Productivity and Costs, Second Quarter 2016, Revised



Transmission of material in this release is embargoed until     USDL 16-1770                          
8:30 a.m. (EDT) Thursday, September 1, 2016

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

                           
                           
                           
                           PRODUCTIVITY AND COSTS
                       Second Quarter 2016, Revised
                                        
Nonfarm business sector labor productivity decreased at a 0.6-percent annual 
rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics 
reported today, as output increased 1.1 percent and hours worked increased 1.7 
percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the second quarter of 2015 to the second quarter 
of 2016, productivity decreased 0.4 percent, the first four-quarter decline in 
the series since a 0.6-percent decline in the second quarter of 2013. (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. 

Unit labor costs in the nonfarm business sector increased 4.3 percent in the 
second quarter of 2016, reflecting a 3.7-percent increase in hourly 
compensation and a 0.6-percent decline in productivity. Unit labor costs 
increased 2.6 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 decreased 0.4 percent in the second 
quarter of 2016, as output and hours worked decreased 0.8 percent and 0.4 
percent, respectively. Output per hour increased 2.4 percent in the durable 
goods manufacturing sector reflecting a 0.7-percent increase in output and a 
1.8-percent decline in hours worked. Productivity decreased 4.4 percent in the 
nondurable goods sector in the second quarter of 2016, following a 4.0-percent 
first-quarter increase. Over the last four quarters, manufacturing 
productivity increased 0.9 percent, as output increased 0.3 percent and hours 
declined 0.6 percent. (See tables A, 3, 4, and 5.)  Unit labor costs in 
manufacturing increased 6.7 percent in the second quarter of 2016 and rose 2.5 
percent from the same quarter a year ago. Hourly compensation increased 6.3 
percent in the second 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 second quarter 2016 measures of productivity and costs were 
announced for the nonfinancial corporate sector. Productivity decreased 2.1 
percent in the second quarter of 2016--the largest decline since a 3.1 
percent decline in the third quarter of 2013--as output decreased 0.7 percent, 
and hours worked increased 1.4 percent. Unit labor costs increased 5.9 
percent, reflecting both a 3.7 percent increase in hourly compensation and a 
2.1 percent decline in productivity. (See tables C and 6.)

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 nonfarm business, business, and 
manufacturing sectors.

In the second quarter of 2016, nonfarm business productivity was revised down 
slightly to a decline of 0.6 percent. Output was revised down slightly to an 
increase of 1.1 percent, and hours were revised down slightly to an increase 
of 1.7 percent. Unit labor costs increased 4.3 percent rather than increasing 
2.0 percent as reported August 9, due mainly to a 2.2-percentage point upward 
revision to hourly compensation, in addition to the slight downward revision 
to productivity. 

In the second quarter of 2016, manufacturing sector productivity was revised 
down to a decline of 0.4 percent from a previously-reported decline of 0.2 
percent. Unit labor costs increased 6.7 percent, higher than the preliminary 
estimate of 3.1 percent. Durable and nondurable goods manufacturing unit labor 
costs were also revised up, to increases of 3.0 percent and 13.0 percent, 
respectively. After revision, nondurable goods unit labor costs had its 
largest gain in the series since a 13.2-percent gain in the fourth quarter of 
2008.

In the first quarter of 2016, nonfarm business productivity decreased at the 
same 0.6-percent rate reported in the previous estimate. Unit labor costs were 
revised down slightly. Manufacturing sector productivity was revised down to 
an increase of 1.3 percent. Hourly compensation and unit labor costs were 
revised downward slightly.

In the nonfinancial corporate sector, first-quarter 2016 productivity was 
revised down slightly to an increase of 1.3 percent. Unit labor costs were 
revised down slightly to a decrease of 3.2 percent (See table C.)

Full historical annual and quarterly measures can be found on the productivity 
and costs home page: www.bls.gov/lpc/#data.
______________  







The preliminary Productivity and Costs news release for third-quarter 2016 is 
scheduled to be released on Thursday, November 3, 2016 at 8:30 a.m. (EDT).





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Table A. Revised second-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      -0.6     -0.4    -0.8    -0.4    -0.4     0.9     2.4     1.2    -4.4     0.3
Output                   1.1      1.1     1.2     1.2    -0.8     0.3     0.7     0.3    -2.6     0.2
Hours worked             1.7      1.5     2.0     1.7    -0.4    -0.6    -1.8    -0.9     1.9    -0.1
Hourly compensation      3.7      2.2     3.3     2.0     6.3     3.4     5.5     2.9     8.0     4.4
Real hourly 
 compensation            1.1      1.1     0.7     0.9     3.7     2.3     2.9     1.8     5.4     3.3
Unit labor costs         4.3      2.6     4.1     2.4     6.7     2.5     3.0     1.7    13.0     4.1
======================================================================================================
Table B. Revised and previous measures: second quarter and first 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, second quarter 2016
Labor 
 productivity   -0.6    -0.5     -0.8     -0.7      -0.4    -0.2      2.4      2.6     -4.4     -4.1
Output           1.1     1.2      1.2      1.4      -0.8    -0.8      0.7      0.5     -2.6     -2.4
Hours worked     1.7     1.8      2.0      2.1      -0.4    -0.7     -1.8     -2.0      1.9      1.8
Hourly
 compensation    3.7     1.5      3.3      1.1       6.3     2.9      5.5      2.4      8.0      4.2
Real hourly 
 compensation    1.1    -1.1      0.7     -1.4       3.7     0.4      2.9     -0.1      5.4      1.6
Unit labor
 costs           4.3     2.0      4.1      1.7       6.7     3.1      3.0     -0.1     13.0      8.7
 ------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, first quarter 2016
Labor 
 productivity   -0.6    -0.6     -0.7     -0.7       1.3     1.5     -0.4     -0.2      4.0      4.0
Output           0.7     0.7      0.8      0.8       0.6     0.7     -0.1      0.0      1.4      1.5
Hours worked     1.4     1.4      1.5      1.5      -0.8    -0.8      0.2      0.2     -2.5     -2.5
Hourly 
 compensation   -0.9    -0.8     -1.1     -0.9      -4.8    -4.6     -6.4     -5.9     -1.9     -2.1
Real hourly 
 compensation   -0.6    -0.4     -0.7     -0.5      -4.5    -4.3     -6.0     -5.6     -1.5     -1.8
Unit labor 
 costs          -0.3    -0.2     -0.4     -0.2      -6.0    -5.9     -6.0     -5.7     -5.6     -5.9
======================================================================================================
Table C. Nonfinancial corporations: preliminary second-quarter and revised first-quarter 2016 
productivity and cost measures
                                                          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, second quarter 2016
Q to Q          -2.1      -0.7      1.4       3.7          1.1          5.9       -17.0          1.9
Y to Y          -0.1       1.6      1.8       1.4          0.3          1.5        -9.1         -0.1
                                Percent change, annual rate, first quarter 2016
Q to Q Revised   1.3       1.9      0.6      -1.9         -1.6         -3.2        30.7         -2.0
Q to Q Previous  1.4       2.0      0.6      -1.8         -1.5         -3.1        30.6         -2.0
======================================================================================================

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Last Modified Date: September 01, 2016