Economic News Release

                                             Technical Note

Labor Productivity: The industry labor productivity measures describe the relationship between industry 
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 the labor productivity measures relate 
output to hours of all persons in an industry, they do not measure the specific contribution of labor or 
any other factor of production.  Rather, they reflect the joint effects of many influences, including 
changes in technology; capital investment; utilization of capacity, energy, and materials; the use of 
purchased services inputs, including contract employment services; the organization of production; 
managerial skill; and the characteristics and effort of the workforce.

Output:  Industry output is measured as an annual-weighted index of the changes in the various products 
(in real terms) provided for sale outside the industry. Real industry output is usually derived by deflating 
nominal sales or values of production using BLS price indexes, but for some industries it is measured by 
physical quantities of output. For manufacturing industries, industry output reflects sectoral value of 
production, derived by adjusting shipments for changes in inventories and removing intra-industry 
transactions.

Industry output measures are constructed primarily using data from the economic censuses and annual 
surveys of the Census Bureau, U.S. Department of Commerce, together with information on price 
changes primarily from BLS.  

Labor Hours:  The primary source of industry employment and hours data is the BLS Current 
Employment Statistics (CES) survey. The CES provides monthly data on the number of total and 
production worker jobs held by wage and salary workers in nonfarm establishments as well as data on 
the average weekly hours of production workers in those establishments. CES data are supplemented 
with data from the Current Population Survey (CPS) to estimate employment and hours of self-
employed and unpaid family workers in each industry. Data from the CPS, together with the CES data, 
are also used to estimate the historical average weekly hours of nonproduction workers for each industry. 
CES and CPS data are supplemented or further disaggregated for some industries using data from the 
BLS Quarterly Census of Employment and Wages (QCEW), the Census Bureau, or other sources. Hours 
of all persons in an industry are treated as homogeneous and are directly aggregated.

Unit Labor Costs:  Unit labor costs represent the cost of labor required to produce one unit of output.  
The unit labor cost indexes are computed by dividing an index of industry labor compensation by an 
index of real industry output.  Unit labor costs also describe the relationship between compensation per 
hour and real output per hour (labor productivity). Increases in hourly compensation increase unit labor 
costs; increases in labor productivity offset compensation increases and lower unit labor costs. 
      
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to the employer 
of securing the services of labor. Payroll includes salaries, wages, commissions, dismissal pay, bonuses, 
vacation and sick leave pay, and compensation in kind.  Supplemental payments include legally required 
expenditures and payments for voluntary programs. The legally required portion consists primarily of 
Federal old age and survivors’ insurance, unemployment compensation, and workers’ compensation. 
Payments for voluntary programs include all programs not specifically required by legislation, such as the 
employer portion of private health insurance and pension plans.
      
Revisions: The measures in this news release incorporate 2010 data and revisions to 2009 data from the 
Annual Survey of Manufactures (ASM) published by the Census Bureau. The measures in this release 
also incorporate the annual benchmark revision of the BLS Current Employment Statistics (CES) survey 
published in February 2012. All of the measures for 2010 in this release are preliminary and subject to 
revision.

Additional Information: With this release, some series that were formerly provided upon request are now 
available on the BLS Labor Productivity and Costs website at www.bls.gov/lpc. These include annual 
levels of industry employment and hours, nominal values of production and labor compensation, and 
implicit price indexes for industry output. 

The industries included in this news release are classified according to the 2007 NAICS. While the rates 
of change reported by BLS in this release are rounded to one decimal place, all percent changes are 
calculated using index numbers rounded to three decimal places.

Year-to-year movements in industry productivity may be erratic, particularly in smaller industries. The 
annual measures based on sample data may differ from measures generated by a census of 
establishments in the industry. Annual changes in an industry’s output and use of labor may reflect 
cyclical changes in the economy as well as long-term trends. As a result, long-term productivity trends 
tend to be more reliable indicators of industry performance than year-to-year changes.

Industry productivity and related indexes; rates of change; and levels of industry employment, hours, 
nominal value of production and labor compensation can be accessed online by visiting the BLS Labor 
Productivity and Costs website at www.bls.gov/lpc. Additional information is available by calling the 
Division of Industry Productivity Studies (202-691-5618) or by sending an e-mail to dipsweb@bls.gov. 
Information in this report will be made available to sensory-impaired individuals upon request. Voice 
phone: 202-691-5618; TDD message referral phone number: 1-800-877-8339.

To subscribe to the industry productivity program’s news releases, customers can register on the BLS 
website at https://subscriptions.bls.gov/accounts/USDOLBLS/subscriber/new.