PRODUCTIVITY AND COSTS: Second Quarter 2013, Preliminary

8:30 a.m. (EDT) Friday, August 16, 2013
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Second Quarter 2013, Preliminary

Nonfarm business sector labor productivity increased at a 0.9 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 2.6 percent in output and 1.7 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 was unchanged as output and hours worked both increased 1.8 percent. (See chart 1 and 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.


Productity and Costs Second Quarter 2013, Preliminary


Unit labor costs in nonfarm businesses increased 1.4 percent in the second quarter of 2013, the combined effect of a 2.3 percent increase in hourly compensation and the 0.9 percent increase in productivity. Over the last four quarters hourly compensation and unit labor costs both increased 1.6 percent. (See chart 2 and 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 2.7 percent in the second quarter of 2013, as output grew 0.1 percent and hours worked fell 2.6 percent. Over the last four quarters, manufacturing productivity increased 2.2 percent, as output increased 2.1 percent and hours decreased 0.1 percent. Unit labor costs in manufacturing increased 1.4 percent in the second quarter of 2013 and decreased 0.4 percent from the same quarter a year ago. (See tables A and 3.)
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 Technical Notes for a more detailed explanation. (See page 5.)
Revised measures
Productivity, unit labor costs, and hourly compensation were subject to revisions for the full period of these series, which begin in 1947 for the business and nonfarm business sectors and in 1987 for the manufacturing sectors. Measures of output for the business and nonfarm business sectors and measures of compensation for all sectors incorporate the revised National Income and Product Accounts (NIPA) data released on July 31 by the Bureau of Economic Analysis, U.S. Department of Commerce. Output data for manufacturing incorporates revised output indexes constructed by BLS using data from the U.S. Department of Commerce. Hours were revised for the business and nonfarm business sectors for 1990 forward to include revised NIPA data on government enterprises and for 2001 forward to include revised NIPA data on the proportion of sector compensation paid to employees of nonprofit institutions.
Table B presents revised and previous productivity and related measures for the nonfarm business, business, and manufacturing sectors for the first quarter of 2013 and table C presents annual data for nonfarm business and total manufacturing from 2010 to 2012. All index measures show historical revisions because the base year was updated to 2009. A new base generally has little or no effect on percent changes. Revised quarterly and annual series for recent years appear in tables 1-5 and annual indexes for all years appear in appendix tables 1-5. Full historical annual and quarterly measures can be found on the productivity and costs home page
In the first quarter of 2013, nonfarm business productivity declined 1.7 percent—rather than increasing 0.5 percent as reported June 5—as a downward revision to output was larger than a downward revision to hours. Unit labor costs fell 4.2 percent in the first quarter—about the same as previously reported—as the downward revision to productivity was offset by a downward revision to hourly compensation. In the manufacturing sector, productivity growth in the first quarter was 3.9 percent, as output growth was revised up and hours were revised down. Unit labor costs declined 3.2 percent, rather than decreasing 10.0 percent, reflecting a large upward revision to hourly compensation.


Annual Average productivity growth for 2012 in the nonfarm business sector was revised to 1.5 percent from 0.7 percent due to an upward revision to output. (See table C). Unit labor costs increased 1.2 percent, the same as reported June 5. Revisions to annual average changes in 2011 and 2010 were -2-small


Upward revisions to productivity—resulting from the NIPA benchmark revision to output—raised the annual average rate of growth in nonfarm business productivity during the 2000 to 2012 period from 2.2 percent to 2.4 percent. Growth in unit labor costs was revised down from 1.1 percent per year to 0.8 percent per year over the same period. The long-term productivity growth rate over the 66 years of the series is 2.3 percent, rather than the previously-published rate of 2.2 percent.
In the manufacturing sector, small downward revisions to annual average productivity growth in 2010, 2011, and 2012 were due to downward revisions to output. For the period 2000-2012, manufacturing productivity grew 2.9 percent per year on average, lower than the previous estimate of 3.0 percent. Unit labor costs had smaller increases in 2011 and 2012—and a smaller decline in 2010—than previously reported. For the period 2000-2012, unit labor costs growth was 0.2 percent per year, lower than the previous estimate of 0.5 percent per year. (Full Report)





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