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



Transmission of material in this release is embargoed until       USDL 15-0324                  
8:30 a.m. (EST) Thursday, March 5, 2015

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                                PRODUCTIVITY AND COSTS
                   Fourth Quarter and Annual Averages 2014, Revised



Nonfarm business sector labor productivity decreased at a 2.2 percent annual 
rate during the fourth quarter of 2014, the U.S. Bureau of Labor Statistics 
reported today, as output increased 2.6 percent and hours worked increased 
4.9 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the fourth quarter of 2013 to the fourth 
quarter of 2014, productivity decreased 0.1 percent reflecting increases in 
output and hours worked of 2.9 percent and 3.0 percent, respectively. (See 
table A.) Annual average productivity increased 0.7 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. Measures released today were based on
more recent source data than were available for the preliminary report.

Unit labor costs in the nonfarm business sector increased 4.1 percent in the 
fourth quarter of 2014, reflecting a 1.9 percent increase in hourly 
compensation and a 2.2 percent decline in productivity. Unit labor costs 
increased 2.6 percent over the last four quarters. (See tables A and 2.) 


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Data in this release reflect the annual benchmark revision of BLS Current 
Employment Statistics program data on nonfarm employment and hours, and the 
revised seasonal adjustment of those data. More detail can be found in 
tables 1-6 and appendix tables 1-6. See Revised measures.
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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 decreased 0.1 percent in the fourth quarter
of 2014, as output increased 4.3 percent and hours worked increased 4.4 
percent. Productivity increased 0.5 percent in the durable manufacturing 
sector and decreased 1.5 percent in the nondurable manufacturing sector. 
(See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing 
productivity increased 2.4 percent, as output increased 4.5 percent and hours
increased 2.0 percent. Unit labor costs in manufacturing increased 1.5 
percent in the fourth quarter of 2014 and were unchanged 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

Quarterly and annual measures of hours and related series-including 
productivity-were revised back to 1990 for all major sectors. The revisions 
incorporate revised Current Employment Statistics (CES) program data 
published February 6, 2015. From 2010 forward the data were subject to 
revision as a result of annual benchmarking of CES data and revised seasonal 
adjustment of those data. Prior to 2010 there were small revisions due to 
CES coverage changes affecting two manufacturing industries. Index measures 
related to hours show full historical revisions because the 2009 base year 
values were revised; resulting revisions to percent changes are small. Third 
quarter, fourth quarter, and annual average data for 2014 were also revised 
for regular updates of source data on output and compensation.

Revised and previous measures for the third and fourth quarters of 2014 are 
shown in table B for the business, nonfarm business, and manufacturing 
sectors. Revised annual average measures for 2010 to 2014 are shown in table 
C for the nonfarm business and manufacturing sectors. Revised third quarter 
measures for the nonfinancial corporate sector are shown in table D. 
Quarterly and annual data for all sectors appear in tables 1-6 for 2012 
through 2014 and in appendix tables 1-6 for 2009 through 2011. Full 
historical annual and quarterly measures can be found on the labor 
productivity and costs home page at www.bls.gov/lpc/#data. 

In the fourth quarter of 2014, nonfarm business productivity decreased 2.2 
percent rather than 1.8 percent as reported February 5. The revised figure 
reflects a 0.6 percentage point downward revision to output and a 0.2 
percentage point downward revision to hours. The 4.9 percent increase in 
hours worked remains the largest increase in this series since a gain of 5.7 
percent in the fourth quarter of 1998. Unit labor costs increased 4.1 
percent, a larger increase than was previously reported. 

Manufacturing productivity declined 0.1 percent rather than increasing 1.3 
percent, a combination of a downward revision to output and a small upward 
revision to hours. This was the first decrease in the productivity measure 
since a 1.6 percent decrease in the fourth quarter of 2011. Because the 
downward revision to productivity was larger than a downward revision to 
hourly compensation, manufacturing unit labor costs increased 1.5 percent, 
rather than 0.2 percent as reported in the preliminary release. (See table 
B.) 

In the third quarter of 2014, nonfarm business productivity growth was 
little changed, at 3.9 percent, reflecting a slight downward revision to 
hours. Unit labor costs decreased 1.0 percent, as revised, reflecting the 
small upward revision to productivity and a 1.5 percentage point upward 
revision to hourly compensation. In the manufacturing sector, productivity 
increased 3.5 percent rather than 3.2 percent as previously reported. The 
revision reflected a small upward revision to output and a small downward 
revision to hours. (See table B.) Nonfinancial corporate sector productivity 
increased 1.8 percent in the third quarter of 2014. (See table D.)

When the annual average indexes of output per hour are compared, nonfarm 
business sector productivity rose 0.7 percent from 2013 to 2014 reflecting 
increases of 3.0 percent in output and 2.3 percent in hours worked. The 
increase in hours in 2014 was the largest increase in the annual measure 
since 1997 (3.5 percent). Since 2010, productivity has increased at an 
average annual rate of 0.7 percent, reflecting average annual growth rates 
of 2.8 percent in output and 2.1 percent in hours worked. Output per hour 
has increased at an average annual rate of 2.1 percent since 1990 as output 
increased 2.8 percent and hours increased 0.7 percent. Unit labor costs rose 
1.8 percent from 2013 to 2014 in the nonfarm business sector.

In the manufacturing sector, annual average productivity growth was revised 
down to 2.2 percent in 2014. Productivity growth over the last four years of 
1.5 percent per year on average reflects annual average rates of growth in 
output and hours of 3.2 percent and 1.7 percent, respectively. Manufacturing 
unit labor costs increased 0.1 percent in 2014 as the 2.2 percent increase 
in productivity was outpaced by the 2.3 percent increase in compensation per 
hour. Real hourly compensation increased 0.6 percent in 2014, after four 
consecutive years of decreases in the measure (See table C.)
______________  







The preliminary Productivity and Costs news release for first-quarter 2015 is 
scheduled to be released on Wednesday, May 6, 2015 at 8:30 a.m. (EDT).






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Table A. Revised 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           -2.2     -0.1    -2.3    -0.4    -0.1     2.4     0.5     2.8    -1.5     2.3
Output                  2.6      2.9     2.7     2.8     4.3     4.5     3.4     5.5     5.4     3.4
Hours                   4.9      3.0     5.2     3.2     4.4     2.0     3.0     2.6     7.0     1.1
Hourly 
 compensation           1.9      2.5     1.6     2.3     1.4     2.4     1.8     2.4     1.1     2.3
Real hourly 
 compensation           3.1      1.3     2.8     1.1     2.7     1.2     3.0     1.2     2.4     1.1
Unit labor 
 costs                  4.1      2.6     4.0     2.7     1.5     0.0     1.3    -0.4     2.7     0.1

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Table B. Revised and previous measures: fourth quarter and 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, fourth quarter 2014
Productivity    -2.2    -1.8     -2.3     -2.0     -0.1      1.3      0.5      1.5     -1.5      0.2
Output           2.6     3.2      2.7      3.3      4.3      5.7      3.4      4.5      5.4      7.0
Hours            4.9     5.1      5.2      5.3      4.4      4.3      3.0      3.0      7.0      6.8
Hourly 
 compensation    1.9     0.9      1.6      0.6      1.4      1.5      1.8      1.3      1.1      2.2
Real hourly 
 compensation    3.1     2.1      2.8      1.8      2.7      2.8      3.0      2.5      2.4      3.4
Unit labor 
 costs           4.1     2.7      4.0      2.6      1.5      0.2      1.3     -0.2      2.7      2.0
-------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2014
Productivity     3.9     3.7      3.3      3.2      3.5      3.2      3.5      3.5      4.4      3.8
Output           6.3     6.3      6.4      6.4      4.9      4.8      6.7      6.7      2.9      2.7
Hours            2.4     2.5      2.9      3.1      1.4      1.5      3.1      3.1     -1.4     -1.1
Hourly 
 compensation    2.8     1.3      2.1      0.6      2.1      1.4      1.7      0.7      2.7      2.6
Real hourly 
 compensation    1.7     0.2      1.0     -0.5      1.0      0.3      0.6     -0.4      1.6      1.5
Unit labor
 costs          -1.0    -2.3     -1.2     -2.5     -1.3     -1.7     -1.8     -2.6     -1.6     -1.2
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Table C. Revised 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     0.2     1.0     0.9     0.7  |   6.2     0.8     1.0     1.9      2.2
Output                   3.2     2.2     3.2     2.6     3.0  |   6.2     2.9     3.3     2.7      3.8
Hours                   -0.1     2.0     2.2     1.7     2.3  |   0.0     2.1     2.3     0.8      1.6
Hourly                                                        |
 compensation            2.0     2.2     2.7     1.1     2.5  |   1.2     1.7     1.8     0.5      2.3
Real hourly                                                   |
 compensation            0.3    -0.9     0.6    -0.3     0.8  |  -0.4    -1.4    -0.3    -0.9      0.6
Unit labor                                                    |
 costs                  -1.3     2.1     1.7     0.2     1.8  |  -4.7     1.0     0.8    -1.4      0.1
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Table D.  Nonfinancial corporations: revised 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        1.8      4.6        2.7       1.0          0.0          -0.8        5.7           0.7
Previous       1.7      4.6        2.9       0.9         -0.2          -0.8        5.7           0.7
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Last Modified Date: March 05, 2015