Productivity and Costs, Second Quarter 2017, Preliminary


Transmission of material in this release is embargoed until       USDL 17-1098                        
8:30 a.m. (EDT) Wednesday, August 9, 2017

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



                         PRODUCTIVITY AND COSTS
                   Second Quarter 2017, Preliminary

Nonfarm business sector labor productivity increased 0.9 percent during the 
second quarter of 2017, the U.S. Bureau of Labor Statistics reported today,
as output increased 3.4 percent and hours worked increased 2.5 percent. (All 
quarterly percent changes in this release are seasonally adjusted annual 
rates.) From the second quarter of 2016 to the second quarter of 2017, 
productivity increased 1.2 percent, reflecting a 2.7-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 increased 0.6 percent in the 
second quarter of 2017, reflecting a 1.6-percent increase in hourly 
compensation and a 0.9-percent increase in productivity. Unit labor costs 
decreased 0.2 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 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 28, 2017. 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 increased 2.5 percent in the second 
quarter of 2017, as output increased 1.6 percent and hours worked decreased 
0.9 percent. Output per hour increased 3.8 percent in the durable goods 
manufacturing sector and edged down 0.1 percent in the nondurable goods 
sector. Over the last four quarters, manufacturing sector productivity 
increased 1.0 percent, as output increased 1.5 percent and hours worked 
increased 0.4 percent. (See tables A1, 3, 4 and 5.)  Unit labor costs in 
manufacturing decreased 0.3 percent in the second quarter of 2017 and rose 0.1 
percent from the same quarter a year ago. 

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 for first-quarter 
2014 through first-quarter 2017 released on July 28 by the Bureau of Economic 
Analysis, U.S. Department of Commerce. Measures of output for the 
manufacturing sectors incorporate regular updates of source data for the first
quarter of 2017 and the fourth quarter of 2016. Hours and related measures 
were revised back to 2012 for the business and nonfarm business sectors due to
revised NIPA data on government enterprises employment and on the proportion
of sector compensation paid to employees of nonprofit institutions. Hours and
related measures were revised back to 2007 for the nonfinancial corporate 
sector due to the incorporation of 2012 Economic Census data on employment and
revised NIPA data on the proportion of sector compensation paid to employees
of corporations. 

Table B1 presents revised and previous labor productivity and related measures 
for the nonfarm business, business, and manufacturing sectors for the first 
quarter of 2017, and table C1 presents annual data for the nonfarm business, 
total manufacturing, and nonfinancial corporate sectors from 2014 to 2016. 
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 nonfinancial corporate sector 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 increased 0.1 percent in the first 
quarter of 2017--similar to the previously reported estimate (0.0 percent)
--the combined effect of a small upward revision to output and a small 
downward revision to hours. (See table B1.) A large upward revision to 
first-quarter unit labor costs--from an increase of 2.2 percent to an increase
of 5.4 percent--reflected a 3.3-percentage point upward revision to hourly 
compensation and a 0.1-pecentage point upward revision to productivity. Real 
hourly compensation increased 2.3 percent after revision, rather than the 
previously published decrease of 0.9 percent.

Annual Average productivity growth in the nonfarm business sector in 2016 was 
revised down to a decrease of 0.1 percent. (See table C1.) As revised, the 
decrease in productivity in 2016 is the first annual decrease since a 1.0-
percent decrease in 1982. In 2015 and 2014, annual productivity growth was 
revised up to increases of 1.3 percent and 1.0 percent, respectively. The 
average annual rate of productivity growth from 2012 to 2016--the period 
affected by the revisions--was unrevised at 0.6 percent per year. Unit labor 
costs increased 1.0 percent in the nonfarm business sector in 2016, rather 
than increasing 2.2 percent, as a 1.6-percentage point downward revision to 
hourly compensation was partially offset by a 0.3-percentage point downward 
revision to productivity. As revised, hourly compensation increased 0.9 
percent in the nonfarm business sector, the smallest increase in the series 
which begins in 1947. Real hourly compensation declined 0.4 percent in 2016 
rather than increasing 1.2 percent. There were small upward revisions to 
hourly compensation and real hourly compensation in 2014 and 2015.

Manufacturing sector productivity increased 0.3 percent in the first quarter 
of 2017--slightly less than previously reported. Productivity decreased 0.9 
percent in the durable goods sector and increased 2.6 percent in the 
nondurable goods sector. (See table B1.) Unit labor costs increased 3.9 
percent in the manufacturing sector rather than increasing 2.4 percent as 
reported June 5, reflecting both a small downward revision to productivity and 
a 1.3-percentage point upward revision to hourly compensation. Real hourly 
compensation increased 1.0 percent, as revised.
        
Annual average manufacturing productivity grew 0.2 percent in 2016, unrevised 
from the previously reported estimate. Productivity was unrevised in the 
manufacturing sector in 2015 and 2014. Unit labor costs was revised down to 
an increase of 0.6 percent in 2016, reflecting a 1.9-percentage point 
downward revision to hourly compensation. After revision, manufacturing real 
hourly compensation declined 0.5 percent in 2016 rather than increasing 1.3 
percent. (See tables C1, 3, 4, and 5.) 

Nonfinancial corporate sector productivity growth was revised up in the first 
quarter of 2017, to an increase of 2.0 percent, rather than the previously 
published decrease of 1.5 percent; this revision was due solely to a 3.5-
percentage point upward revision to output; hours were unrevised. (See table 
A2.) 

Annual average productivity in the nonfinancial corporate sector decreased 0.1 
percent in 2016, a downward revision from the previously reported 0.4-percent 
increase. This measure was revised up 0.6 percentage point in 2015 to an 
increase of 1.4 percent, and was revised up 1.0 percentage point in 2014 to an 
increase of 1.3 percent. (See tables C1 and 6.)

______________  

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                Methodology change for manufacturing output

Beginning with the Productivity and Costs news release scheduled for December
6, 2017, BLS plans to incorporate source data reflecting a change in 
methodology for estimating manufacturing output. For more information see:
www.bls.gov/mfp/sectoraloutputrevisions.htm.
==============================================================================


The revised Productivity and Costs news release for second-quarter 2017 is 
scheduled to be released on Thursday, September 7, 2017 at 8:30 a.m. (EDT).






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Table A1. Labor productivity growth and related measures - preliminary second-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           0.9          3.4      2.5        1.6             1.9           0.6
                        A year ago                 1.2          2.7      1.5        1.0            -0.9          -0.2
                        
Business                Previous quarter           0.6          3.1      2.4        1.6             1.9           0.9
                        A year ago                 1.1          2.5      1.3        1.1            -0.8           0.0
                        
Manufacturing           Previous quarter           2.5          1.6     -0.9        2.2             2.5          -0.3 
                        A Year ago                 1.0          1.5      0.4        1.1            -0.8           0.1
 Durable
 manufacturing          Previous quarter           3.8          0.9     -2.7        3.0             3.3          -0.8
                        A year ago                 1.3          1.7      0.3        0.8            -1.1          -0.5
 Nondurable
 manufacturing          Previous quarter          -0.1          2.3      2.4        1.1             1.4           1.2 
                        A year ago                 0.6          1.3      0.7        1.7            -0.2           1.1 
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Table A2. Labor productivity growth and related measures - revised and previously published first-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                     2.0          4.0       2.0        4.2             1.0           2.2
corporate       Previously published             -1.5          0.5       2.0        1.9            -1.2           3.4
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Table B1. Labor productivity growth and related measures - revised and previously published first-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              0.1          1.8      1.6        5.5             2.3           5.4 
                        Previously published       0.0          1.7      1.7        2.2            -0.9           2.2
                        
Business                      Revised             -0.8          1.4      2.1        4.9             1.7           5.7
                        Previously published      -1.0          1.1      2.2        1.6            -1.5           2.7
                        
Manufacturing                 Revised              0.3          2.4      2.1        4.2             1.0           3.9
                        Previously published       0.5          2.6      2.1        2.9            -0.3           2.4  

 Durable                      Revised             -0.9          2.7      3.6        2.3            -0.9           3.2
 manufacturing          Previously published      -0.7          2.9      3.6        1.7            -1.4           2.4
                         
 Nondurable                   Revised              2.6          2.1     -0.5        7.8             4.5           5.1
 manufacturing          Previously published       2.7          2.3     -0.4        4.9             1.7           2.1
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Table C1. Labor productivity growth and related measures – revised and previous annual average changes: 2014-2016


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm          2016           Revised           -0.1          1.5      1.6        0.9            -0.4           1.0
business                 Previously published      0.2          1.7      1.5        2.5             1.2           2.2
                                                         
                 2015            Revised           1.3          3.4      2.1        3.2             3.0           1.9
                         Previously published      0.9          3.1      2.1        3.0             2.8           2.0
                         
                 2014           Revised            1.0          3.3      2.2        2.9             1.2           1.8
                         Previously published      0.8          3.0      2.2        2.8             1.1           2.0
                         
Manufacturing    2016           Revised            0.2          0.2      0.0        0.7            -0.5           0.6
                         Previously published      0.2          0.2      0.0        2.6             1.3           2.4
                                                
                 2015           Revised           -0.6          0.3      1.0        2.5             2.4           3.1
                         Previously published     -0.6          0.3      1.0        2.4             2.3           3.0
                       
                 2014            Revised           0.1          1.7      1.5        2.8             1.2           2.7
                         Previously published      0.1          1.7      1.5        2.8             1.1           2.7
                                                        
Nonfinancial     2016           Revised           -0.1          1.4      1.5        1.1            -0.2           1.2
corporate                Previously published      0.4          1.9      1.5        1.9             0.6           1.5
                         
                 2015            Revised           1.4          3.6      2.2        3.0             2.9           1.6
                         Previously published      0.8          3.0      2.2        2.9             2.8           2.2
                                                        
                 2014            Revised           1.3          4.0      2.7        2.6             0.9           1.3
                         Previously published      0.3          3.0      2.7        2.5             0.8           2.2
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Last Modified Date: August 09, 2017