Productivity and Costs, Second Quarter 2016, Preliminary



Transmission of material in this release is embargoed until        USDL 16-1652      
8:30 a.m. (EDT) Tuesday, August 9, 2016

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                           PRODUCTIVITY AND COSTS
                    Second Quarter 2016, Preliminary
                        
                        
Nonfarm business sector labor productivity decreased at a 0.5-percent annual 
rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics 
reported today, as output increased 1.2 percent and hours worked increased
1.8 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the second quarter of 2015 to the second quarter 
of 2016, productivity decreased 0.4 percent, the first four-quarter decline 
in the series since a 0.6-percent decrease in the second quarter of 2013. 
(See 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.  

Unit labor costs in the nonfarm business sector increased 2.0 percent in the 
second quarter of 2016, reflecting a 1.5-percent increase in hourly 
compensation and a 0.5-percent decline in productivity. Unit labor costs 
increased 2.1 percent over the last four quarters. (See tables A and 2.) 

=============================================================================
          Historical Revisions to Productivity and Costs Data
          
Data in this release reflect revisions to the National Income and Product 
Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. 
Department of Commerce on July 29, 2016. See “Revised measures” section.
=============================================================================

BLS calculates 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 labor productivity decreased 0.2 percent in the second 
quarter of 2016, as output and hours worked decreased 0.8 percent and 0.7 
percent, respectively. Output per hour increased 2.6 percent in the durable 
goods manufacturing sector reflecting a 2.0-percent decline in hours worked 
and a 0.5-percent increase in output. Productivity decreased 4.1 percent in 
the nondurable goods sector in the second quarter of 2016, following a 4.0-
percent first-quarter increase. Over the last four quarters, manufacturing 
productivity increased 0.9 percent, as output increased 0.3 percent and hours 
declined 0.6 percent. (See tables A, 3, 4, and 5.)  Unit labor costs in 
manufacturing increased 3.1 percent in the second quarter of 2016 and rose 1.7 
percent from the same quarter a year ago. Hourly compensation increased 2.9 
percent in the second quarter of 2016. 

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 the Technical Notes for 
a more detailed explanation. 

Revised measures

Measures of output for the business, nonfarm business, and nonfinancial 
corporate sectors, and measures of compensation for all sectors incorporate 
revised National Income and Product Accounts (NIPA) data released on July 29 
by the Bureau of Economic Analysis, U.S. Department of Commerce. Hours and 
related measures were revised back to 2007 for the business, nonfarm business,
and nonfinancial corporate sectors. These revisions were due to the 
incorporation of 2012 Economic Census data on employment, as well as revised 
NIPA data on government enterprises employment and the proportion of sector
compensation paid to employees of nonprofit institutions and nonfinancial
corporations. Measures of manufacturing output and all related measures were
revised back to 1987 to reflect revised output indexes constructed by the BLS
using data from the U.S. Department of Commerce.  

Table B presents revised and previous productivity and related measures for 
the nonfarm business, business, and manufacturing sectors for the first 
quarter of 2016, and table C presents annual data for nonfarm business and 
total manufacturing from 2013 to 2015. Revised quarterly and annual series for 
all sectors in recent years appear in tables 1-6 and appendix tables 1-6. 
Indexes of all hours-related measures in the business, nonfarm business, and 
nonfinancial corporate sectors show historical revisions because hours in the 
base year of 2009 were revised; resulting revisions to percent changes are 
small. Complete annual and quarterly data series can be found on the 
Productivity and Costs home page: www.bls.gov/lpc/#data.

Nonfarm business sector productivity decreased 0.6 percent in the first 
quarter of 2016--the same as the preliminary estimate--as a small downward 
revision to output was offset by a small downward revision to hours. Due to a 
4.7-percentage point downward revision to first-quarter hourly compensation, 
unit labor costs decreased 0.2 percent in the first quarter of 2016, rather 
than increasing 4.5 percent as reported June 7. Real hourly compensation 
decreased 0.4 percent after revision, rather than the previously-published 
increase of 4.2 percent.

Annual Average productivity growth in the nonfarm business sector in 2015 was 
revised up to an increase of 0.9 percent. (See table C.) Productivity growth 
was unrevised in 2014 at 0.8 percent, and was revised up to an increase of 0.3 
percent in 2013. The average annual rate of productivity growth from 2007 to 
2015--the period affected by the revisions--was revised up from 1.2 percent to 
1.3 percent per year, but still remains well below the long-term rate from 
1947 to 2015 of 2.2 percent per year.  

Manufacturing sector productivity increased 1.5 percent in the first quarter 
of 2016--slightly more than previously reported--reflecting both a small 
downward revision to hours and a small upward revision to output. Productivity 
decreased 0.2 percent in the durable goods sector and increased 4.0 percent in 
the nondurable goods sector. Unit labor costs decreased 5.9 percent in the 
manufacturing sector rather than increasing 1.1 percent as reported June 7, 
due to both the upward revision to productivity and a 7.1-percentage point 
downward revision to hourly compensation. Real hourly compensation decreased 
4.3 percent, as revised.
        
Annual average manufacturing productivity grew 0.3 percent in 2015, slightly 
more than the previous estimate of 0.2 percent. Unit labor costs increased 
2.2 percent, as revised. There were also historical revisions to 
manufacturing productivity for the complete series, going back to 1987. 
Productivity was revised slightly up in 2014 to an increase of 0.1 percent, 
and was revised down 0.5 percentage point to an increase of 0.2 percent in 
2013. (See tables C, 3, 4, and 5.) Average annual productivity from 1987 to 
2015 increased 3.3 percent, the same rate as was previously reported. 

Nonfinancial corporate sector productivity growth was revised down in the 
first quarter of 2016, to an increase of 1.4 percent, rather than the 
previously-published increase of 2.5 percent; this revision was mainly due to 
a downward revision to output. Annual average productivity in the nonfinancial 
corporate sector increased 0.9 percent in 2015, the same rate as was 
previously reported. This measure was revised up 0.7 percentage point in 2014 
to an increase of 1.2 percent, and was revised down slightly in 2013 to an 
increase of 0.8 percent. (See tables D and 6.)
______________  







The revised Productivity and Costs news release for second-quarter 2016 is 
scheduled to be released on Thursday, September 1, 2016 at 8:30 a.m. (EDT).






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Table A. Preliminary second-quarter 2016 measures: percent change from previous quarter at annual rate 
(Q to Q) and from same quarter a year ago (Y to Y)

Sector                    Nonfarm                                        Durable         Nondurable
                          Business         Business      Manufacturing   Manufacturing   Manufacturing
                       Q to Q   Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y
------------------------------------------------------------------------------------------------------ 
Labor Productivity      -0.5     -0.4    -0.7    -0.4    -0.2     0.9     2.6     1.3    -4.1     0.3
Output                   1.2      1.1     1.4     1.3    -0.8     0.3     0.5     0.3    -2.4     0.3
Hours worked             1.8      1.5     2.1     1.7    -0.7    -0.6    -2.0    -1.0     1.8    -0.1
Hourly compensation      1.5      1.7     1.1     1.5     2.9     2.6     2.4     2.3     4.2     3.4
Real hourly 
 compensation           -1.1      0.6    -1.4     0.4     0.4     1.5    -0.1     1.2     1.6     2.3
Unit labor costs         2.0      2.1     1.7     1.9     3.1     1.7    -0.1     1.0     8.7     3.0
======================================================================================================
Table B. Revised and previous measures: first quarter 2016

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, first quarter 2016
Labor 
 Productivity   -0.6    -0.6     -0.7     -0.7      1.5      1.3     -0.2     -0.6      4.0      4.2
Output           0.7     0.9      0.8      0.8      0.7      0.6      0.0     -0.2      1.5      1.6
Hours worked     1.4     1.5      1.5      1.6     -0.8     -0.7      0.2      0.4     -2.5     -2.5
Hourly 
 compensation   -0.8     3.9     -0.9      3.8     -4.6      2.5     -5.9      1.6     -2.1      4.0
Real hourly 
 compensation   -0.4     4.2     -0.5      4.1     -4.3      2.8     -5.6      1.9     -1.8      4.3
Unit labor 
 costs          -0.2     4.5     -0.2      4.5     -5.9      1.1     -5.7      2.2     -5.9     -0.2
===================================================================================================================
Table C. Revised and previous annual average measures: 2013-2015
Sector                       Nonfarm Business                  |                 Manufacturing
                  2015             2014              2013      |       2015            2014             2013  
             Revised Previous Revised Previous Revised Previous| Revised Previous Revised Previous Revised Previous
---------------------------------------------------------------|---------------------------------------------------
                              Percent change                   |                    Percent change
Labor                                                          |
 productivity    0.9    0.7     0.8       0.8    0.3      0.0  |   0.3      0.2     0.1     -0.1     0.2      0.7               
Output           3.1    2.9     3.0       3.0    2.0      1.7  |   1.2      1.1     1.7      1.5     1.0      1.5
Hours worked     2.1    2.1     2.2       2.2    1.7      1.7  |   0.8      0.8     1.6      1.6     0.8      0.8
Hourly                                                         |
 compensation    2.9    3.0     2.8       2.8    1.2      1.1  |   2.5      2.5     2.8      2.7     0.2      0.2
Real hourly                                                    |
 compensation    2.8    2.9     1.1       1.2   -0.3     -0.4  |   2.4      2.4     1.1      1.1    -1.2     -1.2
Unit labor                                                     |
 costs           2.0    2.3     2.0       2.0    0.9      1.1  |   2.2      2.3     2.7      2.8     0.0     -0.5
===================================================================================================================
Table D. Nonfinancial corporations: revised and previous first-quarter 2016 measures, and revised 
annual measures 2013-2015       
                                                          Real 
               Labor                         Hourly       hourly       Unit                   Implicit
               produc-             Hours     compen-      compen-      labor      Unit        price
               tivity    Output    worked    sation       sation       costs      profits     deflator
------------------------------------------------------------------------------------------------------  
                                    Percent change, annual rate, first quarter 2016
Q to Q Revised   1.4       2.0      0.6       -1.8        -1.5         -3.1        30.6         -2.0
Q to Q Previous  2.5       3.2      0.7        3.8         4.2          1.3        13.4         -2.0

                                            Percent change, annual average
                                            
2015             0.9       3.2      2.2        2.9         2.8          2.0        -6.6          0.3
2014             1.2       3.9      2.7        2.5         0.8          1.3         1.5          0.8
2013             0.8       2.9      2.0        1.4        -0.1          0.5         4.0          0.8
====================================================================================================== 

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Last Modified Date: August 09, 2016