Productivity and Costs, Fourth Quarter and Annual Averages 2014, Preliminary


Transmission of material in this release is embargoed until       USDL 15-0157         
8:30 a.m. (EST) Thursday, February 5, 2015

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                                PRODUCTIVITY AND COSTS
                Fourth Quarter and Annual Averages 2014, Preliminary



Nonfarm business sector labor productivity decreased at a 1.8 percent annual 
rate during the fourth quarter of 2014, the U.S. Bureau of Labor Statistics 
reported today, as output increased 3.2 percent and hours worked increased 
5.1 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) The increase in hours worked is the largest increase 
in this series since a gain of 5.7 percent in the fourth quarter of 1998. 
From the fourth quarter of 2013 to the fourth quarter of 2014, productivity 
was unchanged as output and hours worked both increased 3.1 percent. (See 
table A.) Annual average productivity increased 0.8 percent from 2013 to 
2014. (See table C.)

Labor productivity, or output per hour, is calculated by dividing an index of 
real output by an index of hours worked of all persons, including employees,
proprietors, and unpaid family workers. 

Unit labor costs in the nonfarm business sector increased 2.7 percent in the 
fourth quarter of 2014, reflecting a 0.9 percent increase in hourly 
compensation and a 1.8 percent decline in productivity. Unit labor costs 
increased 1.9 percent over the last four quarters. (See tables A 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 productivity increased 1.3 percent in the fourth quarter
of 2014, as output increased 5.7 percent and hours worked increased 4.3 
percent. Productivity increased 1.5 percent in the durable manufacturing 
sector and increased 0.2 percent in the nondurable manufacturing sector. 
(See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing 
productivity increased 2.8 percent, as output increased 4.8 percent and hours 
increased 1.9 percent. Unit labor costs in manufacturing increased 0.2 
percent in the fourth quarter of 2014 and decreased 0.4 percent from the 
same quarter a year ago. (See tables A 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 Technical Notes for a 
more detailed explanation. 

Table C presents annual averages for the most recent five years for the 
nonfarm business sector and the total manufacturing sector. Nonfarm business 
sector productivity grew 0.8 percent in 2014, as output and hours increased 
3.1 percent and 2.2 percent, respectively. This increase in productivity is 
similar to the increases of 0.9 percent in 2013 and 1.0 percent in 2012. 
These rates are slower than the long-term average annual rate of 
productivity growth since 1947 (2.2 percent), and reflect steady growth in 
both output and hours.

Unit labor costs rose 1.5 percent in 2014, as hourly compensation grew faster
than productivity. Real hourly compensation, which takes into account changes
in consumer prices, increased 0.7 percent in 2014.

In the manufacturing sector, productivity increased 2.5 percent from 2013 to 
2014, and unit labor costs were unchanged.  Real hourly compensation in 
manufacturing increased 0.8 percent--the first annual increase in the series 
since 2009 (3.8 percent).

Revised measures

Revised and previous measures for the third quarter of 2014 are shown in 
tables B and D and cover the following major sectors: nonfarm business, 
business, manufacturing, and nonfinancial corporations.

In the third quarter of 2014, nonfarm business productivity was revised up 
1.4 percentage points, to an increase of 3.7 percent; this is due solely to 
an upward revision to output, as hours worked were unrevised. (See table B.) 
Unit labor costs for the nonfarm business sector fell 2.3 percent in the 
third quarter--rather than falling 1.0 percent as previously reported--due 
solely to the upward revision to productivity.

In the manufacturing sector, productivity was revised up 0.3 percentage 
points, to an increase of 3.2 percent. Manufacturing unit labor costs were 
revised down, to a decline of 1.7 percent. 

In the nonfinancial corporate sector, productivity increased 1.7 percent,
after a 0.6 percentage point upward revision which was due solely to an 
upward revision to output. (See table D.)

Quarterly and annual data for all sectors from 2012 to 2014 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 2014 
is scheduled to be released on Thursday, March 5, 2015 at 8:30 a.m. (EST).






=======================================================================================================
Table A. Preliminary fourth-quarter 2014 measures: percent change from previous quarter, at 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
------------------------------------------------------------------------------------------------------- 
Productivity           -1.8      0.0    -2.0    -0.3     1.3     2.8     1.5     3.1     0.2     2.9
Output                  3.2      3.1     3.3     2.9     5.7     4.8     4.5     5.8     7.0     3.7
Hours                   5.1      3.1     5.3     3.2     4.3     1.9     3.0     2.5     6.8     0.9
Hourly 
 compensation           0.9      1.9     0.6     1.7     1.5     2.4     1.3     2.1     2.2     2.8
Real  hourly
 compensation           2.1      0.7     1.8     0.5     2.8     1.2     2.5     0.9     3.4     1.6
Unit labor 
 costs                  2.7      1.9     2.6     2.0     0.2    -0.4    -0.2    -1.0     2.0     0.0
=======================================================================================================
Table B. Revised and previous measures: third quarter 2014 

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
-------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2014
Productivity    3.7      2.3      3.2      1.8      3.2      2.9      3.5      3.2      3.8      3.5
Output          6.3      4.9      6.4      4.9      4.8      4.2      6.7      6.3      2.7      2.0
Hours           2.5      2.5      3.1      3.0      1.5      1.3      3.1      3.0     -1.1     -1.5
Hourly 
 compensation   1.3      1.3      0.6      0.6      1.4      1.6      0.7      0.8      2.6      2.7
Real  hourly
 compensation   0.2      0.2     -0.5     -0.5      0.3      0.5     -0.4     -0.3      1.5      1.6
Unit labor 
 costs         -2.3     -1.0     -2.5     -1.2     -1.7     -1.3     -2.6     -2.3     -1.2     -0.7
=======================================================================================================
Table C. Annual average changes in productivity and related measures: 2010-2014

Sector                            Nonfarm Business                         Manufacturing
                        2010    2011    2012    2013    2014  |  2010    2011    2012    2013     2014
--------------------------------------------------------------|----------------------------------------
Productivity             3.3     0.1     1.0     0.9     0.8  |   6.2     0.8     1.0     2.0      2.5
Output                   3.2     2.2     3.2     2.6     3.1  |   6.2     2.9     3.3     2.7      3.9
Hours                   -0.1     2.1     2.2     1.7     2.2  |   0.0     2.1     2.3     0.7      1.3
Hourly                                                        |
 compensation            2.0     2.2     2.7     1.1     2.3  |   1.3     1.7     1.7     0.6      2.5
Real hourly                                                   |
 compensation            0.3    -0.9     0.6    -0.3     0.7  |  -0.4    -1.4    -0.3    -0.8      0.8
Unit labor                                                    |
 costs                  -1.3     2.1     1.7     0.2     1.5  |  -4.7     1.0     0.8    -1.4      0.0
=======================================================================================================
Table D. Nonfinancial corporations: revised and previous third-quarter 2014 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, third quarter 2014
                                
Revised        1.7      4.6        2.9       0.9         -0.2          -0.8        5.7           0.7
Previous       1.1      4.0        2.9       0.9         -0.2          -0.3        3.2           0.7
======================================================================================================= 

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Last Modified Date: February 05, 2015