Productivity and Costs, Second Quarter 2015, Preliminary



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8:30 a.m. (EDT) Tuesday, August 11, 2015

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                           PRODUCTIVITY AND COSTS
                      Second Quarter 2015, Preliminary
                      
                      
                      
Nonfarm business sector labor productivity increased at a 1.3 percent annual 
rate during the second quarter of 2015, the U.S. Bureau of Labor Statistics 
reported today, as output increased 2.8 percent and hours worked increased 
1.5 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the second quarter of 2014 to the second quarter 
of 2015, productivity increased 0.3 percent, reflecting increases in output 
and hours worked of 2.8 percent and 2.6 percent, respectively. (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 0.5 percent in the 
second quarter of 2015, reflecting a 1.8 percent increase in hourly 
compensation and a 1.3 percent increase in productivity. Unit labor costs 
increased 2.1 percent over the last four quarters. (See tables A and 2.) 

=============================================================================
          Historical Revisions to Productivity and Costs Data
          
Data in this release reflect the revisions to the National Income and Product 
Accounts (NIPA) released by the Bureau of Economic Analysis of the U.S. 
Department of Commerce on July 30, 2015. See “Revised measures” section.
=============================================================================

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 2.5 percent in the second 
quarter of 2015, as output increased 1.5 percent and hours worked decreased 
1.0 percent. Productivity increased 3.4 percent in the durable manufacturing 
sector and 1.2 percent in the nondurable goods sector. (See tables A, 3, 4, 
and 5.) Over the last four quarters, manufacturing productivity increased 1.1 
percent, as output increased 2.3 percent and hours increased 1.2 percent. 
Unit labor costs in manufacturing decreased 2.3 percent in the second quarter 
of 2015 and increased 0.2 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.

Revised measures                

Productivity, unit labor costs, and related measures in the business and 
nonfarm business sectors were subject to revision going back to 2010, due to 
revisions in source data including output, compensation, and hours. Measures 
of output for the business and nonfarm business sectors and measures of 
compensation for all sectors incorporate the revised National Income and 
Product Accounts (NIPA) data released on July 30 by the Bureau of Economic 
Analysis, U.S. Department of Commerce. Hours were revised for the business 
and nonfarm business sectors to incorporate revised NIPA data on government 
enterprises employment and the proportion of sector compensation paid to 
employees of nonprofit institutions. Measures of manufacturing output and all 
related measures were revised back to 1987 to reflect revised output indexes 
constructed by BLS using data from the U.S. Department of Commerce.  In 
particular, the revisions incorporate data from the 2012 Economic Census as 
well as improvements to BLS methodology for estimating annual manufacturing 
output. Output data for the manufacturing sector also incorporate 
historically revised indexes of industrial production published by the Board 
of Governors of the Federal Reserve System on July 21.

Table B presents revised and previous productivity and related measures for 
the nonfarm business, business, and manufacturing sectors for the first 
quarter of 2015 and table C presents annual data for nonfarm business and 
total manufacturing from 2012 to 2014. Revised quarterly and annual series 
for all sectors in recent years appear in tables 1-6 and appendix tables 1-6. 
Historical annual indexes for the manufacturing sectors appear in appendix 
tables 7-9. Full historical annual and quarterly measures can be found on the 
Productivity and Costs home page: www.bls.gov/lpc/#data.

Nonfarm business sector productivity decreased 1.1 percent in the first 
quarter of 2015--rather than falling 3.1 percent as reported June 4--solely 
reflecting a 2.1-percentage point upward revision to output; hours increased 
at the same 1.6 percent rate reported previously. Unit labor costs increased 
2.3 percent in the first quarter of 2015--much less than a previously-
published increase of 6.7 percent--due to both the upward revision to 
productivity and a 2.2-percentage point downward revision to hourly 
compensation. Real hourly compensation increased 4.2 percent after 
revision, rather than the previous estimate of 6.5 percent.

There were historical revisions to quarterly series of labor productivity 
in the nonfarm business sector. Percent changes from previous quarter were 
revised beginning in 2011. Most notable were downward revisions in the 
third quarters of both 2012 and 2013, and the upward revision in the first 
quarter of 2015. The average growth rate from the first quarter of 2011 to 
the first quarter of 2015 was revised down by 0.1 percentage point, to a 
rate of 0.5 percent.
        
There were also revisions to percent changes from the same quarter a year 
ago, beginning in 2011. After revision, the four-quarter rate of 
productivity growth dipped below zero for the first three quarters of 2013. 
The last time this measure was negative for three consecutive quarters was 
the first three quarters of 1982; in 2013 hours were rising faster than 
output, while in 1982 output was falling faster than hours.  

Annual Average productivity growth in the nonfarm business sector was not 
revised for 2014. (See table C.) Productivity growth was revised down in 
both 2013 and 2012, to rates of 0.0 percent in 2013 and 0.9 percent in 2012. 
The revised annual rate of 0.0 percent in 2013 is the lowest annual change 
in productivity since a 1.0 percent decline in 1982. The average annual rate 
of productivity growth from 2007 to 2014--corresponding to the current 
business cycle--was revised down from 1.4 percent to 1.3 percent per year, 
well below the long-term rate from 1947 to 2014 of 2.2 percent per year.  

Manufacturing sector productivity declined 0.6 percent in the first quarter 
of 2015--a smaller decline than previously reported--as an upward revision to 
output was greater than an upward revision to hours. Unit labor costs 
decreased 1.1 percent rather than increasing 3.4 percent as reported June 4, 
due to both the upward revision to productivity and a 4.1-percentage point 
downward revision to hourly compensation.
        
Annual average manufacturing productivity grew 1.3 percent in 2014, less 
than the previous estimate of 2.2 percent. Unit labor costs increased 1.4 
percent in 2014, rather than 0.3 percent as previously reported. There were 
also historical revisions to manufacturing productivity for the complete 
series, going back to 1987. The revised long-term growth rate from 1987 to 
2014 is 3.4 percent, larger than a previous estimate of 3.2 percent. From 
1987 to 2000 the average annual rate of growth in manufacturing productivity 
was revised down from 3.7 percent to 3.5 percent. For the 2000-2007 period 
the average annual rate was revised up from 3.7 percent to 4.7 percent, and 
during the current business cycle from 2007 to 2014 the average annual rate 
was revised up from 1.7 percent to 2.2 percent.  This recent period saw the 
largest single-year revisions--a large downward revision in 2009 followed by 
large upward revisions in 2010 and 2011. 
       
Nonfinancial corporate sector productivity and related measures were subject 
to revision back to 2011, to incorporate source data revisions to series 
from the Bureau of Economic Analysis, including output, compensation, and 
data on the proportion of employees working in the corporate sector. First-
quarter 2015 productivity growth was revised down to a decline of 2.1 
percent, rather than the previously-published decline of 1.2 percent; this 
revision was due solely to a downward revision to output. Annual average 
productivity was revised down 0.1 percentage points in 2014 to a rate of 0.4 
percent, revised up 0.7 percentage points in 2013 to a rate of 1.0 percent, 
and revised down 0.3 percentage points in 2012 to a rate of 1.6 percent. 
(See tables D and 6.)
______________  







The revised Productivity and Costs news release for second-quarter 2015 is 
scheduled to be released on Wednesday, September 2, 2015 at 8:30 a.m. (EDT).






======================================================================================================
Table A. Preliminary second-quarter 2015 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       1.3      0.3     1.7     0.1     2.5     1.1     3.4     1.2     1.2     1.0
Output                   2.8      2.8     2.8     2.9     1.5     2.3     1.7     2.4     1.3     2.3
Hours worked             1.5      2.6     1.1     2.8    -1.0     1.2    -1.6     1.1     0.1     1.3
Hourly compensation      1.8      2.4     2.1     2.1     0.2     1.3     0.0     1.1     0.5     1.8
Real hourly 
 compensation           -1.1      2.3    -0.8     2.1    -2.7     1.3    -2.9     1.0    -2.4     1.8
Unit labor costs         0.5      2.1     0.5     2.0    -2.3     0.2    -3.3    -0.1    -0.6     0.9
======================================================================================================
Table B. Revised and previous measures: first quarter 2015 

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
------------------------------------------------------------------------------------------------------
                                   Percent change, annual rate, first quarter 2015
Labor
 productivity   -1.1    -3.1     -1.3     -3.1     -0.6     -1.0     -2.2     -3.3      1.2      1.5
Output           0.5    -1.6      0.6     -1.3     -0.5     -1.1     -2.3     -3.7      1.6      2.1
Hours worked     1.6     1.6      1.9      1.9      0.1     -0.1     -0.1     -0.5      0.4      0.6
Hourly
 compensation    1.1     3.3      0.9      3.1     -1.7      2.4     -2.9      2.4      0.5      2.5
Real hourly 
 compensation    4.2     6.5      4.0      6.3      1.3      5.5      0.1      5.5      3.6      5.7
Unit labor
 costs           2.3     6.7      2.3      6.4     -1.1      3.4     -0.6      5.9     -0.6      1.0
===================================================================================================================
Table C. Revised and previous annual average measures, 2012-2014

Sector                       Nonfarm Business                  |                 Manufacturing
                                                               |
                  2014             2013              2012      |       2014            2013             2012  
             Revised Previous Revised Previous Revised Previous| Revised Previous Revised Previous Revised Previous
---------------------------------------------------------------|---------------------------------------------------
                              Percent change                   |                    Percent change
                                                               |
Labor                                                          |
 productivity   0.7     0.7     0.0      0.9     0.9      1.0  |   1.3      2.2     0.7      1.9     0.7      1.0
Output          3.0     3.0     1.7      2.6     3.1      3.2  |   2.9      3.8     1.5      2.7     3.0      3.3
Hours worked    2.3     2.3     1.7      1.7     2.2      2.2  |   1.6      1.6     0.8      0.8     2.3      2.3
Hourly                                                         |
 compensation   2.7     2.6     1.1      1.1     2.7      2.7  |   2.7      2.4     0.2      0.5     1.8      1.8
Real hourly                                                    |
 compensation   1.1     0.9    -0.4     -0.3     0.6      0.6  |   1.0      0.8    -1.2     -0.9    -0.3     -0.3
Unit labor                                                     |
 costs          2.0     1.8     1.1      0.2     1.7      1.7  |   1.4      0.3    -0.5     -1.4     1.0      0.8
====================================================================================================================
Table D. Nonfinancial corporations: revised and previous first-quarter 2015 measures, and revised 
 annual measures 2012-2014
                                                          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, first quarter 2015
                                    
Q to Q Revised  -2.1      -0.4      1.8        0.4         3.5          2.6       -19.3         -0.8
Q to Q Previous -1.2       0.6      1.8        3.4         6.5          4.6       -27.8         -1.2

                                            Percent change, annual average
                                            
2014             0.4       3.2      2.8        2.4         0.8          2.0        -0.4          0.7
2013             1.0       3.0      2.0        1.3        -0.2          0.3         4.4          0.8
2012             1.6       4.0      2.4        2.9         0.7          1.2         6.4          1.4
======================================================================================================


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Last Modified Date: August 11, 2015