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PRODUCTIVITY AND COSTS
Third Quarter 2009, Preliminary
Nonfarm business sector labor productivity increased at a 9.5 percent
annual rate during the third quarter of 2009, the U.S. Bureau of Labor
Statistics reported today. This was the largest gain in productivity since
the third quarter of 2003, when it rose 9.7 percent. Labor productivity,
or output per hour, is calculated by dividing an index of real output by
an index of hours of all persons, including employees, proprietors, and
unpaid family workers. Output increased 4.0 percent and hours worked
decreased 5.0 percent in the third quarter of 2009 (All quarterly percent
changes in this release are seasonally adjusted annual rates).
From the third quarter of 2008 to the third quarter of 2009, nonfarm
business output fell 3.5 percent and hours worked fell faster, 7.5
percent, resulting in a productivity increase of 4.3 percent (tables A and 2).
The four-quarter decline in hours was the largest in the series, which
begins in 1948. Nonfarm business productivity rose 1.8 percent in 2008,
and 2.6 percent per year on average during the 2001-2007 period
corresponding to the last complete business cycle.
Unit labor costs in nonfarm businesses fell 5.2 percent in the third
quarter of 2009; the increase in productivity outpaced the increase in
hourly compensation. Unit labor costs declined 3.6 percent over the last
four quarters--the largest decrease since the series began in 1948 (tables A
and 2). BLS defines 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.
Productivity increased 9.8 percent in the business sector in the third
quarter of 2009. This was the largest increase in the series since the
second quarter of 1972. Unit labor costs decreased 5.1 percent during the
third quarter of 2009 (tables A and 1).
Manufacturing sector productivity grew 13.6 percent in the third quarter
of 2009, as output increased 7.7 percent despite a 5.2 percent decrease in
hours worked. This was the largest increase in the quarterly productivity
series, which begins in 1987. Over the last four quarters, manufacturing
productivity increased 3.1 percent as output and hours declined 10.8
percent and 13.5 percent respectively (tables A and 3). Manufacturing
sector productivity increased 0.8 percent in 2008, and at an average annual
rate of 4.0 percent from 2001 to 2007.
In the third quarter of 2009, changes in productivity, output, and hours
were larger in durable goods producing industries than in nondurable goods
industries (tables A, 4 and 5).
Manufacturing unit labor costs fell at a 7.1 percent annual rate in the
third quarter of 2009, but increased 2.3 percent over the last four
quarters (tables A and 3).
The data sources and methods used in the preparation of the manufacturing
output series differ from those used in preparing the business and nonfarm
business output series, and these measures are not directly comparable.
See Technical Notes for further information on data sources.
Revised measures
In the second quarter of 2009, nonfarm business productivity growth was
revised up to 6.9 percent, reflecting declines in output and hours of 1.1
percent and 7.5 percent, respectively. Unit labor costs were revised down
due to the upward revision in productivity. In the manufacturing sector,
revised second quarter productivity growth was 6.8 percent, a 1.9
percentage point upward revision. Manufacturing unit labor costs declined
1.6 percent, rather than rising 0.2 percent as reported September 2.
In the nonfinancial corporate sector, revised data for the second quarter
of 2009 show that productivity increased 6.6 percent, as output per hour
was revised up along with output; hours were unrevised. After revision,
unit labor costs fell 4.5 percent in the second quarter, but rose 1.4
percent from the second quarter of 2008 to the second quarter of 2009.
Unit profits grew at a 23.0 percent annual rate in the second quarter of
2009.
______________
The revised Productivity and Costs press release for third-quarter 2009 is
scheduled to be released on Thursday, December 3, 2009 at 8:30 a.m. (EST)
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Table A. Preliminary third-quarter 2009 measures, percent change from previous quarter, annual rate
(Q to Q) and from same quarter a year ago (Y to Y)
Sector Nonfarm Durable Nondurable
Business Business Manufacturing Manufacturing Manufacturing
Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y Q to Q Y to Y
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Productivity 9.5 4.3 9.8 4.3 13.6 3.1 21.2 -0.9 5.5 4.7
Output 4.0 -3.5 4.1 -3.3 7.7 -10.8 12.4 -16.9 3.4 -4.6
Hours -5.0 -7.5 -5.1 -7.4 -5.2 -13.5 -7.2 -16.1 -2.0 -8.9
Hourly
compensation 3.8 0.5 4.2 0.5 5.5 5.5 6.0 6.2 5.2 4.8
Real hourly
compensation 0.2 2.1 0.5 2.1 1.9 7.1 2.3 7.9 1.6 6.4
Unit labor
costs -5.2 -3.6 -5.1 -3.7 -7.1 2.3 -12.5 7.2 -0.3 0.1
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Table B. Revised and previous measures for: second quarter 2009
Sector Nonfarm Durable Nondurable
Business Business Manufacturing Manufacturing Manufacturing
Revised Previous Revised Previous Revised Previous Revised Previous Revised Previous
------------------------------------------------------------------------------------------------------
Percent change, annual rate
Productivity 6.9 6.6 6.8 6.5 6.8 4.9 3.7 3.1 5.2 2.2
Output -1.1 -1.5 -1.0 -1.4 -8.1 -9.8 -15.9 -16.4 -0.2 -3.2
Hours -7.5 -7.6 -7.4 -7.5 -13.9 -14.0 -18.9 -18.9 -5.1 -5.3
Hourly
compensation 0.3 0.3 0.2 0.2 5.1 5.1 7.9 7.9 1.3 1.5
Real hourly
compensation -1.0 -1.0 -1.1 -1.2 3.7 3.7 6.5 6.5 0.0 0.2
Unit labor
costs -6.1 -5.9 -6.2 -6.0 -1.6 0.2 4.1 4.6 -3.7 -0.7
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Table C. Nonfinancial corporations: revised second quarter 2009 productivity and cost measures
Real
Hourly hourly Unit Implicit
Produc- compen- compen- labor Unit price
tivity Output Hours sation sation costs profits deflator
------------------------------------------------------------------------------------------------------
Percent change, annual rate
Revised 6.6 -2.2 -8.3 1.8 0.5 -4.5 23.0 -1.3
Previous 6.2 -2.6 -8.3 1.8 0.4 -4.2 22.5 -1.1
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