Also, all index measures for the NFC sector have been converted to a base year of 2009. A new base generally has little or no effect on percent changes. Historical revisions to measures for all other sectors due to the NIPA revision and BLS base year change were published with the August 16, 2013 release of Productivity and Costs.

In the first quarter of 2013, nonfinancial corporate sector productivity declined 4.1 percent, rather than increasing 0.3 percent as reported June 5. Unit labor costs declined 2.1 percent in the first quarter, compared to the 1.5 percent decrease published June 5.

Annual Average productivity growth for 2012 in the nonfinancial corporate sector was revised to 1.4 percent from 0.7 percent due to an upward revision to output. For the full series from 1947 to 2012, the average annual rate of growth is 2.4 percent, slightly higher than the 2.3 percent rate published June 5.

Revised quarterly and annual series for recent years for all sectors appear in tables 1-6. Revised annual indexes for the NFC sector for all years appear in appendix table 1. Full historical annual and quarterly measures can be found on the productivity and costs home page http://www.bls.gov/lpc/#data.


The preliminary Productivity and Costs press release for third-quarter 2013 is scheduled to be released on Wednesday, November 6, 2013 at 8:30 a.m. (EST).

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