Productivity and Costs, Fourth Quarter and Annual Averages 2016, Preliminary



Transmission of material in this release is embargoed until     USDL 17-0140                  
8:30 a.m. (EST) Thursday, February 2, 2017

Technical information: (202) 691-5606    dprweb@bls.gov  www.bls.gov/lpc
Media contact:         (202) 691-5902    PressOffice@bls.gov

(NOTE: This release was reissued February 8, 2017 to correct 2015 annual 
average data for the nonfinancial corporate sector as shown in table 6 and 
appendix table 1. These measures reflect corrected source data on output 
reissued by the Bureau of Economic Analysis on February 6, 2017.)


                            PRODUCTIVITY AND COSTS         
                Fourth Quarter and Annual Averages 2016, Preliminary

Nonfarm business sector labor productivity increased at a 1.3-percent annual 
rate during the fourth quarter of 2016, the U.S. Bureau of Labor Statistics 
reported today, as output increased 2.2 percent and hours worked increased 0.9 
percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the fourth quarter of 2015 to the fourth quarter 
of 2016, productivity increased 1.0 percent, reflecting increases in output 
and hours worked of 2.2 percent and 1.1 percent, respectively. (See table A1.) 
Annual average productivity increased 0.2 percent from 2015 to 2016. (See 
table C1.) 

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 1.7 percent in the 
fourth quarter of 2016, reflecting a 3.0-percent increase in hourly 
compensation and a 1.3-percent increase in productivity. Unit labor costs 
increased 1.9 percent over the last four quarters. (See tables A1 and 2.) 

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 increased 0.7 percent in the fourth 
quarter of 2016, as output increased 0.8 percent and hours worked were 
unchanged. Output per hour increased 0.1 percent in the durable goods 
manufacturing sector and 1.8 percent in the nondurable goods sector. Over the 
last four quarters, manufacturing sector productivity increased 0.4 percent, 
output increased 0.2 percent, and hours worked decreased 0.2 percent. (See 
tables A1, 3, 4, and 5.)  Unit labor costs in manufacturing increased 3.3 
percent in the fourth quarter of 2016 and rose 2.2 percent from the same 
quarter a year ago. Hourly compensation increased 4.1 percent in the fourth 
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. 

Annual averages

Table C1 presents annual average changes for the most recent 5 years for the 
nonfarm business sector and the total manufacturing sector. Nonfarm business 
sector productivity grew 0.2 percent in 2016, as output and hours increased 
1.7 percent and 1.5 percent, respectively. The increase in hours was the 
smallest since a 0.1-percent decrease in 2010. Productivity has increased at 
an annual rate of less than 1.0 percent in each of the last 6 years. The 
average annual rate of nonfarm business sector productivity growth from 2007 
to 2016--corresponding to the current business cycle--is 1.1 percent, well 
below the long-term rate from 1947 to 2016 of 2.1 percent.

Unit labor costs in the nonfarm business sector rose 2.6 percent in 2016, 
reflecting increases of 2.8 percent in hourly compensation and 0.2 percent in 
productivity. The increase in unit labor costs is the largest since 2007, when 
unit labor costs rose 2.7 percent. Real hourly compensation, which takes into 
account changes in consumer prices, increased 1.5 percent in 2016.

In the manufacturing sector, productivity increased 0.6 percent in 2016, as 
output increased 0.2 percent and hours worked decreased 0.4 percent. The 
decrease in the annual hours series was the first since a 12.9-percent annual 
decrease in 2009. Manufacturing sector productivity has increased at an annual 
rate of less than 1.0 percent in each of the last 4 years. The average annual 
rate of manufacturing productivity growth from 2007 to 2016 is 1.7 percent, 
which is below the long-term rate from 1987 to 2016 of 3.2 percent. Unit labor 
costs increased 2.6 percent in 2016. 

Revised measures                

Revised and previously published measures for the third quarter of 2016 are 
shown in tables A2 and B1 and cover the following major sectors: nonfarm 
business, business, manufacturing, and nonfinancial corporations.

In the third quarter of 2016, nonfarm business productivity was revised up 0.4 
percentage point, to an increase of 3.5 percent. (See table B1.) Unit labor 
costs in the nonfarm business sector increased 0.2 percent in the third 
quarter--rather than 0.7 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.4 percentage
point to show no change in the third quarter of 2016. Manufacturing unit labor
costs increased 3.3 percent, the same rate as previously reported.

In the nonfinancial corporate sector, productivity was revised down 0.6 
percentage point in the third quarter of 2016, to an increase of 6.5 percent. 
This downward revision to productivity is due primarily to a 0.5-percentage 
point downward revision to output. (See table A2.) This release incorporates 
revised historical source data on output in nonfinancial corporations, 
published December 22, 2016 by the Bureau of Economic Analysis. This led to 
revisions back to 1947 for all quarterly and annual output-related measures 
including productivity and unit labor costs. The average annual rate of 
productivity growth from 2007 to 2015 in the nonfinancial corporate sector was 
revised down from 1.3 percent to 0.9 percent. The long-term rate for average 
annual productivity growth from 1947 to 2015 was revised down 0.1 percentage 
point to 2.2 percent.

Quarterly and annual data for all sectors from 2014 to 2016 appear in tables 
1-6. Historical annual indexes for the nonfinancial corporate sector can be 
found in appendix table 1. Full historical measures can be found on the 
Productivity and Costs home page: www.bls.gov/lpc/#data.
______________  






==============================================================================
                Methodology change for hours worked
                
Beginning with the Productivity and Costs news release scheduled for March 8,
2017, an improvement in the methodology for estimating hours worked will be
implemented. As a result, hours worked and related measures, including labor 
productivity, will be subject to revision for all sectors from 1989 forward. 
For more information see: www.bls.gov/lpc/hwhpnew.htm.
==============================================================================


The revised Productivity and Costs news release for fourth-quarter 2016 is 
scheduled to be released on Wednesday, March 8, 2017 at 8:30 a.m. (EST).


Calendar year 2017 release dates for Productivity and Costs news 
releases are now available at www.bls.gov/schedule/news_release/prod2.htm.





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Table A1. Labor productivity growth and related measures  preliminary fourth-quarter 2016
(percent change from previous quarter at annual rate and from same quarter a year ago)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Percent change from:    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm Business        Previous quarter          1.3           2.2      0.9         3.0           -0.4          1.7
                        A year ago                1.0           2.2      1.1         2.9            1.1          1.9
                        
Business                Previous quarter          2.0           2.2      0.2         3.9            0.4          1.8
                        A year ago                1.2           2.2      1.0         3.1            1.2          1.8
                        
Manufacturing           Previous quarter          0.7           0.8      0.0         4.1            0.6          3.3
                        A Year ago                0.4           0.2     -0.2         2.6            0.7          2.2
 
 Durable                Previous quarter          0.1           0.7      0.7         3.9            0.4          3.8
 Manufacturing          A year ago                1.1           0.8     -0.2         2.7            0.9          1.6
  
 Nondurable             Previous quarter          1.8           0.8     -1.0         4.3            0.8          2.4
 Manufacturing          A year ago               -0.4          -0.5     -0.1         2.3            0.5          2.8
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Table A2. Labor productivity growth and related measures  revised and previously published third-quarter 2016 
(percent change from previous quarter at annual rate)
        

                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------  
Nonfinancial          Revised                     6.5           7.8      1.2         4.1            2.4         -2.2    
Corporations    Previously published              7.1           8.3      1.1         4.3            2.6         -2.7
=========================================================================================================================



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Table B1. Labor productivity growth and related measures  revised and previously published third-quarter 2016
(percent change from previous quarter at annual rate) 


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm Business         Revised                  3.5           4.2      0.6         3.7            2.1          0.2
                   Previously published           3.1           3.6      0.5         3.8            2.2          0.7
                        
Business                 Revised                  3.9           4.3      0.4         4.0            2.3          0.0
                   Previously published           3.5           3.9      0.3         4.1            2.4          0.6
                        
Manufacturing            Revised                  0.0           0.6      0.5         3.4            1.7          3.3
                   Previously published           0.4           0.6      0.3         3.7            2.0          3.3
 
 Durable                 Revised                  2.1           2.2      0.1         3.8            2.1          1.7
 Manufacturing     Previously published           3.0           2.7     -0.3         4.2            2.5          1.2
  
 Nondurable              Revised                 -2.7          -1.5      1.3         2.6            1.0          5.5
 Manufacturing     Previously published          -3.0          -1.9      1.1         2.8            1.2          6.0
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Table C1. Labor productivity growth and related measures  annual average changes: 2012-2016


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Year                    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm Business        2016                      0.2           1.7      1.5         2.8            1.5          2.6
                        2015                      0.9           3.1      2.1         2.9            2.8          2.0
                        2014                      0.8           3.0      2.2         2.8            1.1          2.0    
                        2013                      0.3           2.0      1.7         1.2           -0.3          0.9
                        2012                      0.9           3.1      2.2         2.7            0.6          1.7
                        
Manufacturing           2016                      0.6           0.2     -0.4         3.3            2.0          2.6
                        2015                      0.3           1.2      0.8         2.5            2.4          2.2
                        2014                      0.1           1.7      1.6         2.8            1.1          2.7
                        2013                      0.2           1.0      0.8         0.2           -1.2          0.0
                        2012                      1.7           4.1      2.3         1.7           -0.3          0.0
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Last Modified Date: February 08, 2017