Productivity and Costs, Third Quarter 2017, Revised


Transmission of material in this release is embargoed until       USDL 17-1615                
8:30 a.m. (EST) Wednesday, December 6, 2017

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



                                PRODUCTIVITY AND COSTS
                             Third Quarter 2017, Revised                                
                                
Nonfarm business sector labor productivity increased 3.0 percent during the 
third quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as 
output increased 4.1 percent and hours worked increased 1.1 percent. The 
productivity increase was the largest since the third quarter of 2014, when 
output per hour increased 4.4 percent. (All quarterly percent changes in this 
release are seasonally adjusted annual rates.) From the third quarter of 2016 
to the third quarter of 2017, productivity increased 1.5 percent, reflecting 
a 3.0-percent increase in output and a 1.5-percent increase in hours worked. 
(See tables A1 and 2.) 

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 declined 0.2 percent in the 
third quarter of 2017, as the 3.0-percent increase in productivity was greater 
than a 2.7-percent increase in hourly compensation. Unit labor costs decreased 
0.7 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 fell 4.4 percent in the third quarter 
of 2017, as output decreased 1.1 percent and hours worked increased 3.5 
percent. This was the largest quarterly decline in manufacturing sector 
productivity since the fourth quarter of 2008 (-5.4 percent). Productivity 
decreased 4.7 percent in the durable goods manufacturing sector and 4.4 
percent in the nondurable goods sector in the third quarter of 2017. Over the 
last four quarters, total manufacturing sector productivity increased 0.3 
percent, as output increased 1.5 percent and hours worked increased 1.2 
percent.  Unit labor costs in manufacturing increased 4.8 percent in the third 
quarter of 2017 and rose 0.3 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. 

Preliminary third-quarter 2017 measures of productivity and costs were 
announced for the nonfinancial corporate sector. Productivity was unchanged 
in the third quarter of 2017 and increased 0.2 percent over the last four 
quarters. Unit labor costs increased 2.5 percent in the third quarter of 2017 
and increased 0.6 percent over the last four quarters. (See tables A2 and 6.)

Revised measures

Measures released today are based on more recent source data than were 
available for the preliminary report. Regular updates of source data from the 
BLS, the Bureau of Economic Analysis (BEA), and the Board of Governors of the 
Federal Reserve System are reflected in data for the second and third quarters 
of 2017.

Table B1 presents revised and previous productivity and related measures for 
the nonfarm business, business, and manufacturing sectors for the third
quarter  of 2017. Revised quarterly and annual series for all sectors in 
recent years  appear in tables 1-6. Historical annual indexes for the
manufacturing sectors appear in appendix tables 1-3.

In the third quarter of 2017, nonfarm business labor productivity increased 
3.0 percent--the same as the preliminary estimate; output and hours worked 
were both revised up by 0.3 percentage points. Unit labor costs were revised 
from a 0.5-percent increase to a 0.2-percent decline for the third quarter of 
2017. In the manufacturing sector, productivity decreased 4.4 percent rather 
than declining 5.0 percent as previously reported, as an upward revision to 
output was greater than an upward revision to hours worked. Unit labor costs 
increased 4.8 percent, a smaller increase than the preliminary estimate. 

Table B2 shows previous and revised productivity and related measures for the 
nonfarm business, business, manufacturing and nonfinancial corporate sectors 
for the second quarter of 2017.

In the second quarter of 2017, nonfarm business labor productivity, output, 
and hours were unrevised. Unit labor costs decreased 1.2 percent, rather than 
increasing 0.3 percent as previously reported. In the manufacturing sector, 
productivity was revised up 0.2 percentage point to an increase of 3.6 
percent, due to a slight upward revision to output. Unit labor costs decreased 
1.2 percent instead of a decline of 1.0 percent. 

Second-quarter 2017 measures of productivity and costs were revised for the 
nonfinancial corporate sector. Productivity increased 3.3 percent rather than 
4.4 percent as reported on November 2. Unit labor costs decreased 3.0 percent 
rather than the preliminary estimate of a 2.3-percent decline.

There were historical revisions to manufacturing output and all related 
measures--including productivity--back to 1987 to reflect revised output 
indexes constructed by the BLS using an improved methodology for estimating 
the sectoral output of manufacturing industries. A new technique for 
benchmarking output estimates to the Economic Census was an important 
component of the revisions, and the period between Census years 2007 and 2012 
saw the largest revisions. For more complete information see 
www.bls.gov/mfp/sectoraloutputrevisions.htm.

Revisions to labor productivity mirrored revisions to output; hours worked 
were not revised.  A large upward revision to the change in the annual 
manufacturing productivity index from 2008 to 2009 was more than offset by 
downward revisions in adjacent years, and the average annual rate of growth 
from 2007 to 2012 was revised down from 2.9 percent to 1.2 percent. The 
average annual rate of manufacturing productivity growth during the current 
business cycle from 2007 to 2016 was revised down from 1.6 percent to 0.9 
percent, and the long-term rate for the entire series from 1987 to 2016 is 
now 2.8 percent, compared to the previous estimate of 3.2 percent.

Hourly compensation and all related measures for the manufacturing sectors 
also were revised, from 1987 to 2000, to incorporate source data on 
compensation published by the BEA November 2, 2017.

Full historical annual and quarterly measures can be found on the productivity 
and costs home page: www.bls.gov/lpc/#data. 

______________  

The preliminary Productivity and Costs news release for fourth-quarter and 
annual averages 2017 is scheduled to be released on Thursday, February 1, 2018 
at 8:30 a.m. (EST).


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Calendar year 2018 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 - revised third-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           3.0          4.1      1.1         2.7           0.7           -0.2
                        A year ago                 1.5          3.0      1.5         0.8          -1.1           -0.7
                        
Business                Previous quarter           3.6          4.1      0.5         3.3           1.3           -0.3
                        A year ago                 1.5          2.8      1.3         1.0          -0.9           -0.5
                        
Manufacturing           Previous quarter          -4.4         -1.1      3.5         0.2          -1.8            4.8
                        A Year ago                 0.3          1.5      1.2         0.6          -1.3            0.3
 Durable
 manufacturing          Previous quarter          -4.7         -1.7      3.1         0.1          -1.9            5.0
                        A year ago                 0.3          1.4      1.0         0.9          -1.0            0.6
 Nondurable
 manufacturing          Previous quarter          -4.4         -0.4      4.1         0.5          -1.5            5.1
                        A year ago                 0.2          1.6      1.4         0.1          -1.8           -0.1
=========================================================================================================================
Table A2. Labor productivity growth and related measures - preliminary third-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
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial         Previous quarter              0.0          1.3      1.2         2.5           0.5            2.5
corporate            A year ago                    0.2          1.9      1.7         0.8          -1.1            0.6
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Table B1. 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              3.0          4.1      1.1         2.7           0.7           -0.2
                        Previously published       3.0          3.8      0.8         3.5           1.5            0.5
                        
Business                      Revised              3.6          4.1      0.5         3.3           1.3           -0.3
                        Previously published       3.6          3.8      0.1         4.1           2.0            0.4
                        
Manufacturing                 Revised             -4.4          -1.1     3.5         0.2          -1.8            4.8
                        Previously published      -5.0          -2.1     3.1         0.9          -1.1            6.2

 Durable                      Revised             -4.7          -1.7     3.1         0.1          -1.9            5.0 
 manufacturing          Previously published      -5.7          -3.4     2.5         0.5          -1.4            6.7
                        
 Nondurable                   Revised             -4.4          -0.4     4.1         0.5          -1.5            5.1
 manufacturing          Previously published      -4.6          -0.7     4.1         1.6          -0.4            6.5
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Table B2. Labor productivity growth and related measures - revised and previously published second-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              1.5          3.9      2.4         0.3           0.6           -1.2
                        Previously published       1.5          3.9      2.4         1.8           2.1            0.3
                        
Business                      Revised              1.4          3.7      2.3         0.3           0.7           -1.0
                        Previously published       1.4          3.7      2.3         1.9           2.2            0.4
                        
Manufacturing                 Revised              3.6          2.9     -0.6         2.3           2.6           -1.2
                        Previously published       3.4          2.8     -0.6         2.4           2.7           -1.0
 Durable
 manufacturing                Revised              5.3          2.6     -2.6         5.6           5.9            0.2
                        Previously published       5.0          2.3     -2.6         3.0           3.4           -1.9
 Nondurable
 manufacturing                Revised              0.4          3.3      2.9        -3.3          -3.0           -3.6
                        Previously published       0.4          3.3      2.9         1.5           1.9            1.1

Nonfinancial                  Revised              3.3          6.4      3.0         0.2           0.5           -3.0
corporate               Previously published       4.4          7.5      3.0         2.0           2.3           -2.3
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Last Modified Date: December 06, 2017