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PRODUCTIVITY AND COSTS
First Quarter 2008, Revised
The Bureau of Labor Statistics of the U.S. Department of Labor today
reported revised productivity data--as measured by output per hour of all
persons--for the first quarter of 2008. The revised seasonally adjusted
annual rates of productivity change in the first quarter were:
2.4 percent in the business sector and
2.6 percent in the nonfarm business sector.
In both sectors, the first-quarter productivity gains were greater than the
preliminary estimates reported on May 7, due primarily to upward revisions to
output growth.
In manufacturing, the revised productivity changes in the first quarter
were:
3.6 percent in manufacturing,
2.6 percent in durable goods manufacturing, and
5.7 percent in nondurable goods manufacturing.
Manufacturing productivity growth was slower in the first quarter of
2008 than reported on May 7 as output was revised down by more than hours.
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. First-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 prepared by the Board of Governors
of the Federal Reserve System. See Technical Notes for further information
on data sources.
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Table A. Productivity and costs: Revised first-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 2.4 0.6 -1.7 4.8 0.4 2.3
Nonfarm business 2.6 0.7 -1.8 4.9 0.6 2.2
Manufacturing 3.6 -1.2 -4.7 7.9 3.5 4.2
Durable 2.6 -0.9 -3.4 7.5 3.1 4.8
Nondurable 5.7 -1.6 -6.9 8.5 4.0 2.6
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Percent change from same quarter a year ago
Business 3.4 2.7 -0.7 4.1 -0.1 0.7
Nonfarm business 3.3 2.7 -0.6 4.0 -0.1 0.7
Manufacturing 4.0 1.9 -2.1 3.8 -0.3 -0.2
Durable 5.5 3.5 -1.9 3.7 -0.5 -1.8
Nondurable 2.5 0.0 -2.4 4.2 0.0 1.6
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Business
Business sector productivity grew 2.4 percent in the first quarter of
2008 as output increased 0.6 percent and hours worked by all persons--
employees, proprietors, and unpaid family workers--declined 1.7 percent
(seasonally adjusted annual rates). When the first quarter of 2008 is
compared with the first quarter of 2007, output per hour in the business
sector increased 3.4 percent--the largest four-quarter gain since a 3.4
percent increase from the second quarter of 2003 to the second quarter of
2004 (see tables A and 1).
Hourly compensation increased at a 4.8 percent annual rate in the first
quarter of 2008. This measure of compensation includes wages and salaries,
supplements, employer contributions to employee benefit plans, and taxes.
Real hourly compensation, which takes into account changes in consumer
prices, rose 0.4 percent in the first quarter of 2008 following a 0.6 percent
gain in the previous quarter.
The change in unit labor costs approximates the change in hourly
compensation less the change in productivity. In the first quarter of 2008
these costs grew at a 2.3 percent annual rate, but from the first quarter of
2007 to the first quarter of 2008 unit labor costs rose just 0.7 percent.
The implicit price deflator for business output, which reflects changes in
both unit labor costs and unit nonlabor payments, grew 2.0 percent in the
first quarter of 2008.
Nonfarm business
During the first quarter of 2008, productivity rose 2.6 percent in the
nonfarm business sector; output increased 0.7 percent and hours of all
persons fell 1.8 percent (seasonally-adjusted annual rates). From the first
quarter of 2007 to the first quarter of 2008, output per hour in the nonfarm
business sector increased 3.3 percent, the largest four-quarter change since
a 3.8 percent increase from the second quarter of 2003 to the second quarter
of 2004. Nonfarm business productivity had increased at an average annual
rate of 2.7 percent from 2000 through 2006.
Hourly compensation increased 4.9 percent in the nonfarm business sector
in the first quarter of 2008. The measure increased 6.6 percent in the
fourth quarter, as revised. When hourly compensation is adjusted for the
rise in consumer prices, real hourly compensation grew 1.5 percent in the
fourth quarter of 2007 and 0.6 percent in the first quarter of 2008.
Unit labor costs rose 2.2 percent in the first quarter of 2008. As in
the business sector, the percent change from the same quarter a year ago was
0.7 percent. The implicit price deflator for nonfarm business output
increased by 2.3 percent in the first quarter of 2008.
Manufacturing
Productivity grew at a 3.6 percent annual rate in the manufacturing
sector during the first quarter of 2008, reflecting a 1.2 percent decrease in
output and a 4.7 percent decrease in hours (table A). This was the largest
decline in hours since a 6.3 percent drop in the third quarter of 2003.
Output per hour rose at the highest rate in three years, 5.7 percent, in
nondurable goods industries during the first quarter; hours fell by 6.9
percent and output declined 1.6 percent (tables 3, 4, and 5). Total
manufacturing productivity grew 4.0 percent from the first quarter of 2007 to
the first quarter of 2008, similar to the 3.8 percent average annual increase
from 2000 to 2006.
Hourly compensation in manufacturing grew 7.9 percent during the first
quarter of 2008. Real hourly compensation, which takes into account changes
in consumer prices, increased 3.5 percent for all manufacturing workers, as a
3.1 percent rise in durable manufacturing real hourly compensation combined
with a 4.0 percent rise in the nondurable goods industries.
Unit labor costs rose 4.2 percent in manufacturing during the first
quarter of 2008, as hourly compensation increased faster than productivity in
both subsectors. However, over the past four quarters total manufacturing
unit labor costs edged down 0.2 percent, as durable goods unit labor costs
declined 1.8 percent and nondurable goods unit labor costs rose 1.6 percent.
Nonfinancial corporations
Preliminary first-quarter 2008 measures of productivity and costs for
nonfinancial corporations also were announced today (tables B and 6).
Productivity rose 4.6 percent in the first quarter as output rose 3.2 percent
and employee-hours declined 1.4 percent (seasonally adjusted annual rates).
From the first quarter of 2007 to the first quarter of 2008 productivity grew
3.0 percent; it had grown 2.6 percent per year from 2000 to 2006. The
nonfinancial corporate sector includes all corporations doing business in the
United States, except those classified as depository institutions,
nondepository institutions, security and commodity brokers, insurance
carriers, regulated investment offices, small business investment offices,
and real estate investment trusts.
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Table B. Nonfinancial corporations: Preliminary first-quarter 2008
productivity and cost measures
(Seasonally adjusted annual rates)
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Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
Period tivity Output Hours sation sation costs profits deflator
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Percent change from preceding quarter
2008 I 4.6 3.2 -1.4 5.9 1.5 1.2 -1.5 0.5
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Percent change from same quarter a year ago
2008 I 3.0 3.0 0.0 4.2 0.0 1.1 -5.5 0.1
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Hourly compensation increased 5.9 percent during the first quarter of
2008, the same as the revised fourth quarter 2007 increase. Taking the 4.3
percent rise in consumer prices into account, real hourly compensation
increased 1.5 percent in the first quarter of 2008, more than the 0.8 percent
increase one quarter earlier. Unit labor costs in nonfinancial corporations
rose 1.2 percent in the first quarter of 2008, and 1.1 percent over the last
four quarters.
REVISED MEASURES
Previous and revised measures for the first quarter of 2008 in the
business, nonfarm business, and manufacturing sectors are compared in table
C.
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Table C. Previous and revised productivity and related measures
(Quarterly percent change at seasonally adjusted annual rate)
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Real
Hourly hourly Unit
Produc- compen- compen- labor
Sector tivity Output Hours sation sation costs
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First quarter 2008
Business:
Previous 1.9 0.2 -1.6 4.2 -0.1 2.2
Revised 2.4 0.6 -1.7 4.8 0.4 2.3
Nonfarm business:
Previous 2.2 0.4 -1.8 4.4 0.1 2.2
Revised 2.6 0.7 -1.8 4.9 0.6 2.2
Manufacturing:
Previous 4.1 -0.3 -4.2 6.7 2.3 2.5
Revised 3.6 -1.2 -4.7 7.9 3.5 4.2
Fourth quarter 2007
Business:
Previous 0.9 0.1 -0.7 3.7 -1.3 2.8
Revised 0.9 0.1 -0.7 5.6 0.6 4.7
Nonfarm business:
Previous 1.8 0.2 -1.6 4.6 -0.4 2.8
Revised 1.8 0.2 -1.6 6.6 1.5 4.7
Manufacturing:
Previous 4.2 -0.4 -4.4 4.3 -0.6 0.2
Revised 4.2 -0.4 -4.4 7.4 2.3 3.1
Annual average 2007
Business:
Previous 1.9 2.3 0.4 5.0 2.1 3.1
Revised 1.9 2.3 0.4 5.1 2.2 3.2
Nonfarm business:
Previous 1.8 2.3 0.5 4.9 2.1 3.1
Revised 1.8 2.3 0.5 5.1 2.2 3.2
Manufacturing:
Previous 3.4 1.6 -1.7 5.4 2.5 1.9
Revised 3.4 1.6 -1.7 5.6 2.7 2.1
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In the business and nonfarm business sectors, productivity was revised
up along with output, as hours were little changed. Upward revisions to
hourly compensation offset those to productivity, leaving the increase in
unit labor costs about the same as reported May 7.
In the manufacturing sector, productivity growth was revised down in the
first quarter as output was revised down by more than hours. The downward
revision to total manufacturing productivity combined with an upward revision
to hourly compensation to revise the increase in unit labor costs from 2.5
percent to 4.2 percent.
Table C also presents preliminary and revised results for the fourth
quarter and annual average of 2007. Only hourly compensation and related
measures were revised; productivity, output, and hours were not. These
revisions resulted from incorporation of revised data on employee
compensation from the Bureau of Economic Analysis (BEA) of the U.S.
Department of Commerce, released May 29. In the fourth quarter of 2007,
hourly compensation, real hourly compensation, and unit labor costs were
revised up in all sectors. Annual averages of these measures for 2007 were
also revised up.
REVISED MEASURES: NONFINANCIAL CORPORATIONS
Fourth quarter and annual average 2007 measures were revised for the
nonfinancial corporate sector. As revised, productivity increased at a 2.4
percent annual rate in the fourth quarter of 2007, reflecting similar growth
in output and unchanged employee-hours. An upward revision to hourly
compensation outpaced the revision to productivity, and as a result unit
labor costs rose slightly faster than reported May 7. For the year 2007,
productivity was revised up slightly due solely to an upward revision to
output.
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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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Fourth quarter 2007
Previous 0.9 0.9 0.0 3.5 -1.4 2.6 -16.9 0.3
Revised 2.4 2.4 0.0 5.9 0.8 3.4 -18.2 0.3
Annual average 2007
Previous 1.4 2.1 0.7 4.7 1.8 3.2 -5.7 1.6
Revised 1.5 2.2 0.7 4.8 1.9 3.2 -5.8 1.6
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Next release date
The next release of Productivity and Costs is scheduled for 8:30 AM EDT,
Friday, Aug. 8, 2008. Preliminary second-quarter measures for business,
nonfarm business, and manufacturing will be released at that time. The Aug.
8 release also will incorporate the three-year revision of the National
Income and Product Accounts.
Bureau of Labor Statistics
