USDL 05-2116 TRANSMISSION OF THIS MATERIAL IS EMBARGOED UNTIL 8:30 A.M. EST, THURSDAY, NOVEMBER 3, 2005 Internet address: http://www.bls.gov/lpc/ Historical,technical information: (202) 691-5606 dprweb@bls.gov Current data: (202) 691-5200 blsdata_staff@bls.gov Media contact: (202) 691-5902 PRODUCTIVITY AND COSTS Third Quarter 2005, preliminary The Bureau of Labor Statistics of the U.S. Department of Labor today reported preliminary productivity data--as measured by output per hour of all persons--for the third quarter of 2005. The preliminary seasonally-adjusted annual rates of productivity growth in the third quarter were: 4.8 percent in the business sector and 4.1 percent in the nonfarm business sector. Productivity increased 4.8 percent in the business sector, as output grew 4.3 percent and hours declined 0.4 percent. The 4.1-percent rise in nonfarm business productivity occurred as output rose 4.2 percent and hours rose 0.1 percent (table A). The effects of Hurricanes Katrina and Rita, which struck the Gulf Coast during the third quarter, could not be separately identified in the productivity and costs measures. The measures reported in this news release reflect both these effects and ongoing trends in ouput, hours, and compensation. In manufacturing, productivity increases in the third quarter were: 4.5 percent in manufacturing, 7.5 percent in durable goods manufacturing, and 1.7 percent in nondurable goods manufacturing. The third-quarter increase in manufacturing productivity followed a 3.6- percent increase in the second quarter of 2005. Output and hours in manufacturing, which includes about 13 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. Third-quarter measures are summarized in table A and appear in detail in tables 1 through 5. 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 independently prepared by the Board of Governors of the Federal Reserve System. See Technical Notes for further information on data sources. ------------------------------------------------------------------------------ Table A. Productivity and costs: Preliminary third-quarter 2005 measures (Seasonally adjusted annual rates) ------------------------------------------------------------------------------ Real Hourly hourly Unit Produc- compen- compen- labor Sector tivity Output Hours sation sation costs ------------------------------------------------------------------------------ Percent change from preceding quarter Business 4.8 4.3 -0.4 4.2 -0.9 -0.6 Nonfarm business 4.1 4.2 0.1 3.6 -1.4 -0.5 Manufacturing 4.5 3.1 -1.4 2.9 -2.1 -1.6 Durable 7.5 7.5 0.0 2.4 -2.6 -4.7 Nondurable 1.7 -2.1 -3.7 3.4 -1.7 1.7 ------------------------------------------------------------------------------ Percent change from same quarter a year ago Business 2.9 4.1 1.1 5.8 1.9 2.8 Nonfarm business 3.0 4.2 1.2 5.8 1.9 2.7 Manufacturing 4.7 3.1 -1.5 7.2 3.3 2.5 Durable 6.0 5.2 -0.8 6.8 2.9 0.7 Nondurable 3.3 0.5 -2.7 7.8 3.9 4.4 ------------------------------------------------------------------------------ Business From the second quarter to the third quarter of 2005, productivity in the business sector grew at a 4.8 percent seasonally adjusted annual rate. Output increased 4.3 percent, while hours of all persons engaged in the sector declined 0.4 percent. The third-quarter productivity increase was much faster than the 0.8-percent gain recorded in the second quarter of 2005 (as revised), which reflected a 4.0-percent rise in output and a 3.1-percent rise in hours. (tables B and 1). Hourly compensation in the business sector increased at an annual rate of 4.2 percent during the third quarter of 2005, faster than the 3.0-percent rise one quarter earlier ( as revised). This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, fell by 0.9 percent in the third quarter of 2005 after falling by 1.1 percent in the second quarter. It had increased 2.3 percent in the first quarter of the year. Unit labor costs, which reflect changes in both hourly compensation and productivity, declined 0.6 percent during the third quarter. By contrast, this measure had increased 2.2 percent in the second quarter. The implicit price deflator for the business sector increased 3.0 percent during the third quarter of 2005, following a 2.6 percent increase in the previous quarter. Nonfarm business Productivity in the nonfarm business sector grew 4.1 percent during the third quarter of 2005 as output grew 4.2 percent. Hours of all persons in the nonfarm business sector edged up 0.1 percent, reflecting a 0.4-percent gain in employment and a 0.4-percent decline in average weekly hours at work. In the previous quarter, nonfarm business productivity increased 2.1 percent, as output grew 4.4 percent and hours worked increased by 2.2 percent (table 2). Hourly compensation increased at a 3.6 percent annual rate in the third quarter of 2005. When the rise in consumer prices is taken into account, real hourly compensation fell 1.4 percent during the July-September period. During the second quarter of 2005, real hourly compensation had declined 0.1 percent. Unit labor costs in the nonfarm business sector fell 0.5 percent during the third quarter of 2005, after rising 1.8 percent in the second quarter. The implicit price deflator for nonfarm business output rose 3.3 percent in the third quarter of 2005. Manufacturing Productivity increased 4.5 percent in manufacturing in the third quarter of 2005 as output grew 3.1 percent and hours of all persons fell 1.4 percent (seasonally adjusted annual rates). In durable goods industries, productivity and output both grew 7.5 percent in the third quarter while hours of all persons were unchanged. Productivity increased 1.7 percent in nondurable goods, where output fell 2.1 percent but hours fell faster, 3.7 percent (tables 3, 4, and 5). The hourly compensation of manufacturing workers increased an average of 2.9 percent during the third quarter of 2005, reflecting increases of 2.4 percent in durable goods and 3.4 percent in nondurable goods. When the increase in consumer prices is taken into account, real hourly compensation in total manufacturing fell 2.1 percent in the third quarter. Real hourly compensation had grown in the first two quarters of 2005; 3.6 percent in the second quarter (as revised) and 4.6 percent in the first quarter. Unit labor costs in manufacturing fell 1.6 percent in the third quarter of 2005, after rising in each of the previous four quarters. In the durable goods sector, unit labor costs fell 4.7 percent in the third quarter after increasing 4.0 percent one quarter earlier. In the nondurable goods sector, unit labor costs rose 1.7 percent in the third quarter and 4.0 percent in the second quarter of 2005. Revised Measures Revised and previous measures for the second quarter of 2005 for the business, nonfarm business, and manufacturing sectors are compared in table B. Hours data for the second quarter now reflect more current data on the ratio of hours worked to hours paid in private nonfarm businesses. ------------------------------------------------------------------------------ Table B. Previous and revised productivity and related measures Quarterly percent change at seasonally adjusted annual rate ------------------------------------------------------------------------------ Real Hourly hourly Unit Produc- compen- compen- labor Sector tivity Output Hours sation sation costs ------------------------------------------------------------------------------ Second quarter 2005 Business: Previous........ 0.7 4.0 3.2 3.3 -0.8 2.6 Revised......... 0.8 4.0 3.1 3.0 -1.1 2.2 Nonfarm business: Previous........ 1.8 4.1 2.2 4.4 0.2 2.5 Revised......... 2.1 4.4 2.2 4.0 -0.1 1.8 Manufacturing: Previous........ 3.6 0.8 -2.7 8.4 4.1 4.7 Revised......... 3.6 0.9 -2.6 7.9 3.6 4.2 ------------------------------------------------------------------------------ In the business sector, productivity, output, and hours grew about the same as reported on Sept. 7, based on information then available. In the nonfarm sector, growth in productivity and output was revised up while the increase in hours remained the same. Productivity was unchanged in the manufacturing sector, reflecting offsetting small upward revisions to output and hours. In all three sectors, hourly compensation and unit labor costs were revised down. Revised measures: Nonfinancial Corporations Productivity and cost measures for nonfinancial corporations for the second quarter of 2005 also were revised to incorporate more recent information than was available on Sept. 7. ------------------------------------------------------------------------------ Table C. Nonfinancial corporations: Previous and revised productivity and cost measures Quarterly percent changes at seasonally adjusted annual rates ------------------------------------------------------------------------------ Real Hourly hourly Unit Implicit Produc- compen- compen- labor Unit price tivity Output Hours sation sation costs profits deflator ----------------------------------------------------------------------------- Second quarter 2005 Previous 6.8 9.5 2.6 4.0 -0.1 -2.6 43.2 1.3 Revised 6.3 9.0 2.6 3.7 -0.5 -2.4 41.7 1.4 ------------------------------------------------------------------------------ Productivity grew at an annual rate of 6.3 percent in second-quarter 2005, compared with the increase of 6.8 percent reported previously. This was the result of a downward revision in output growth, from 9.5 percent to 9.0 percent, as hours growth was unchanged. Unit labor costs fell more slowly than reported previously, as hourly compensation was revised down less than productivity. Unit profits increased slightly less than reported on Sept. 7. (tables C and 6). Next release date The next release of Productivity and Costs is scheduled for 8:30 AM EST, Tuesday, Dec. 6, 2005. It will present third-quarter measures for nonfinancial corporations and revised third-quarter measures for business, nonfarm business, and manufacturing. The index numbers and rates of change reported by BLS for productivity and costs in its news release and on its Internet site are rounded to one decimal place, based upon unrounded data using many decimal places. This rounding protocol has been practiced in order to facilitate ease of use and interpretation of the published data. This has meant, however, that if data users calculated rates of change using the published rounded index figures, their results could differ from the published rates of change, simply due to differences in rounding. In order to make the data directly used in the calculations more readily available to the public and to ensure greater transparency of its calculating methods, BLS, beginning with the December 6, 2005 publication of the quarterly "Productivity and Costs" news release, will modify its productivity program practices. It will post on its web site productivity index numbers rounded to three decimal places, and, in addition, will calculate all published rates of change from those indexes. The change in calculation method may cause published productivity growth rates to change slightly-- likely by no more than a tenth--from the rates that would have been calculated using the current method. The convention of publishing in the news release index values rounded to one decimal place will continue. TECHNICAL NOTES Labor Hours: Hours data for the labor productivity and cost measures include hours for all persons working in the sector-wage and salary workers, the self- employed, and unpaid family workers. The primary source of hours and em ployment data is the BLS Current Employment Statistics (CES) program, which provides monthly survey data on the number of jobs held by wage and salary workers in nonfarm establishments. The CES also provides average weekly paid hours of production and nonsupervisory workers in these establishments. Weekly paid hours are adjusted to hours at work using data from the National Compensation Survey (NCS). The BLS Hours at Work survey, conducted for this purpose, was used for years prior to 2001. The Office of Productivity and Technology estimates average weekly hours at work for nonproduction and supervisory workers using information from the Current Population Survey (CPS), the CES, and the NCS. Data from the CPS are used for farm labor, nonfarm proprietors, and nonfarm unpaid family workers. Estimates of labor input for government enter prises are derived from the CPS, the CES, and the National Income and Product Accounts (NIPA) prepared by the Bureau of Economic Analysis (BEA) of the Department of Commerce. Output: Business sector output is an annual-weighted index constructed after excluding from gross domestic product (GDP) the following outputs: general government, nonprofit institutions, and private households (including owner- occupied housing). Corresponding exclusions also are made in labor inputs. Business output accounted for about 78 percent of the value of GDP in 2000. Nonfarm business, which also excludes farming, accounted for about 77 percent of GDP in 2000. Annual indexes for manufacturing and its durable and nondurable goods components are constructed by deflating current-dollar industry value of production data from the U.S. Bureau of the Census with deflators from the BEA. These deflators are based on data from the BLS producer price program and other sources. The industry shipments are aggregated using annual weights, and intrasector transactions are removed. Quarterly manufacturing output measures are based on the index of industrial production prepared monthly by the Board of Governors of the Federal Reserve System, adjusted to be consistent with annual indexes of manufacturing sector output prepared by BLS. Durables include the following 3-digit NAICS industries: wood product manufacturing; nonmetallic mineral product manufacturing; primary metal manufacturing; fabricated metal product manufacturing; machinery manufac- turing; computer and electronic product manufacturing; electrical equipment and appliance manufacturing; transportation equipment manufacturing; furniture and related product manufacturing; and miscellaneous manufacturing. Nondurables include: food manufacturing; beverage and tobacco product manufac- turing; textile mills; textile product mills; apparel manufacturing; leather and allied product manufacturing; paper manufacturing; printing and related support activities; petroleum and coal products manufacturing; chemical manu- facturing; and plastics and rubber products manufacturing. Nonfinancial corporate output is an annual-weighted index calculated on the basis of the costs incurred and the incomes earned from production. The output measure excludes the following outputs from GDP: general government; nonprofit institutions; private households; unincorporated business; and those corporations classified as offices of bank holding companies, offices of other holding companies, or offices in the finance and insurance sector. Nonfinancial corporations accounted for about 54 percent of the value of GDP in 2000. Productivity: These productivity measures describe the relationship between real output and the labor time involved in its production. They show the changes from period to period in the amount of goods and services produced per hour. Although these measures relate output to hours at work of all persons engaged in a sector, they do not measure the specific contribution of labor, capital, or any other factor of production. Rather, they reflect the joint effects of many influences, including changes in technology; capital investment; level of output; utilization of capacity, energy, and materials; the organization of production; managerial skill; and the characteristics and effort of the work force. Information in this release will be made available to sensory-impaired individuals upon request. Voice phone: 202-691-5606; Federal Relay Service number: 1-800-877-8339. Table 1. Business sector: Productivity, hourly compensation, unit labor costs, and prices, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit Unit non- Implicit and hour of of all tion per tion per labor labor pay- price quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) --------------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 125.6 144.6 115.2 147.8 115.5 117.7 116.4 117.2 II 127.9 146.4 114.5 150.3 117.3 117.5 117.2 117.4 III 130.5 149.8 114.8 152.0 118.0 116.4 120.3 117.9 IV 130.6 150.8 115.5 152.8 118.4 117.0 120.5 118.3 ANNUAL 128.6 147.9 115.0 150.7 117.3 117.2 118.6 117.7 2004 I 131.7 152.6 115.9 154.4 118.5 117.3 123.0 119.4 II 132.8 154.1 116.1 155.7 118.2 117.2 126.1 120.5 III 133.3 155.8 116.9 158.2 119.6 118.7 124.2 120.7 IV 134.3 157.2 117.1 162.5 121.8 121.0 122.3 121.5 ANNUAL 133.0 154.9 116.5 157.7 119.5 118.6 123.9 120.6 2005 I 135.3 158.9 117.5 164.4 122.5 121.5 123.6 122.3 II 135.5 160.4 118.4 r165.6 r122.1 r122.2 r124.7 r123.1 III 137.1 162.2 118.2 167.3 121.9 122.0 127.4 124.0 --------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 2.8 1.7 -1.1 5.5 1.3 2.6 0.5 1.8 II 7.6 4.9 -2.6 7.0 6.5 -0.6 2.8 0.6 III 8.4 9.9 1.3 4.5 2.3 -3.6 10.7 1.5 IV 0.3 2.6 2.3 2.3 1.4 2.1 0.9 1.6 ANNUAL 3.9 3.4 -0.5 3.9 1.6 0.0 3.7 1.4 2004 I 3.4 4.9 1.5 4.2 0.3 0.8 8.6 3.7 II 3.4 4.0 0.6 3.3 -1.0 -0.1 10.3 3.8 III 1.4 4.4 3.0 6.5 4.8 5.0 -5.8 0.7 IV 3.1 3.6 0.5 11.3 7.5 7.9 -6.0 2.4 ANNUAL 3.4 4.8 1.3 4.6 1.9 1.2 4.4 2.4 2005 I 2.9 4.4 1.4 4.7 2.3 1.7 4.4 2.7 II r0.8 4.0 r3.1 r3.0 r-1.1 r2.2 r3.4 r2.6 III 4.8 4.3 -0.4 4.2 -0.9 -0.6 9.2 3.0 --------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 2.4 2.0 -0.4 3.0 0.1 0.6 2.7 1.4 II 3.8 2.6 -1.1 3.6 1.4 -0.2 3.9 1.3 III 4.7 4.2 -0.5 4.3 2.0 -0.4 4.6 1.4 IV 4.7 4.7 0.0 4.8 2.9 0.1 3.7 1.4 ANNUAL 3.9 3.4 -0.5 3.9 1.6 0.0 3.7 1.4 2004 I 4.9 5.5 0.6 4.5 2.6 -0.4 5.7 1.9 II 3.8 5.3 1.4 3.6 0.8 -0.2 7.6 2.7 III 2.1 4.0 1.8 4.1 1.4 1.9 3.3 2.4 IV 2.8 4.2 1.4 6.3 2.8 3.4 1.5 2.6 ANNUAL 3.4 4.8 1.3 4.6 1.9 1.2 4.4 2.4 2005 I 2.7 4.1 1.3 6.4 3.3 3.6 0.5 2.4 II r2.1 4.1 2.0 r6.3 r3.3 r4.2 r-1.1 2.1 III 2.9 4.1 1.1 5.8 1.9 2.8 2.6 2.7 --------------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor costs, and prices, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit Unit non- Implicit and hour of of all tion per tion per labor labor pay- price quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) --------------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 124.9 144.8 115.9 147.0 114.9 117.7 118.2 117.9 II 126.9 146.5 115.4 149.3 116.5 117.6 118.7 118.0 III 129.9 150.2 115.6 151.2 117.4 116.4 121.6 118.3 IV 130.1 151.2 116.2 152.2 117.9 116.9 121.3 118.6 ANNUAL 128.0 148.2 115.8 149.9 116.7 117.1 120.0 118.2 2004 I 130.8 152.8 116.8 153.5 117.8 117.3 123.5 119.6 II 132.2 154.5 116.8 154.9 117.6 117.1 126.5 120.6 III 132.7 156.3 117.8 157.2 118.8 118.5 125.3 121.0 IV 133.5 157.7 118.2 161.0 120.7 120.7 123.7 121.8 ANNUAL 132.3 155.3 117.4 156.7 118.7 118.4 124.7 120.7 2005 I 134.5 159.4 118.5 163.2 121.6 121.3 125.0 122.7 II r135.3 r161.2 119.2 r164.8 r121.6 r121.9 r126.3 r123.5 III 136.6 162.8 119.2 166.3 121.1 121.7 129.3 124.5 --------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 3.1 2.0 -1.1 5.8 1.5 2.6 0.8 1.9 II 6.6 4.7 -1.8 6.2 5.8 -0.3 1.7 0.4 III 9.6 10.4 0.8 5.1 2.9 -4.1 10.2 1.0 IV 0.8 2.8 2.0 2.7 1.8 2.0 -1.1 0.8 ANNUAL 3.8 3.3 -0.5 4.0 1.6 0.2 3.2 1.3 2004 I 2.1 4.2 2.0 3.5 -0.5 1.3 7.4 3.6 II 4.5 4.6 0.1 3.7 -0.7 -0.8 10.0 3.2 III 1.3 4.6 3.3 6.1 4.4 4.7 -3.6 1.5 IV 2.5 3.9 1.4 10.2 6.4 7.6 -5.1 2.6 ANNUAL 3.4 4.8 1.4 4.5 1.8 1.1 3.9 2.1 2005 I 3.2 4.3 1.1 5.5 3.1 2.2 4.4 3.0 II r2.1 r4.4 2.2 r4.0 r-0.1 r1.8 r4.0 r2.7 III 4.1 4.2 0.1 3.6 -1.4 -0.5 9.9 3.3 --------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 2.0 1.7 -0.4 3.0 0.1 1.0 2.7 1.6 II 3.5 2.5 -0.9 3.5 1.3 0.1 3.2 1.2 III 4.8 4.2 -0.5 4.4 2.1 -0.4 4.1 1.2 IV 5.0 4.9 0.0 5.0 3.0 0.0 2.8 1.0 ANNUAL 3.8 3.3 -0.5 4.0 1.6 0.2 3.2 1.3 2004 I 4.7 5.5 0.7 4.4 2.5 -0.3 4.5 1.5 II 4.2 5.5 1.2 3.7 0.9 -0.4 6.5 2.1 III 2.2 4.0 1.9 4.0 1.2 1.8 3.0 2.3 IV 2.6 4.3 1.7 5.8 2.4 3.2 1.9 2.7 ANNUAL 3.4 4.8 1.4 4.5 1.8 1.1 3.9 2.1 2005 I 2.9 4.4 1.5 6.3 3.3 3.4 1.2 2.6 II r2.3 r4.3 2.0 r6.4 r3.4 r4.1 r-0.2 2.4 III 3.0 4.2 1.2 5.8 1.9 2.7 3.2 2.9 --------------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 151.6 131.8 86.9 156.5 122.3 103.2 II 152.9 130.7 85.5 159.2 124.3 104.1 III 156.9 132.1 84.2 161.5 125.4 102.9 IV 158.1 134.2 84.9 163.2 126.5 103.2 ANNUAL 154.8 132.2 85.4 160.1 124.6 103.4 2004 I 159.3 136.0 85.4 159.1 122.1 99.9 II 162.2 138.0 85.1 161.1 122.3 99.3 III 164.0 139.4 85.0 164.9 124.7 100.6 IV 166.5 141.0 84.7 169.3 126.9 101.7 ANNUAL 163.0 138.6 85.0 163.6 124.0 100.4 2005 I 168.2 142.3 84.6 172.2 128.3 102.4 II 169.7 r142.6 84.0 r175.6 r129.5 r103.4 III 171.6 143.7 83.7 176.8 128.8 103.0 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 5.7 -0.9 -6.3 17.9 13.1 11.5 II 3.3 -3.4 -6.5 6.9 6.5 3.5 III 11.0 4.5 -5.9 5.9 3.7 -4.5 IV 3.2 6.6 3.3 4.3 3.4 1.1 ANNUAL 5.2 0.0 -4.9 8.3 5.9 3.0 2004 I 3.0 5.4 2.4 -9.7 -13.1 -12.4 II 7.6 5.9 -1.6 5.1 0.7 -2.3 III 4.4 4.0 -0.3 9.8 8.0 5.2 IV 6.3 4.9 -1.3 11.2 7.4 4.6 ANNUAL 5.3 4.8 -0.4 2.2 -0.5 -2.9 2005 I 4.2 3.5 -0.7 7.1 4.6 2.8 II 3.6 r0.9 r-2.6 r7.9 r3.6 r4.2 III 4.5 3.1 -1.4 2.9 -2.1 -1.6 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 5.0 0.6 -4.2 8.2 5.2 3.1 II 4.4 -1.3 -5.4 7.8 5.5 3.3 III 5.5 -0.8 -6.0 8.4 6.0 2.7 IV 5.8 1.6 -3.9 8.7 6.6 2.7 ANNUAL 5.2 0.0 -4.9 8.3 5.9 3.0 2004 I 5.1 3.2 -1.8 1.6 -0.2 -3.3 II 6.1 5.6 -0.5 1.2 -1.6 -4.7 III 4.5 5.5 0.9 2.1 -0.6 -2.3 IV 5.3 5.1 -0.2 3.7 0.3 -1.5 ANNUAL 5.3 4.8 -0.4 2.2 -0.5 -2.9 2005 I 5.6 4.6 -1.0 8.3 5.1 2.5 II 4.6 3.3 r-1.2 r9.0 r5.9 r4.2 III 4.7 3.1 -1.5 7.2 3.3 2.5 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 172.7 155.7 90.1 154.9 121.1 89.7 II 174.3 154.3 88.6 157.7 123.1 90.5 III 180.9 157.6 87.1 160.1 124.3 88.5 IV 182.8 161.5 88.3 161.9 125.5 88.6 ANNUAL 177.6 157.3 88.5 158.6 123.5 89.3 2004 I 184.4 164.6 89.3 155.5 119.4 84.3 II 187.8 167.1 88.9 158.2 120.1 84.2 III 190.0 169.5 89.2 162.1 122.6 85.3 IV 193.4 172.1 89.0 166.0 124.4 85.8 ANNUAL 188.9 168.3 89.1 160.4 121.6 84.9 2005 I 196.1 174.3 88.9 169.0 125.9 86.2 II r197.8 r175.1 88.5 r172.1 r127.0 r87.0 III 201.4 178.3 88.5 173.2 126.2 86.0 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 5.1 -1.6 -6.4 22.2 17.2 16.3 II 3.7 -3.4 -6.9 7.3 6.9 3.4 III 16.0 8.7 -6.3 6.2 3.9 -8.5 IV 4.2 10.1 5.7 4.7 3.8 0.5 ANNUAL 6.9 1.3 -5.3 9.3 6.9 2.3 2004 I 3.6 8.1 4.3 -14.9 -18.1 -17.9 II 7.7 6.0 -1.5 6.9 2.5 -0.7 III 4.6 6.0 1.3 10.3 8.5 5.5 IV 7.5 6.3 -1.1 9.9 6.1 2.2 ANNUAL 6.4 7.0 0.6 1.1 -1.5 -4.9 2005 I 5.7 5.2 -0.5 7.5 5.1 1.7 II r3.5 r1.8 r-1.7 r7.6 r3.3 r4.0 III 7.5 7.5 0.0 2.4 -2.6 -4.7 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 6.7 1.7 -4.7 9.1 6.0 2.2 II 5.9 -0.6 -6.1 8.7 6.4 2.7 III 7.9 0.7 -6.7 9.6 7.3 1.6 IV 7.2 3.3 -3.6 9.9 7.8 2.5 ANNUAL 6.9 1.3 -5.3 9.3 6.9 2.3 2004 I 6.8 5.8 -1.0 0.4 -1.4 -6.0 II 7.8 8.3 0.4 0.3 -2.5 -6.9 III 5.0 7.6 2.4 1.3 -1.4 -3.6 IV 5.8 6.6 0.7 2.5 -0.9 -3.2 ANNUAL 6.4 7.0 0.6 1.1 -1.5 -4.9 2005 I 6.4 5.9 -0.5 8.7 5.5 2.2 II 5.3 r4.8 -0.5 r8.8 r5.7 r3.3 III 6.0 5.2 -0.8 6.8 2.9 0.7 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics Table 5. Nondurable manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 130.2 106.9 82.1 158.0 123.5 121.4 II 131.1 106.0 80.9 160.5 125.3 122.4 III 132.6 105.9 79.8 162.7 126.3 122.6 IV 133.6 106.5 79.7 163.9 127.0 122.7 ANNUAL 131.8 106.3 80.6 161.2 125.5 122.3 2004 I 134.5 107.1 79.6 164.1 125.9 122.0 II 137.0 108.6 79.3 164.7 125.1 120.3 III 138.6 109.0 78.7 168.1 127.1 121.2 IV 140.2 109.8 78.3 173.5 130.1 123.8 ANNUAL 137.6 108.6 79.0 167.6 127.0 121.8 2005 I 141.1 110.2 78.1 176.1 131.3 124.9 II r142.5 r110.1 77.3 r179.7 132.6 126.1 III 143.1 109.6 76.5 181.2 132.0 126.6 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 6.5 0.1 -6.0 10.3 5.9 3.6 II 2.6 -3.5 -5.9 6.3 5.9 3.6 III 4.9 -0.6 -5.2 5.6 3.4 0.7 IV 2.8 2.4 -0.4 3.0 2.1 0.2 ANNUAL 2.8 -1.5 -4.2 6.4 4.0 3.5 2004 I 2.9 2.1 -0.8 0.5 -3.3 -2.4 II 7.5 5.7 -1.7 1.7 -2.6 -5.5 III 4.8 1.7 -3.0 8.4 6.6 3.4 IV 4.6 2.9 -1.7 13.7 9.7 8.6 ANNUAL 4.3 2.2 -2.1 3.9 1.2 -0.4 2005 I 2.5 1.5 -1.1 6.1 3.7 3.5 II r4.2 r-0.3 r-4.3 r8.3 r4.0 4.0 III 1.7 -2.1 -3.7 3.4 -1.7 1.7 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 2.6 -0.9 -3.4 6.7 3.7 4.0 II 2.2 -2.2 -4.3 6.4 4.1 4.1 III 2.3 -2.6 -4.8 6.2 3.9 3.9 IV 4.2 -0.4 -4.4 6.3 4.3 2.0 ANNUAL 2.8 -1.5 -4.2 6.4 4.0 3.5 2004 I 3.3 0.1 -3.1 3.8 2.0 0.5 II 4.5 2.4 -2.0 2.7 -0.2 -1.8 III 4.5 3.0 -1.5 3.3 0.6 -1.1 IV 5.0 3.1 -1.8 5.9 2.4 0.9 ANNUAL 4.3 2.2 -2.1 3.9 1.2 -0.4 2005 I 4.9 2.9 -1.8 7.4 4.3 2.4 II 4.1 r1.4 -2.5 r9.1 r6.0 r4.8 III 3.3 0.5 -2.7 7.8 3.9 4.4 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics Table 6. Nonfinancial corporations: Productivity, hourly compensation, unit labor costs, unit profits, and prices, seasonally adjusted Output Hourly Real Unit Total Unit Implicit Year per all- compen- hourly Unit non- unit pro- price and employee Employee sation compen- labor labor costs fits deflator quarter hour Output hours (1) sation(2) costs costs(6) (7) (8) (4) ---------------------------------------------------------------------------------------------------------- Indexes 1992=100 2003 I 130.4 152.3 116.8 144.6 113.0 110.9 111.4 111.0 107.8 110.7 II 132.7 154.3 116.3 147.0 114.8 110.8 110.5 110.7 113.7 111.0 III 135.1 156.9 116.2 148.9 115.6 110.2 110.9 110.4 119.9 111.3 IV 135.9 158.7 116.8 149.8 116.0 110.2 110.8 110.4 124.8 111.7 ANNUAL 133.5 155.6 116.5 147.6 114.8 110.5 110.9 110.6 116.7 111.2 2004 I 136.1 160.0 117.5 150.3 115.4 110.4 111.4 110.7 130.2 112.4 II 136.9 161.3 117.8 151.7 115.2 110.8 111.5 111.0 138.6 113.4 III 139.4 165.0 118.4 154.0 116.5 110.5 110.3 110.5 139.7 113.1 IV 142.3 169.0 118.8 158.0 118.4 111.0 108.8 110.5 143.1 113.4 ANNUAL 138.7 163.8 118.1 153.5 116.4 110.7 110.5 110.6 138.0 113.1 2005 I 143.2 170.3 118.9 160.3 119.4 111.9 108.2 110.9 145.6 114.0 II r145.4 r174.1 119.7 r161.7 r119.3 111.2 r106.8 r110.0 r158.8 r114.4 ---------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2003 I 1.1 -1.8 -2.8 3.9 -0.3 2.9 6.7 3.9 -11.6 2.4 II 7.3 5.5 -1.7 6.9 6.4 -0.4 -3.1 -1.1 23.8 0.9 III 7.3 6.9 -0.3 5.2 2.9 -1.9 1.3 -1.1 23.9 1.0 IV 2.4 4.5 2.1 2.4 1.5 0.0 -0.3 -0.1 17.2 1.5 ANNUAL 4.1 2.7 -1.4 3.9 1.6 -0.2 0.1 -0.1 19.0 1.4 2004 I 0.8 3.4 2.6 1.5 -2.3 0.7 2.1 1.1 18.6 2.7 II 2.3 3.3 1.0 3.7 -0.7 1.3 0.3 1.1 28.2 3.7 III 7.4 9.4 1.9 6.3 4.6 -1.0 -4.2 -1.9 3.4 -1.3 IV 8.5 9.9 1.3 10.6 6.8 1.9 -5.2 0.0 10.0 1.1 ANNUAL 3.9 5.3 1.4 4.0 1.3 0.2 -0.4 0.0 18.3 1.7 2005 I 2.7 3.3 0.5 5.9 3.5 3.1 -2.5 1.6 7.1 2.2 II r6.3 r9.0 2.6 r3.7 r-0.5 r-2.4 r-4.8 r-3.1 r41.7 r1.4 ---------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2003 I 3.5 2.0 -1.5 3.2 0.3 -0.3 -1.4 -0.6 25.6 1.2 II 3.8 2.0 -1.8 3.6 1.4 -0.1 -0.1 -0.1 20.4 1.4 III 4.6 3.1 -1.5 4.3 2.1 -0.3 0.8 0.0 19.6 1.6 IV 4.5 3.7 -0.7 4.6 2.6 0.1 1.1 0.4 12.3 1.5 ANNUAL 4.1 2.7 -1.4 3.9 1.6 -0.2 0.1 -0.1 19.0 1.4 2004 I 4.4 5.1 0.7 4.0 2.1 -0.4 0.0 -0.3 20.8 1.5 II 3.2 4.6 1.3 3.2 0.3 0.0 0.8 0.2 21.9 2.2 III 3.2 5.2 1.9 3.5 0.7 0.3 -0.6 0.0 16.5 1.6 IV 4.7 6.5 1.7 5.5 2.0 0.7 -1.8 0.1 14.7 1.5 ANNUAL 3.9 5.3 1.4 4.0 1.3 0.2 -0.4 0.0 18.3 1.7 2005 I 5.2 6.4 1.2 6.6 3.5 1.3 -2.9 0.2 11.8 1.4 II r6.2 r7.9 1.6 r6.6 3.6 r0.4 r-4.2 -0.9 r14.6 0.8 ---------------------------------------------------------------------------------------------------------- See footnotes following Table 6. November 3, 2005 r=revised Source: Bureau of Labor Statistics SOURCES: Output data are from the Bureau of Economic Analysis and the Census Bureau of the U.S. Department of Commerce; the Bureau of Labor Statistics, U.S. Department of Labor; and the Federal Reserve Board. Compensation and hours data are from the Bureau of Labor Statistics and the Bureau of Economic Analysis. RELIABILITY: Productivity and cost measures are regularly revised as more complete information becomes available. The measures are first published within 40 days of the close of the reference period; revisions appear 30 days later, and second revisions after an additional 60 days. In the business sector, the third publication (second revision) of a quarterly index of output per hour of all persons has differed from the initial value by between -1.4 and +1.4 index points approximately 95 percent of the time. This interval is based on the performance of this measure between the fourth quarter of 1995 and the second quarter of 2005. Footnotes, Tables 1-6 (1) Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Except for nonfinancial corporations, where there are no self-employed, data also include an estimate of wages, salaries, and supplemental payments for the self- employed. (2) The change for recent quarters is based on the Consumer Price Index for all urban consumers (CPI-U). The trend from 1978-2004 is based on the Consumer Price Index research series (CPI-U-RS). (3) Unit nonlabor payments include profits, consumption of fixed capital, taxes on production and imports less subsidies, net interest and miscellaneous payments, business current transfer payments, rental income of persons, and the current surplus of government enterprises. (4) Current dollar output divided by the output index. (5) Quarterly changes: Percent change compounded at annual rate from the original data rather than index numbers. Annual changes: Percent change between annual average levels. (6) Unit nonlabor costs include consumption of fixed capital, taxes on production and imports less subsidies, net interest and miscellaneous payments, and business current transfer payments. (7) Total unit costs are the sum of unit labor and nonlabor costs. (8) Unit profits include corporate profits before tax with inventory valuation and capital consumption adjustments.