Productivity and Costs, Third Quarter 2016, Preliminary



Transmission of material in this release is embargoed until     USDL 16-2094
8:30 a.m. (EDT) Thursday, November 3, 2016

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



                            
                            PRODUCTIVITY AND COSTS
                       Third Quarter 2016, Preliminary                  

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 3.4 percent and hours worked increased 0.3 
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. 

Unit labor costs in the nonfarm business sector increased 0.3 percent in the 
third quarter of 2016, reflecting a 3.4-percent increase in hourly 
compensation and a 3.1-percent increase in productivity. Unit labor costs 
increased 2.3 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 1.0 percent in the third 
quarter of 2016, as output and hours worked increased 1.1 percent and 0.1 
percent, respectively. Output per hour increased 2.5 percent in the durable 
goods manufacturing sector, the combined effect of a 1.9-percent increase in 
output and a 0.6-percent decline in hours worked. Productivity decreased 1.1 
percent in the nondurable goods sector in the third quarter of 2016, following 
a 4.6-percent second-quarter decrease. Over the last four quarters, 
manufacturing sector productivity increased 0.2 percent, as output was 
unchanged and hours worked declined 0.1 percent. (See tables A, 3, 4, and 5.)  
Unit labor costs in manufacturing increased 2.2 percent in the third quarter 
of 2016 and rose 2.9 percent from the same quarter a year ago. Hourly 
compensation increased 3.2 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. 

Revised measures

Revised and previous measures for the second quarter of 2016 are shown in 
tables B and C, covering the following major sectors: nonfarm business, 
business, manufacturing, and nonfinancial corporations.

In the second quarter of 2016, nonfarm business sector productivity decreased 
0.2 percent, rather than decreasing 0.6 percent as reported on September 1. 
The upward revision reflects a 0.5-percentage point upward revision to output; 
hours were unrevised. Unit labor costs increased 3.9 percent during the second 
quarter--rather than increasing 4.3 percent as previously reported--due to the 
0.4-percentage point upward revision to productivity. In the manufacturing 
sector, productivity was revised down slightly to a decrease of 0.5 percent 
from a previously-reported decline of 0.4 percent, reflecting small downward 
revisions to both output and hours. Unit labor costs increased 6.8 percent 
rather than 6.7 percent.

Second-quarter 2016 measures of productivity and costs were revised for the 
nonfinancial corporate sector. Productivity decreased 2.3 percent rather than 
2.1 percent as reported on September 1. Unit labor costs increased 6.2 
percent rather than the preliminary estimate of 5.9 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 revised Productivity and Costs news release for third-quarter 2016 is 
scheduled to be released on Tuesday, December 6, 2016 at 8:30 a.m. (EST).





======================================================================================================
Table A. Preliminary 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     3.4    -0.1     1.0     0.2     2.5     0.6    -1.1    -0.4
Output                   3.4      1.6     3.5     1.7     1.1     0.0     1.9     0.2     0.0    -0.2
Hours worked             0.3      1.7     0.1     1.8     0.1    -0.1    -0.6    -0.4     1.1     0.2
Hourly compensation      3.4      2.3     3.6     2.2     3.2     3.1     3.2     2.7     3.5     3.9
Real hourly 
 compensation            1.7      1.1     1.9     1.0     1.6     1.9     1.5     1.6     1.8     2.7
Unit labor costs         0.3      2.3     0.2     2.2     2.2     2.9     0.7     2.2     4.6     4.3
======================================================================================================
Table B. Revised and previous measures: 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, second quarter 2016
Labor 
 productivity   -0.2    -0.6     -0.4     -0.8      -0.5    -0.4      2.4      2.4     -4.6     -4.4
Output           1.6     1.1      1.6      1.2      -1.1    -0.8      0.5      0.7     -2.9     -2.6
Hours worked     1.7     1.7      2.0      2.0      -0.5    -0.4     -1.8     -1.8      1.8      1.9
Hourly 
 compensation    3.7     3.7      3.3      3.3       6.2     6.3      5.4      5.5      8.0      8.0
Real hourly 
 compensation    1.2     1.1      0.7      0.7       3.6     3.7      2.8      2.9      5.3      5.4
Unit labor
 costs           3.9     4.3      3.7      4.1       6.8     6.7      3.0      3.0     13.2     13.0
======================================================================================================
Table C. Nonfinancial corporations: revised and previous second-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 Revised   -2.3     -0.9      1.4       3.7          1.2          6.2       -16.3          1.8
Q to Q Previous  -2.1     -0.7      1.4       3.7          1.1          5.9       -17.0          1.9
====================================================================================================== 


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Last Modified Date: November 03, 2016