Productivity and Costs, First Quarter 2018, Preliminary


Transmission of material in this release is embargoed until     USDL 18-0682
8:30 a.m. (EDT) Thursday, May 3, 2018

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

                             PRODUCTIVITY AND COSTS
                        First Quarter 2018, Preliminary 
                        
Nonfarm business sector labor productivity increased 0.7 percent during the 
first quarter of 2018, the U.S. Bureau of Labor Statistics reported today, 
as output increased 2.8 percent and hours worked increased 2.1 percent. (All 
quarterly percent changes in this release are seasonally adjusted annual 
rates.) From the first quarter of 2017 to the first quarter of 2018, 
productivity increased 1.3 percent, reflecting a 3.6-percent increase in 
output and a 2.2-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 2.7 percent in the 
first quarter of 2018, reflecting a 3.4-percent increase in hourly 
compensation and a 0.7-percent increase in productivity. 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. When the change in 
consumer prices was taken into account, real hourly compensation declined 
0.1 percent in the first quarter of 2018. Unit labor costs increased 1.1 
percent over the last four quarters. (See tables A1 and 2.) 

Manufacturing sector labor productivity rose 0.5 percent in the first 
quarter of 2018, as output increased 3.3 percent and hours worked increased 
2.8 percent. Productivity increased 1.3 percent in the durable manufacturing 
sector, as output grew at a 5.5-percent rate and hours worked increased 4.2 
percent. In the non-durable goods manufacturing sector, a 0.6-percent 
increase in productivity reflected a 1.1-percent increase in output and a 
0.5-percent increase in hours worked. Over the last four quarters, total 
manufacturing sector productivity increased 0.8 percent, as output increased 
2.5 percent and hours worked increased 1.6 percent. Unit labor costs in 
manufacturing increased 2.7 percent in the first quarter of 2018 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. 

Preliminary fourth quarter and annual 2017 measures were announced today for 
the nonfinancial corporate sector. Productivity increased 0.8 percent in the 
fourth quarter of 2017 and increased 1.7 percent over the last four 
quarters. Annual average productivity increased 1.0 percent from 2016 to 
2017, following a decline of 0.1 percent in the previous year. The 
historical average annual rate of productivity growth in the nonfinancial 
corporate sector between 1947 and 2017 is 2.2 percent. (See tables A2, C1, 
and 6.)

Revised measures

Hours and related measures, including productivity, were revised back to 
2013 for all sectors to incorporate updated ratios of hours worked to hours 
paid by detailed industry; resulting revisions are small. Measures of real 
hourly compensation for all sectors were revised from 2010 forward to 
incorporate new and revised data from the BLS Office of Prices and Living 
Conditions. Output and related measures--including labor productivity and 
unit labor costs--for the manufacturing sector incorporate historically 
revised indexes of industrial production published by the Board of Governors 
of the Federal Reserve System on March 23, 2018. 

In the fourth quarter of 2017, nonfarm business sector productivity 
increased 0.3 percent, rather than unchanged as reported March 7. Unit labor 
costs were revised down to an increase of 2.1 percent. Total manufacturing 
sector productivity increased 4.5 percent in the fourth quarter of 2017, a 
smaller increase than previously reported, reflecting both a downward 
revision to output and an upward revision to hours worked. Unit labor costs 
in the manufacturing sector decreased 2.2 percent during the fourth quarter, 
a smaller decline than previously reported. Fourth-quarter 2017 labor 
productivity was revised down 3.0 percentage points in the durable goods 
sector to an increase of 5.1 percent, and was revised up 0.1 percentage 
point in the nondurable goods sector to an increase of 3.5 percent. (See 
table B1.)

Annual average productivity growth in the nonfarm business sector was 
revised up for 2017, from 1.2 percent to 1.3 percent. (See table 2.) The 
annual average rate of manufacturing productivity growth for 2017 was 
revised down slightly from 0.6 percent to 0.4 percent, and the rate for 2016 
was revised down from positive 0.4 percent to negative 0.4 percent. (See 
table 3.) The average annual rate of productivity growth in the total 
manufacturing sector from 2007 to 2017--corresponding to the current 
business cycle--was revised down from 0.8 percent to 0.7 percent.

Quarterly and annual data for all sectors for recent years appear in tables 
1-6 and appendix tables 1-6. Full historical annual and quarterly measures 
can be found on the labor productivity and costs home page at 
www.bls.gov/lpc/#data. 

The revised Productivity and Costs news release for first-quarter 2018 is 
scheduled to be released on Wednesday, June 6, 2018 at 8:30 a.m. (EDT)

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Table A1. Labor productivity growth and related measures  preliminary first-quarter 2018
(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            0.7         2.8      2.1         3.4           -0.1           2.7
                        A year ago                  1.3         3.6      2.2         2.5            0.2           1.1
                        
Business                Previous quarter            1.1         2.8      1.6         3.9            0.4           2.8
                        A year ago                  1.4         3.5      2.1         2.6            0.3           1.2
                        
Manufacturing           Previous quarter            0.5         3.3      2.8         3.2           -0.3           2.7
                        A Year ago                  0.8         2.5      1.6         2.1           -0.1           1.3
 Durable
 manufacturing          Previous quarter            1.3         5.5      4.2         4.2            0.7           2.9
                        A year ago                  1.5         2.6      1.2         2.9            0.7           1.4
 Nondurable
 manufacturing          Previous quarter            0.6         1.1      0.5         1.0           -2.4           0.4
                        A year ago                 -0.1         2.3      2.4         0.7           -1.5           0.9
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Table A2. 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
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial         Previous quarter               0.8         3.5      2.7        2.0             -1.3          1.2
corporate            A year ago                     1.7         3.9      2.2        2.6              0.5          0.9
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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               0.3         3.7      3.3        2.4             -0.8          2.1
                        Previously published        0.0         3.2      3.3        2.4             -1.2          2.5
                        
Business                      Revised              -0.4         3.6      4.1        1.7             -1.6          2.1
                        Previously published       -0.8         3.1      4.0        1.7             -2.0          2.5
                        
Manufacturing                 Revised               4.5         5.6      1.1        2.2             -1.1         -2.2
                        Previously published        6.0         6.6      0.5        2.5             -1.2         -3.3

 Durable                      Revised               5.1         5.5      0.4        2.3             -1.0         -2.6
 manufacturing          Previously published        8.1         8.1      0.0        2.4             -1.3         -5.3
                        
 Nondurable                   Revised               3.5         5.8      2.2        2.3             -1.0         -1.1
 manufacturing          Previously published        3.4         4.9      1.5        2.7             -0.9         -0.6
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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
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial corporate..2017                       1.0          2.8      1.7        1.5             -0.6          0.5
........................2016                      -0.1          1.4      1.5        1.1             -0.2          1.2
........................2015                       1.4          3.6      2.2        3.0              2.8          1.6
........................2014                       1.3          4.0      2.7        2.6              0.9          1.3
........................2013                       0.2          2.3      2.0        1.3             -0.1          1.1
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Last Modified Date: May 03, 2018