"Productivity and Costs, Fourth Quarter and Annual Averages, 2008 Revised
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PRODUCTIVITY AND COSTS
Fourth Quarter and Annual Averages, 2008 Revised
The Bureau of Labor Statistics of the U.S. Department of Labor today
reported revised fourth-quarter seasonally-adjusted annual rates of
productivity change--as measured by output per hour of all persons--and
revised changes for calendar year 2008. Percent changes in business and
nonfarm business productivity were:
Fourth Annual averages
quarter 2007-2008
Business sector -0.4 2.7
Nonfarm Business sector -0.4 2.8
Productivity growth for the fourth quarter of 2008 was revised down by
3.5 percentage points( !!! DON ) in the business sector and 3.6 percentage points ( !!! DON )in the
nonfarm business sector from the estimates published February 5. In both
sectors output was revised down by 3.2 percentage points and hours were
revised up by 0.1 percentage point. Productivity growth during calendar year
2008 was not revised in either sector.
In the manufacturing sector, percent changes in productivity were:
Fourth Annual averages
quarter 2007-2008
Manufacturing sector -4.0 1.5
Durable goods manufacturing -14.8 1.6
Nondurable goods manufacturing 7.6 1.0
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Data in this release reflect annual benchmark revision of BLS Current
Employment Statistics program data on nonfarm employee hours, and revised
seasonal adjustment of those data. Also, hours of other nonfarm and farm
workers based on the BLS Current Population Survey incorporate new seasonal
adjustment factors. Due to these revisions, hours measures for all major
sectors were revised back to the first quarter of 2004 and appear in detail
in tables 1 through 6 and appendix tables 1 through 6. See Revised
Measures.
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In the manufacturing sector, productivity fell 1.0 percentage point
more than was reported Feb. 5, as a 1.0 percentage point downward revision to
output was partially offset by a 0.1 percentage point downward revision to
hours. Annual average growth in manufacturing productivity from 2007 to 2008
was revised up by 0.2 percentage point. 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. Fourth-quarter productivity and related measures
are summarized in table A and appear in detail in tables 1 through 5.
Preliminary and revised fourth-quarter and annual data appear in table C.
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Table A. Productivity and costs: Revised fourth-quarter 2008 measures
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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Percent change from preceding quarter
Business -0.4 -8.4 -8.0 5.0 15.6 5.4
Nonfarm Business -0.4 -8.7 -8.3 5.3 15.9 5.7
Manufacturing -4.0 -17.7 -14.2 10.1 21.2 14.7
Durable -14.8 -26.9 -14.2 10.1 21.2 29.1
Nondurable 7.6 -7.7 -14.2 10.1 21.3 2.3
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Percent change from same quarter a year ago
Business 2.2 -1.8 -3.9 4.0 2.5 1.8
Nonfarm Business 2.2 -1.8 -4.0 4.1 2.5 1.8
Manufacturing -1.1 -8.0 -6.9 5.6 4.0 6.8
Durable -3.5 -10.6 -7.4 6.0 4.4 9.8
Nondurable 0.8 -5.3 -6.1 4.9 3.3 4.1
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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 prepared by the Board of Governors
of the Federal Reserve System. See Technical Notes for further information
on data sources.
Business
Productivity in the business sector decreased 0.4 percent in the
fourth quarter of 2008, as output decreased 8.4 percent and hours of all
persons decreased 8.0 percent (seasonally adjusted annual rates). The decline
in output was the largest since the first quarter of 1982 (-8.6 percent) and
the decline in hours was the largest since the first quarter of 1975 (-12.1
percent). When the fourth quarter of 2008 is compared to the fourth quarter
of 2007 output per hour increased 2.2 percent (tables A and 1).
Hourly compensation grew at a 5.0 percent annual rate in the fourth
quarter. This measure includes wages and salaries, supplements, employer
contributions to employee-benefit plans, and taxes. Real hourly compensation
increased 15.6 percent in the fourth quarter. This measure takes into
account changes in consumer prices, which fell at a 9.2 percent annual rate
in the fourth quarter.
Unit labor costs, which reflect changes in hourly compensation and
productivity, increased 5.4 percent during the fourth quarter, after rising
3.3 percent in the third quarter. The implicit price deflator for business
sector output edged down 0.1 percent in the fourth quarter of 2008, but
increased 1.7 percent from the same quarter a year ago.
Nonfarm Business
In the nonfarm business sector, productivity decreased at an annual
rate of 0.4 percent in the fourth quarter of 2008, as output decreased 8.7
percent and hours of all persons--employees, proprietors, and unpaid family
workers--decreased 8.3 percent. As in the business sector, the decline in
nonfarm business output was the largest since the first quarter of 1982 (-8.7
percent) and the decline in hours was the largest since the first quarter of
1975 (-12.0 percent). Productivity increased 2.2 percent during the last
four quarters (table 2).
Hourly compensation grew 5.3 percent in the fourth quarter of 2008.
Real hourly compensation rose steeply, 15.9 percent, when the 9.2 percent
decrease in consumer prices was taken into account. This was the largest
increase in the real hourly compensation series, which begins in the second
quarter of 1947. As in the business sector, real hourly compensation rose
2.5 percent during the past four quarters.
Unit labor costs increased 5.7 percent in the fourth quarter and 1.8
percent over the last four quarters. The implicit price deflator for nonfarm
business increased 0.5 percent in the fourth quarter after increasing 4.7
percent in the previous quarter.
Manufacturing
Manufacturing productivity, output, and hours all declined in the
fourth quarter of 2008; output per hour fell 4.0 percent, output dropped 17.7
percent, and hours fell 14.2 percent. These were the largest declines for
each of these series, which begin with data for the second quarter of 1987.
From the fourth quarter of 2007 to the fourth quarter of 2008 manufacturing
productivity decreased 1.1 percent, output fell 8.0 percent and hours fell
6.9 percent (table A).
In the durable goods manufacturing sector, productivity dropped 14.8
percent in the fourth quarter of 2008, as output fell 26.9 percent and hours
declined 14.2 percent. These were the largest decreases in output and output
per hour for the entire series beginning in the second quarter of 1987. In
the nondurable goods sector, productivity rose 7.6 percent in the fourth
quarter as hours fell faster than output; output declined 7.7 percent and
hours fell 14.2 percent.
Hourly compensation of all manufacturing workers increased 10.1
percent during the fourth quarter of 2008, and after taking into account the
9.2 percent decrease in consumer prices, real hourly compensation in
manufacturing rose a series-high 21.2 percent. Hourly compensation also rose
10.1 percent in durable and nondurable manufacturing; real hourly
compensation increased 21.2 percent and 21.3 percent, respectively.
Unit labor costs in manufacturing increased 14.7 percent in the fourth
quarter of 2008. These cost increases were concentrated in durable goods
manufacturing where unit labor costs rose 29.1 percent; unit labor costs rose
2.3 percent in nondurable goods industries. Over the last four quarters
manufacturing unit labor costs increased 6.8 percent.
ANNUAL AVERAGE CHANGES, 2007-2008
Business and Nonfarm Business
When annual averages for 2008 were compared with annual averages for
2007, labor productivity increased 2.7 percent in the business sector and 2.8
percent in the nonfarm business sector (table B). In both sectors, the
productivity gains were the largest since 2004, due more to declines in hours
than the small gains in output, and were larger than the 2.5 percent average
annual increase during the 2000-2007 period.
In 2008, hourly compensation increased 3.6 percent and 3.7 percent in
the business and nonfarm business sectors, respectively. Because consumer
prices increased more, 3.8 percent, real hourly compensation fell slightly.
The annual decline in this measure of purchasing power was the first since
small declines occurred in three consecutive years--1993, 1994, and 1995.
Unit labor costs rose just 0.9 percent in both the business and
nonfarm business sectors during 2008, as hourly compensation growth was
largely offset by productivity growth. Unit labor costs had increased 1.4
percent from 2000 to 2007 in both sectors.
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Table B. Productivity and costs: Revised 2008 annual averages
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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Percent change from previous year
Business 2.7 0.8 -1.9 3.6 -0.2 0.9
Nonfarm Business 2.8 0.8 -1.9 3.7 -0.1 0.9
Manufacturing 1.5 -2.5 -3.9 4.0 0.2 2.5
Durable 1.6 -2.6 -4.2 4.2 0.3 2.5
Nondurable 1.0 -2.4 -3.4 3.8 0.0 2.8
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Manufacturing
In the manufacturing sector, labor productivity rose 1.5 percent in
2008 as output fell 2.5 percent but hours fell faster, 3.9 percent (table B).
Durable manufacturing output per hour increased 1.6 percent as output fell
2.6 percent and hours fell 4.2 percent, while in nondurable goods industries
productivity increased 1.0 percent, output fell 2.4 percent and hours fell
3.4 percent. Total manufacturing productivity had grown at a 3.7 percent
average annual rate from 2000 to 2007.
Hourly compensation of manufacturing workers increased 4.0 percent in
2008, which is the same as the average annual rate of growth from 2000 to
2007. The gain in hourly compensation was offset by the 3.8 percent increase
in consumer prices, and real hourly compensation edged up 0.2 percent. Unit
labor costs in manufacturing increased 2.5 percent in 2008, as hourly
compensation increased more than productivity. These costs had increased at
a 0.3 percent average annual rate from 2000 to 2007.
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Table C. Previous and revised productivity and related measures:
Fourth-quarter 2008, third-quarter 2008, and annual averages 2008
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
------------------------------------------------------------------------------
Percent change, fourth quarter 2008
Business:
Previous 3.1 -5.2 -8.1 4.7 15.3 1.5
Revised -0.4 -8.4 -8.0 5.0 15.6 5.4
Nonfarm Business:
Previous 3.2 -5.5 -8.4 5.0 15.6 1.8
Revised -0.4 -8.7 -8.3 5.3 15.9 5.7
Manufacturing:
Previous -3.0 -16.7 -14.1 9.8 20.9 13.3
Revised -4.0 -17.7 -14.2 10.1 21.2 14.7
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Percent change, third quarter 2008
Business:
Previous 1.7 -1.8 -3.5 4.2 -2.3 2.5
Revised 2.3 -1.8 -4.0 5.7 -1.0 3.3
Nonfarm Business:
Previous 1.5 -1.9 -3.4 4.2 -2.4 2.6
Revised 2.2 -1.9 -3.9 5.7 -0.9 3.5
Manufacturing:
Previous -3.3 -8.8 -5.7 4.9 -1.7 8.4
Revised -2.2 -8.6 -6.5 5.4 -1.3 7.8
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Percent change, 2007 - 2008
Business:
Previous 2.7 1.0 -1.7 3.3 -0.5 0.6
Revised 2.7 0.8 -1.9 3.6 -0.2 0.9
Nonfarm Business:
Previous 2.8 1.0 -1.8 3.4 -0.4 0.5
Revised 2.8 0.8 -1.9 3.7 -0.1 0.9
Manufacturing:
Previous 1.3 -2.4 -3.7 3.9 0.1 2.5
Revised 1.5 -2.5 -3.9 4.0 0.2 2.5
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Revised Measures
Quarterly and annual measures for all sectors were revised back to
2004 to incorporate the annual benchmark adjustment and updated information on
seasonal trends from the BLS nonfarm payroll series (table C and appendix
tables 1-5). Hours and related measures for the business and nonfarm
business sectors were revised to incorporate updated information on seasonal
trends in Current Population Survey data on hours worked. Full quarterly and
annual historical series are available on the BLS website,
http://www.bls.gov/lpc/#data .
Previous and revised productivity and related data for the third
quarter, fourth quarter, and full year 2008 for business, nonfarm business,
and manufacturing are displayed in Table C. In the business and nonfarm
business sectors, productivity declined 0.4 percent in the fourth quarter of
2008, rather than increasing as reported Feb. 5. In both sectors, this
resulted from a 3.2 percentage points downward revision to output, with hours
little changed. Also in both sectors, the downward revisions to productivity
and the 0.3 percentage point upward revisions to hourly compensation resulted
in upward revisions to unit labor costs of 3.9 percentage points.
In the manufacturing sector, fourth-quarter productivity growth was
revised down from -3.0 percent to -4.0 percent, due to the 1.0 percentage
point downward revision to output; hours were revised down slightly. The
combination of the downward revision to productivity and a small upward
revision to hourly compensation led to an upward revision in unit labor costs
from 13.3 percent to 14.7 percent.
Productivity growth was revised up in the business and nonfarm
business sectors for the third quarter, due solely to downward revisions to
hours; output was not revised. In the manufacturing sector, productivity
declined less than previously reported, reflecting a downward revision to
hours and a slight upward revision to output. Unit labor costs were revised
up in the business and nonfarm business sectors for the third quarter, while
they were revised down in the manufacturing sector.
For the year 2008, productivity grew at the same rates reported Feb. 5
in both the business and nonfarm business sectors--2.7 percent and 2.8
percent, respectively. Because hourly compensation was revised up in these
two sectors, unit labor costs were revised up as well. In the manufacturing
sector, an upward revision to productivity was offset by an upward revision
to hourly compensation, leading to unit labor costs not being revised.
Revised measures: Nonfinancial corporations
Measures for the nonfinancial corporate sector also were revised today
to incorporate new information regarding output and compensation in the third
quarter of 2008. Productivity growth was revised up from the preliminary
estimate due to an upward revision to output and a downward revision to
hours. Hourly compensation had an upward revision which, when paired with
the upward revision to productivity, led to a slight upward revision to unit
labor costs.
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Table D. Nonfinancial corporations: Previous and revised productivity and
cost measures
Quarterly percent changes at seasonally adjusted annual rates
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Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
tivity Output Hours sation sation costs profits deflator
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Third quarter 2008
Previous 5.5 2.1 -3.2 5.1 -1.5 -0.4 26.8 3.8
Revised 6.4 2.3 -3.9 6.1 -0.6 -0.3 26.5 3.8
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Next release date
The next release of Productivity and Costs is scheduled for 8:30 A.M.
EDT, Thursday, May 7, 2009, and will present preliminary first-quarter 2009
measures for business, nonfarm business, and manufacturing. Fourth-quarter
2008 and annual average data for 2008 for nonfinancial corporations will be
released at that time.
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