Technical notes


Labor Hours

Hours data for the labor productivity and cost measures include hours 
worked for all persons working in the sectorówage and salary workers, the 
self-employed and unpaid family workers. The primary source of hours and 
employment data is the BLS Current Employment Statistics (CES) program, 
which provides monthly survey data on the number of jobs held by wage and 
salary workers in nonfarm establishments, counting a person who is 
employed by two or more establishments at each place of employment. The 
CES also provides average weekly paid hours of production and 
nonsupervisory workers in these establishments. Weekly paid hours are 
adjusted to hours at work using data from the National Compensation 
Survey (NCS) for 2001 forward and data from the BLS Hours at Work survey, 
conducted for this purpose, for earlier years. The Office of Productivity 
and Technology estimates average weekly hours at work for nonproduction 
and supervisory workers using information from the Current Population 
Survey (CPS), the CES, and the NCS.

Data from the CPS are used to estimate hours worked for farm labor, 
nonfarm proprietors, and nonfarm unpaid family workers. Using CPS 
information on employment and hours worked at primary jobs and all other 
jobs, separately, the BLS productivity measures assign all hours worked 
to the correct industrial sector. Hours for government enterprises are 
derived from the CPS, the CES, and the National Income and Product 
Accounts (NIPA) prepared by the Bureau of Economic Analysis (BEA) of the 
Department of Commerce.


Business sector output is a chain-type, current-weighted index 
constructed after excluding from gross domestic product (GDP) the 
following outputs: general government, nonprofit institutions, and 
private households (including owner-occupied housing). Corresponding 
exclusions also are made in labor inputs. Business output accounted for 
about 76 percent of the value of GDP in 2014. Nonfarm business, which 
excludes farming, accounted for about 75 percent of GDP in 2014.

Annual indexes for manufacturing and its durable and nondurable goods 
components are constructed by deflating current-dollar industry value of 
production data from the U.S. Bureau of the Census with deflators from 
the BLS. These deflators are based on data from the BLS producer price 
program and other sources. The industry shipments are aggregated using 
annual weights, and intrasector transactions are removed. Quarterly 
manufacturing output measures are based on the indexes of industrial 
production prepared monthly by the Board of Governors of the Federal 
Reserve System, adjusted to be consistent with annual indexes of 
manufacturing sector output prepared by BLS. 

Nonfinancial corporate output is a chain-type, current-weighted index 
calculated on the basis of the costs incurred and the incomes earned from 
production.  The output measure excludes the following outputs from GDP: 
general government; nonprofit institutions; private households; 
unincorporated business; and those corporations classified as offices of 
bank holding companies, offices of other holding companies, or offices in 
the finance and insurance sector. Nonfinancial corporations accounted for 
about 49 percent of the value of GDP in 2014.
Labor Productivity

The measure describes the relationship between real output and the labor 
time involved in its production. Measures of labor productivity growth 
show the changes from period to period in the amount of goods and 
services produced per hour worked. They reflect the joint effects of many 
influences, including changes in technology; capital investment; level of 
output; utilization of capacity, energy, and materials; the organization 
of production; managerial skill; and the characteristics and effort of 
the work force.

Labor Compensation

The measure includes accrued wages and salaries, supplements, employer 
contributions to employee benefit plans, and taxes. Estimates of labor 
compensation by major sector, required for measures of hourly 
compensation and unit labor costs, are based primarily on employee 
compensation data from the NIPA, prepared by the BEA. The compensation of 
employees in general government, nonprofit institutions and private 
households are subtracted from compensation of domestic employees to 
derive employee compensation for the business sector. The labor 
compensation of proprietors cannot be explicitly identified and must be 
estimated. This is done by assuming that proprietors have the same hourly 
compensation as employees in the same sector. The quarterly labor 
productivity and cost measures do not contain estimates of compensation 
for unpaid family workers.  
Unit Labor Costs

These measures describe the relationship between compensation per hour 
and labor productivity, or real output per hour, and can be used as an 
indicator of inflationary pressure on producers. Increases in hourly 
compensation increase unit labor costs; labor productivity increases 
offset compensation increases and lower unit labor costs. 

Presentation of the data

The quarterly data in this release are presented in three ways: as 
percent changes from the previous quarter presented at a compound annual 
rate, as percent changes from the corresponding quarter of the previous 
year, and as index number series where 2009=100. Annual data are 
presented both as index number series and percent changes from the 
previous year.  

The index numbers and rates of change reported in the productivity and 
costs news release are rounded to one decimal place. All percent changes 
in this release and on the BLS web site are calculated using index 
numbers to three decimal places. A complete historical series of these 
index numbers are available at the BLS web site,, or by contacting the BLS Division of Major 
Sector Productivity (Telephone 202-691-5606 or email

For a more detailed explanation of methodology see "Technical Information 
About the Major Sector Productivity and Costs Methods" at
Information in this release will be made available to sensory-impaired 
individuals upon request. Voice phone: 202-691-5606; Federal Relay 
Service number: 1-800-877-8339.

Table of Contents

Last Modified Date: November 05, 2015