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



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8:30 a.m. (EST) Thursday, February 1, 2018

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                        PRODUCTIVITY AND COSTS
         Fourth Quarter and Annual Averages 2017, Preliminary 


Nonfarm business sector labor productivity decreased 0.1 percent during 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 2.0 percent in the 
fourth quarter of 2017, due primarily to a 1.8-percent increase in hourly 
compensation. Unit labor costs increased 1.3 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 5.7 percent in the fourth 
quarter of 2017, as output increased 7.3 percent and hours worked rose 1.5 
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 
6.7 percent in the durable goods manufacturing sector and 4.5 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 2.7 percent and hours worked increased 1.6 percent.  Unit 
labor costs in manufacturing decreased 3.7 percent in the fourth quarter of 
2017 and increased 1.1 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

Revised and previously published measures for the third quarter of 2017 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 2017, nonfarm business productivity was revised down 
0.3 percentage point, to an increase of 2.7 percent. (See table B1.) Unit 
labor costs in the nonfarm business sector decreased 0.1 percent in the third 
quarter--rather than declining 0.2 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.5 percentage 
point, to a decrease of 4.9 percent. Manufacturing unit labor costs increased 
5.4 percent, a 0.6 percentage point increase over the previously reported 
figure.

In the nonfinancial corporate sector, productivity was revised down 0.4 
percentage point in the third quarter of 2017, to a decrease of 0.4 percent. 
This downward revision to productivity is due primarily to a 0.3-percentage 
point downward revision to output. (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 declined 0.1 
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 0.2 percent in 2017, 
reflecting increases of 1.5 percent in hourly compensation and 1.2 percent in 
productivity. Real hourly compensation, which takes into account changes in 
consumer prices, decreased 0.7 percent in 2017.

In the manufacturing sector, productivity increased 0.7 percent in 2017, as 
output increased 1.7 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 0.9 percent in 2017. 

Quarterly and annual data for all sectors from 2015 to 2017 appear in tables 
1-6. Full historical measures can be found on the Productivity and Costs home 
page: www.bls.gov/lpc/#data.

______________  
The revised Productivity and Costs news release for fourth-quarter 2017 is 
scheduled to be released on Wednesday, March 7, 2018 at 8:30 a.m. (EST).


==============================================================================
Data in this release do not reflect the annual benchmark revision of the BLS 
Current Employment Statistics program data to be released February 2, 2018. 
This benchmark will be incorporated in our next release on March 7, 2018.
==============================================================================





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Table A1. Labor productivity growth and related measures - preliminary 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          -0.1          3.2      3.3         1.8          -1.8            2.0
                        A year ago                 1.1          3.2      2.1         2.4           0.3            1.3
                        
Business                Previous quarter          -0.9          3.1      4.1         1.1          -2.5            2.0
                        A year ago                 0.8          3.0      2.3         2.2           0.1            1.5
                        
Manufacturing           Previous quarter           5.7          7.3      1.5         1.8          -1.8           -3.7
                        A Year ago                 1.1          2.7      1.6         2.2           0.0            1.1
 Durable
 manufacturing          Previous quarter           6.7          8.2      1.4         2.6          -1.0           -3.8
                        A year ago                 1.4          2.7      1.3         2.7           0.5            1.3
 Nondurable
 manufacturing          Previous quarter           4.5          6.4      1.8         0.3          -3.3           -4.0
                        A year ago                 0.5          2.6      2.1         1.3          -0.8            0.8
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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                    -0.4          1.0      1.3         2.4           0.4            2.8
 corporate       Previously published              0.0          1.3      1.2         2.5           0.5            2.5
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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              2.7          4.0      1.2         2.7           0.6           -0.1
                         Previously published      3.0          4.1      1.1         2.7           0.7           -0.2
                        
Business                      Revised              3.3          3.9      0.6         3.2           1.2           -0.1
                         Previously published      3.6          4.1      0.5         3.3           1.3           -0.3
                        
Manufacturing                 Revised             -4.9         -1.6      3.5         0.2          -1.8            5.4  
                         Previously published     -4.4         -1.1      3.5         0.2          -1.8            4.8

 Durable                      Revised             -5.0         -2.2      3.0         0.1          -1.9            5.3
 manufacturing           Previously published     -4.7         -1.7      3.1         0.1          -1.9            5.0
                         
 Nondurable                   Revised             -5.2         -1.0      4.4         0.4          -1.6            5.9
 manufacturing           Previously published     -4.4         -0.4      4.1         0.5          -1.5            5.1
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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        1.5           -0.7           0.2
 ........................2016             -0.1          1.5       1.6        1.0           -0.2           1.1
 ........................2015              1.3          3.4       2.1        3.1            3.0           1.8
 ........................2014              1.0          3.3       2.2        2.9            1.3           1.9
 ........................2013              0.3          2.0       1.7        1.2           -0.3           0.9
                        
Manufacturing....... ....2017              0.7          1.7       1.0        1.6           -0.5           0.9
 ........................2016              0.4          0.4       0.0        0.7           -0.5           0.3
 ........................2015              0.2          1.2       1.0        2.5            2.4           2.2
 ........................2014              0.0          1.6       1.5        2.8            1.2           2.8
 ........................2013              0.9          1.8       0.8        0.2           -1.3          -0.8
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Last Modified Date: February 01, 2018