Productivity and Costs, Third Quarter 2016, Revised



Transmission of material in this release is embargoed until     USDL 16-2252              
8:30 a.m. (EST) Tuesday, December 6, 2016

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Media contact:         (202) 691-5902    PressOffice@bls.gov




                            PRODUCTIVITY AND COSTS
                        Third Quarter 2016, Revised

Nonfarm business sector labor productivity increased at a 3.1-percent annual 
rate during the third quarter of 2016, the U.S. Bureau of Labor Statistics 
reported today, as output increased 3.6 percent and hours worked increased 0.5 
percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) The quarterly increase in nonfarm business sector 
labor productivity was the first increase after three consecutive declines in 
the measure. From the third quarter of 2015 to the third quarter of 2016, 
productivity was unchanged. (See table A.) 

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. Measures released today are based on 
more recent source data than were available for the preliminary report.

Unit labor costs in the nonfarm business sector increased 0.7 percent in the 
third quarter of 2016, reflecting a 3.8-percent increase in hourly 
compensation and a 3.1-percent increase in productivity. Unit labor costs 
increased 3.0 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 labor productivity increased 0.4 percent in the third 
quarter of 2016, as output and hours worked increased 0.6 percent and 0.3 
percent, respectively. Output per hour increased 3.0 percent in the durable 
goods manufacturing sector and decreased 3.0 percent in the nondurable goods 
sector. Over the last four quarters, manufacturing sector productivity was 
unchanged, as output and hours worked both declined 0.1 percent. (See tables 
A, 3, 4, and 5.)  Unit labor costs in manufacturing increased 3.3 percent in 
the third quarter of 2016 and rose 3.6 percent from the same quarter a year 
ago. Hourly compensation increased 3.7 percent in the third quarter of 2016.

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 third-quarter 2016 measures of productivity and costs were 
announced for the nonfinancial corporate sector. Productivity increased 7.1 
percent in the third quarter of 2016--the largest gain since an 8.8-percent 
gain in the first quarter of 2010--as output increased 8.3 percent and hours 
worked increased 1.1 percent. Over the last four quarters, productivity 
increased 1.6 percent. Unit labor costs decreased 2.7 percent in the third 
quarter of 2016 and increased 0.9 percent over the last four quarters.

Revised measures

The measures released today are based on more recent source data than were 
available for the preliminary report. Table B presents previous and revised 
productivity and related measures for the business, nonfarm business, and 
manufacturing sectors, for the second and third quarters of 2016.

In the third quarter of 2016, nonfarm business labor productivity was not 
revised; output and hours were both revised up by 0.2 percentage points. Unit 
labor costs were revised up from a 0.3-percent increase to a 0.7-percent 
increase, due solely to an upward revision to hourly compensation growth from 
3.4 percent to 3.8 percent. In the manufacturing sector, productivity 
increased 0.4 percent rather than increasing 1.0 percent as previously 
reported, due both to a downward revision to output and an upward revision to 
hours. Unit labor costs increased 3.3 percent, a larger increase than the 
preliminary estimate. 

In the second quarter of 2016, nonfarm business labor productivity, output, 
and hours were unrevised. Unit labor costs increased 6.2 percent, rather than 
increasing 3.9 percent as previously reported, the result of a large upward 
revision to hourly compensation. In the manufacturing sector, labor 
productivity was not revised. Hourly compensation was revised up to an 8.0-
percent increase from a previous estimate of 6.2 percent. As a result, unit 
labor costs were revised up, and increased 8.5 percent instead of 6.8 percent. 

Second-quarter 2016 measures of productivity and costs were revised for the 
nonfinancial corporate sector. Productivity decreased 1.2 percent rather than 
decreasing 2.3 percent as reported on November 3, due to a 1.1-percentage 
point upward revision to output. (See table C.)

Complete annual and quarterly data series can be found on the Productivity 
and Costs home page: www.bls.gov/lpc/#data.
______________  







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                  Upcoming change to table format

Tables A-C will be reformatted to better assist our readers beginning
with the next scheduled release of Productivity and Costs, on February 2,
2017. All data currently shown in the tables will continue to be displayed.
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                Methodology change for hours worked
                
Beginning with the Productivity and Costs news release scheduled for March 8,
2017, a change in the methodology for estimating hours worked will be
implemented. As a result, hours worked and related measures,including labor
productivity, will be subject to revision for all sectors from 1989 forward.  
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The preliminary Productivity and Costs news release for fourth-quarter and 
annual averages 2016 is scheduled to be released on Thursday, February 2, 2017 
at 8:30 a.m. (EST).





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Table A. Revised third-quarter 2016 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
------------------------------------------------------------------------------------------------------ 
Labor Productivity       3.1      0.0     3.5     0.0     0.4     0.0     3.0     0.7    -3.0    -0.9
Output                   3.6      1.7     3.9     1.8     0.6    -0.1     2.7     0.4    -1.9    -0.7
Hours worked             0.5      1.7     0.3     1.8     0.3    -0.1    -0.3    -0.3     1.1     0.2
Hourly compensation      3.8      3.0     4.1     2.9     3.7     3.7     4.2     4.1     2.8     2.8
Real hourly
 compensation            2.2      1.8     2.4     1.7     2.0     2.5     2.5     2.9     1.2     1.6
Unit labor costs         0.7      3.0     0.6     2.9     3.3     3.6     1.2     3.4     6.0     3.8
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Table B. Revised and previous measures: third quarter and second quarter 2016 

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 2016
Labor 
 Productivity    3.1     3.1      3.5      3.4       0.4     1.0      3.0      2.5     -3.0     -1.1
Output           3.6     3.4      3.9      3.5       0.6     1.1      2.7      1.9     -1.9      0.0
Hours worked     0.5     0.3      0.3      0.1       0.3     0.1     -0.3     -0.6      1.1      1.1
Hourly 
 compensation    3.8     3.4      4.1      3.6       3.7     3.2      4.2      3.2      2.8      3.5
Real hourly 
 compensation    2.2     1.7      2.4      1.9       2.0     1.6      2.5      1.5      1.2      1.8
Unit labor 
 costs           0.7     0.3      0.6      0.2       3.3     2.2      1.2      0.7      6.0      4.6
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, second quarter 2016
Labor 
 Productivity   -0.2    -0.2     -0.4     -0.4      -0.5    -0.5      2.5      2.4     -4.6     -4.6
Output           1.6     1.6      1.6      1.6      -1.0    -1.1      0.6      0.5     -2.9     -2.9
Hours worked     1.7     1.7      2.0      2.0      -0.5    -0.5     -1.8     -1.8      1.8      1.8
Hourly 
 compensation    6.1     3.7      5.6      3.3       8.0     6.2     10.1      5.4      4.4      8.0
Real hourly
 compensation    3.4     1.2      3.0      0.7       5.4     3.6      7.4      2.8      1.8      5.3
Unit labor 
 costs           6.2     3.9      6.0      3.7       8.5     6.8      7.5      3.0      9.5     13.2
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Table C. Nonfinancial corporations: preliminary third quarter and revised second quarter 2016 

                                                          Real 
               Labor                         Hourly       hourly       Unit                   Implicit
               produc-             Hours     compen-      compen-      labor      Unit        price
               tivity    Output    worked    sation       sation       costs      profits     deflator
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2016
Q to Q            7.1      8.3      1.1       4.3          2.6         -2.7        18.9         -0.7
Y to Y            1.6      3.2      1.7       2.4          1.3          0.9        -5.2         -0.5
                                Percent change, annual rate, second quarter 2016                                 
Q to Q Revised   -1.2      0.2      1.4       5.7          3.1          7.0       -17.2          1.8
Q to Q Previous  -2.3     -0.9      1.4       3.7          1.2          6.2       -16.3          1.8
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Last Modified Date: December 06, 2016