Productivity and Costs, Fourth Quarter and Annual Averages 2017, Revised


Transmission of material in this release is embargoed until       USDL 18-0333
8:30 a.m. (EST) Wednesday, March 7, 2018

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

                           PRODUCTIVITY AND COSTS
                  Fourth Quarter and Annual Averages 2017, Revised 
                  
Nonfarm business sector labor productivity growth was revised to 0.0 percent 
in the fourth quarter of 2017, the U.S. Bureau of Labor Statistics reported  
today, as output increased 3.2 percent and hours worked increased 3.3 percent. 
(All quarterly percent changes in this release are seasonally adjusted annual 
rates.) From the fourth quarter of 2016 to the fourth quarter of 2017,  
productivity increased 1.1 percent, reflecting a 3.2-percent increase in 
output and a 2.1-percent increase in hours worked. (See tables A1 and 2.) 
Annual average productivity increased 1.2 percent from 2016 to 2017. (See 
table C1.)

Labor productivity, or output per hour, is calculated by dividing an index of 
real output by an index of hours worked by all persons, including employees, 
proprietors, and unpaid family workers. 

Unit labor costs in the nonfarm business sector increased 2.5 percent in the 
fourth quarter of 2017, and increased 1.7 percent over the last four quarters. 
(See tables A1 and 2.) 

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            Historical Revisions to Productivity and Costs Data
Data in this release reflect the annual benchmark revision of BLS Current 
Employment Statistics program data on nonfarm employment and hours, and the 
revised seasonal adjustment of those data. See revised measures.
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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 6.0 percent in the fourth 
quarter of 2017, as output increased 6.6 percent and hours worked rose 0.5 
percent. These were the largest quarterly increases in manufacturing sector 
productivity and output since the second quarter of 2010, when output per hour 
increased 7.0 percent and output jumped 10.7 percent. Productivity increased 
8.1 percent in the durable goods manufacturing sector and 3.4 percent in the 
nondurable goods sector in the fourth quarter of 2017. Over the last four 
quarters, total manufacturing sector productivity increased 1.1 percent, as 
output increased 2.5 percent and hours worked increased 1.4 percent. Unit labor 
costs in manufacturing decreased 3.3 percent in the fourth quarter of 2017 and 
increased 1.3 percent from the same quarter a year ago. (See tables A1 and 3.)

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

Quarterly and annual measures of hours and related series–-including 
productivity–-were revised historically for all major sectors. The revisions 
incorporate revised Current Employment Statistics (CES) program data published 
February 2, 2018. From 2013 to 2017, the data were subject to revision as a 
result of annual benchmarking of CES data and revised seasonal adjustment of 
those data. From 1990 onward, there were small revisions due to the CES update
of the nonfarm payroll series to the 2017 North American Industrial 
Classification System (NAICS) from the 2012 NAICS basis. Index measures 
related to hours show full historical revisions because the 2009 base year 
values were revised. In addition to revisions to hours data, third quarter, 
fourth quarter, and annual average data for 2017 were revised to incorporate 
regular updates of source data on output and compensation.

Revised and previous measures for the fourth quarter of 2017 are shown in table 
B1 for the business, nonfarm business, and manufacturing sectors. In the fourth 
quarter of 2017, nonfarm business productivity was revised up slightly from a 
decline of 0.1 percent to unchanged (0.0 percent); output and hours worked 
indexes had small revisions although growth remained at previously reported 
levels. Unit labor costs were revised up from a rate of 2.0 percent to a rate
of 2.5 percent.

Manufacturing productivity increased 6.0 percent rather than 5.7 percent in the 
fourth quarter of 2017, as a downward revision to output was smaller than a 
downward revision to hours. Because an upward revision to hourly compensation 
was larger than an upward revision to productivity, manufacturing unit labor 
costs were revised up to a decline of 3.3 percent--a smaller decline than the 
3.7-percent decrease reported in the preliminary release. (See table B1.)

In the third quarter of 2017, nonfarm business productivity growth was revised 
down slightly to an increase of 2.6 percent. Unit labor costs were revised up 
from a decline of 0.1 percent to an increase of 1.0 percent, reflecting both a 
0.1-percentage point downward revision to productivity and a 0.9-percentage 
point upward revision to hourly compensation. In the manufacturing sector, 
productivity declined by 4.7 percent, a slightly smaller decrease than previously 
reported. Unit labor costs were revised up due to a 0.5-percentage point 
upward revision to hourly compensation, and increased 5.8 percent rather than
5.4 percent as previously reported. (See table B2.) Nonfinancial corporate 
sector productivity increased 0.2 percent in the third quarter of 2017, rather
than declining 0.4 percent as previously reported; an upward revision to
output was larger than an upward revision to hours. (See table A2.)

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 1.2 percent in 2017, as output and hours increased 
2.9 percent and 1.6 percent, respectively. In 2016, productivity was unchanged
(0.0 percent). The average annual rate of nonfarm business sector productivity
growth from 2007 to 2017--corresponding to the current business cycle--is 1.2
percent, which is below the long-term rate from 1947 to 2017 of 2.1 percent.

Unit labor costs in the nonfarm business sector increased 0.4 percent in 2017, 
reflecting increases of 1.6 percent in hourly compensation and 1.2 percent in 
productivity. Real hourly compensation, which takes into account changes in 
consumer prices, decreased 0.5 percent in 2017. Labor share, which is the 
percentage of output that accrues to workers in the form of compensation, was
56.6 percent in 2017, which is the lowest annual average in the series going 
back to 1947. 

In the manufacturing sector, productivity increased 0.6 percent in 2017, as 
output increased 1.6 percent and hours worked increased 1.0 percent. 
Manufacturing sector productivity has grown less than 1.0 percent in each of 
the last 7 years. The average annual rate of manufacturing productivity growth
from 2007 to 2017 is 0.8 percent, well below the long-term rate from 1987 to 
2017 of 2.7 percent. Unit labor costs increased 1.0 percent in 2017.

Quarterly and annual data for all sectors from 2015 to 2017 appear in tables 
1-6, and from 2012 to 2014 appear in appendix tables 1-6. Full historical 
measures can be found at: www.bls.gov/lpc/#data.
______________	
The preliminary Productivity and Costs news release for first-quarter 2018 is 
scheduled to be released on Thursday, May 3, 2018 at 8:30 a.m. (EDT).	


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Table A1. Labor productivity growth and related measures – revised fourth-quarter 2017
(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            0.0         3.2       3.3       2.4           -1.2          2.5
                        A year ago                  1.1         3.2       2.1       2.9            0.7          1.7

Business                Previous quarter           -0.8         3.1       4.0       1.7           -2.0          2.5
                        A year ago                  0.8         3.0       2.2       2.7            0.5          1.8
	                
Manufacturing           Previous quarter            6.0         6.6       0.5       2.5           -1.2         -3.3
                        A year ago                  1.1         2.5       1.4       2.4            0.3          1.3
	                
  Durable               Previous quarter            8.1         8.1       0.0       2.4           -1.3         -5.3
  manufacturing         A year ago                  1.8         2.7       0.9       2.5            0.4          0.7
	                
  Nondurable            Previous quarter            3.4         4.9       1.5       2.7           -0.9         -0.6
  manufacturing         A year ago                  0.1         2.3       2.2       2.3            0.1          2.2
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Table A2. Labor productivity growth and related measures – revised and previously published third-quarter 2017
(percent change  from previous quarter at annual rate)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial            Revised                     0.2         1.7       1.5       3.6            1.5          3.3
corporate          Previously published            -0.4         1.0       1.3       2.4            0.4          2.8
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Table B1. Labor productivity growth and related measures – revised and previously published fourth-quarter 2017
(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               0.0         3.2       3.3       2.4           -1.2          2.5
                         Previously published      -0.1         3.2       3.3       1.8           -1.8          2.0
	                 
Business                      Revised              -0.8         3.1       4.0       1.7           -2.0          2.5
                         Previously published      -0.9         3.1       4.1       1.1           -2.5          2.0
	                 
Manufacturing                 Revised               6.0         6.6       0.5       2.5           -1.2         -3.3
                         Previously published       5.7         7.3       1.5       1.8           -1.8         -3.7
	                 
  Durable                     Revised               8.1         8.1       0.0       2.4           -1.3         -5.3
  manufacturing          Previously published       6.7         8.2       1.4       2.6           -1.0         -3.8
  
  Nondurable                  Revised               3.4         4.9       1.5       2.7           -0.9         -0.6
  manufacturing          Previously published       4.5         6.4       1.8       0.3           -3.3         -4.0
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Table B2. Labor productivity growth and related measures – revised and previously published third-quarter 2017
(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               2.6         4.0       1.4       3.6            1.5          1.0
                         Previously published       2.7         4.0       1.2       2.7            0.6         -0.1
	                 
Business                      Revised               3.2         3.9       0.7       4.1            2.1          0.9
                         Previously published       3.3         3.9       0.6       3.2            1.2         -0.1
	                 
Manufacturing                 Revised              -4.7        -1.6       3.2       0.7           -1.2          5.8
                         Previously published      -4.9        -1.6       3.5       0.2           -1.8          5.4
	                 
  Durable                     Revised              -4.7        -2.2       2.6      -0.1           -2.1          4.8
  manufacturing          Previously published      -5.0        -2.2       3.0       0.1           -1.9          5.3
  
  Nondurable                  Revised              -5.2        -1.0       4.3       2.5            0.5          8.1
  manufacturing          Previously published      -5.2        -1.0       4.4       0.4           -1.6          5.9
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Table C1. Labor productivity growth and related measures – annual average changes: 2013-2017


                                        	Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Year           		productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business........2017                        1.2         2.9       1.6       1.6           -0.5          0.4
........................2016                        0.0         1.5       1.5       1.1           -0.2          1.1
........................2015                        1.2         3.4       2.2       3.1            3.0          1.8
........................2014                        1.0         3.3       2.3       2.9            1.2          1.9
........................2013                        0.3         2.0       1.7       1.2           -0.3          0.9

Manufacturing...........2017                        0.6         1.6       1.0       1.6           -0.5          1.0
........................2016                        0.4         0.4       0.0       0.7           -0.5          0.3
........................2015                        0.3         1.2       1.0       2.5            2.4          2.2
........................2014                        0.0         1.6       1.6       2.8            1.1          2.8
........................2013                        0.9         1.8       0.8       0.2           -1.3         -0.8
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Last Modified Date: March 07, 2018