Productivity and Costs, Fourth Quarter and Annual Averages 2015, Preliminary



Transmission of material in this release is embargoed until        USDL 16-0209              
8:30 a.m. (EST) Thursday, February 4, 2016

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                           PRODUCTIVITY AND COSTS
           Fourth Quarter and Annual Averages 2015, Preliminary



Nonfarm business sector labor productivity decreased at a 3.0-percent annual 
rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics 
reported today, as output increased 0.1 percent and hours worked increased 
3.3 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter 
of 2015, productivity increased 0.3 percent. (See table A.) Annual average 
productivity increased 0.6 percent from 2014 to 2015. (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.            
      
Unit labor costs in the nonfarm business sector increased 4.5 percent in the 
fourth quarter of 2015, reflecting a 1.3-percent increase in hourly 
compensation and a 3.0-percent decrease in productivity. Unit labor costs 
increased 2.8 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 fourth 
quarter of 2015, as output increased 0.5 percent and hours worked increased 
0.9 percent. Productivity decreased 1.0 percent in the durable goods 
manufacturing sector and increased 0.3 percent in the nondurable goods sector. 
(See tables A, 3, 4, and 5.) Over the last four quarters, manufacturing 
productivity increased 1.5 percent, as output increased 1.1 percent and hours 
decreased 0.4 percent. Unit labor costs in manufacturing increased 3.6 percent 
in the fourth quarter of 2015 and increased 1.9 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 the Technical Notes for 
a more detailed explanation. 

Table C presents annual average changes for the most recent five years for the 
nonfarm business sector and the total manufacturing sector. Nonfarm business 
sector productivity grew 0.6 percent in 2015, as output and hours increased 
2.8 percent and 2.2 percent, respectively. The increase in hours was due 
solely to an increase in employment of 2.3 percent, which was the largest 
employment gain since a 2.3-percent increase in 1998.  Productivity increased 
at an annual rate of less than 1.0 percent in each of the last five years, 
reflecting steady growth in both output and hours during these years. The 
average annual rate of productivity growth from 2007 to 2015--corresponding to 
the current business cycle--is 1.2 percent, well below the long-term rate from 
1947 to 2015 of 2.1 percent.

Unit labor costs in the nonfarm business sector rose 2.4 percent in 2015, 
reflecting increases of 3.0 percent in hourly compensation and 0.6 percent in 
productivity. The increases in unit labor costs and hourly compensation are 
the largest since 2007, when these series rose 2.7 percent and 4.3 percent, 
respectively. Real hourly compensation, which takes into account changes in 
consumer prices, increased 2.8 percent in 2015. This is the largest annual 
increase in real hourly compensation since a 3.9-percent increase in 2000.

In the manufacturing sector, productivity increased 1.3 percent in 2015, which 
is the same rate of increase as in 2014. The average annual rate of 
productivity growth from 2007 to 2015 is 2.1 percent, which is below the long-
term rate from 1987 to 2015 of 3.4 percent. Unit labor costs increased 1.3 
percent in 2015, which is similar to a 1.4-percent increase in 2014. Real 
hourly compensation in manufacturing increased 2.4 percent in 2015.

Revised measures

Revised and previous measures for the third quarter of 2015 are shown in 
tables B and D and cover the following major sectors: nonfarm business,
business, manufacturing, and nonfinancial corporations.

In the third quarter of 2015, nonfarm business productivity was revised down 
0.1 percentage point, to an increase of 2.1 percent. (See table B.) Unit labor 
costs in the nonfarm business sector increased 1.9 percent in the third 
quarter--rather than 1.8 percent as previously reported.

In the manufacturing sector, productivity was revised down 0.1 percentage 
point, to an increase of 5.0 percent. Manufacturing unit labor costs increased 
2.3 percent, the same rate as previously reported.

In the nonfinancial corporate sector, productivity was revised down 1.2 
percentage points in the third quarter of 2015, to an increase of 1.7 percent. 
This downward revision to productivity is due solely to a 1.2 percentage point 
downward revision to output. (See table D.)

Quarterly and annual data for all sectors from 2013 to 2015 appear in tables 
1-6. Full historical measures can be found on the Productivity and Costs home 
page: www.bls.gov/lpc/#data.
_____________   






The revised Productivity and Costs news release for fourth-quarter 2015 is 
scheduled to be released on Thursday, March 3, 2016 at 8:30 a.m. (EST).






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Table A. Preliminary fourth-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      -3.0      0.3    -2.7     0.5    -0.4     1.5    -1.0     1.5     0.3     1.2
Output                   0.1      1.9     0.6     2.1     0.5     1.1    -0.2     0.6     1.5     1.7
Hours worked             3.3      1.5     3.4     1.5     0.9    -0.4     0.8    -0.9     1.1     0.5
Hourly compensation      1.3      3.1     1.1     3.1     3.2     3.4     3.6     3.1     2.6     4.1
Real hourly 
 compensation            1.1      2.7     0.9     2.7     3.0     3.0     3.3     2.7     2.4     3.6
Unit labor costs         4.5      2.8     3.9     2.5     3.6     1.9     4.6     1.6     2.3     2.8
=======================================================================================================
Table B. Revised and previous measures: third 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, third quarter 2015
Labor 
 Productivity    2.1     2.2      2.6      2.7      5.0      5.1      6.8      6.9      2.2      2.3
Output           1.8     1.8      2.2      2.3      3.2      3.2      3.9      3.7      2.4      2.7
Hours worked    -0.3    -0.3     -0.4     -0.4     -1.7     -1.8     -2.7     -3.0      0.2      0.3
Hourly 
 compensation    4.1     4.0      4.1      4.1      7.4      7.5      7.3      7.5      7.8      7.7
Real hourly
 compensation    2.5     2.4      2.5      2.4      5.7      5.8      5.6      5.9      6.1      6.0
Unit labor
 costs           1.9     1.8      1.6      1.3      2.3      2.3      0.4      0.6      5.5      5.3
=======================================================================================================
Table C. Annual average changes in productivity and related measures: 2011-2015

Sector                            Nonfarm Business                         Manufacturing
                        2015    2014    2013    2012    2011  |  2015    2014    2013    2012     2011
--------------------------------------------------------------|----------------------------------------
Labor Productivity       0.6     0.7     0.0     0.9     0.2  |   1.3     1.3     0.7     0.7      5.6
Output                   2.8     3.0     1.7     3.1     2.2  |   2.2     2.9     1.5     3.0      7.8
Hours worked             2.2     2.3     1.7     2.2     2.0  |   0.9     1.6     0.8     2.3      2.1
Hourly compensation      3.0     2.7     1.1     2.7     2.2  |   2.6     2.7     0.2     1.8      1.7
Real hourly                                                   |
 compensation            2.8     1.1    -0.4     0.6    -0.9  |   2.4     1.0    -1.2    -0.3     -1.4
Unit labor costs         2.4     2.0     1.1     1.7     2.1  |   1.3     1.4    -0.5     1.0     -3.6
=======================================================================================================
Table D. Nonfinancial corporations: revised and previous third-quarter 2015 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, third quarter 2015
Q to Q Revised   1.7      3.1       1.4        4.2         2.5           2.4      -6.6          0.5
Q to Q Previous  2.9      4.3       1.4        4.1         2.5           1.2       0.7          0.5
=======================================================================================================

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Last Modified Date: February 04, 2016