USDL 04-2461 TRANSMISSION OF THIS MATERIAL IS EMBARGOED UNTIL 8:30 A.M. EST, TUESDAY, DECEMBER 7, 2004. Internet address: http://www.bls.gov/lpc/ Historical, technical information: (202) 691-5606 Current data: (202) 691-5200 Media contact: (202) 691-5902 PRODUCTIVITY AND COSTS Third Quarter 2004, revised The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data--as measured by output per hour of all persons--for the third quarter of 2004. The seasonally adjusted annual rates of productivity growth in the third quarter were: 2.4 percent in the business sector, and 1.8 percent in the nonfarm business sector. In both sectors, changes in productivity are similar to the preliminary estimates published November 4. Output and hours were revised upwards in both sectors. In manufacturing, revised productivity increases in the third quarter were: 4.6 percent in manufacturing, 4.8 percent in durable goods manufacturing, and 5.4 percent in nondurable goods manufacturing. Productivity in the manufacturing sector rose more rapidly than was reported on Nov. 4. Both output and hours were revised up with the revisions to output larger than those to hours. Output and hours in manufacturing, which includes about 13 percent of U.S. business sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors. Third-quarter measures are summarized in table A and appear in detail in tables 1 through 5. The data sources and methods used in the preparation of the manufacturing series differ from those used in preparing the business and nonfarm business series, and these measures are not directly comparable. Output measures for business and nonfarm business are based on measures of gross domestic product prepared by the Bureau of Economic Analysis of the U.S. Department of Commerce. Quarterly output measures for manufacturing reflect indexes of industrial production independently prepared by the Board of Governors of the Federal Reserve System. See Technical Notes for further information on data sources. --------------------------------------------------------------------- Table A. Productivity and costs: Revised third-quarter 2004 measures (Seasonally adjusted annual rates) --------------------------------------------------------------------- Real Hourly hourly Unit Produc- compen- compen- labor Sector tivity Output Hours sation sation costs --------------------------------------------------------------------- Percent change from preceding quarter Business 2.4 4.5 2.0 4.0 2.1 1.5 Nonfarm business 1.8 4.2 2.4 3.6 1.8 1.8 Manufacturing 4.6 4.5 -0.1 4.6 2.7 0.0 Durable 4.8 6.4 1.6 4.0 2.1 -0.8 Nondurable 5.4 2.4 -2.8 5.4 3.5 0.0 --------------------------------------------------------------------- Percent change from same quarter a year ago Business 2.9 4.4 1.5 4.0 1.2 1.1 Nonfarm business 3.1 4.7 1.5 4.0 1.2 0.8 Manufacturing 4.7 5.9 1.2 3.2 0.4 -1.5 Durable 5.2 8.0 2.7 2.3 -0.5 -2.8 Nondurable 4.7 3.4 -1.3 4.5 1.7 -0.2 --------------------------------------------------------------------- Business From the second quarter to the third quarter of 2004, business sector productivity rose at an annual rate of 2.4 percent, as output increased 4.5 percent and hours of all persons engaged in the sector rose 2.0 percent (table 1). The hours increase was the largest since a 2.4-percent rise in the third quarter of 1999. Output per hour had increased 2.9 percent in the second quarter. Business sector hourly compensation increased 4.0 percent during the third quarter of 2004, following a 5.2-percent increase in the second quarter (as revised). Hourly compensation includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, rose 2.1 percent in the third quarter of 2004. Unit labor costs increased 1.5 percent in the third quarter of 2004, less than the 2.3-percent rise in the second quarter. The implicit price deflator for the business sector, which reflects changes both in unit labor costs and in unit nonlabor payments, rose at a 0.9 percent annual rate in the third quarter of 2004. Nonfarm business Output per hour of all persons in the nonfarm business sector rose 1.8 percent during the third quarter of 2004, as output grew 4.2 percent and hours of all persons increased 2.4 percent (table 2). Output had also increased 4.2 percent in the second quarter, but because hours rose less, 0.3 percent, nonfarm productivity increased more, 3.9 percent. The 2.4-percent increase in hours was the largest since the third quarter of 1999, when they increased 2.6 percent. Hourly compensation grew 3.6 percent in the third quarter of 2004, less than the 5.9-percent increase in the previous quarter. When the rise in consumer prices is taken into account, real hourly compensation rose 1.8 percent in the third quarter of 2004. Unit labor costs rose 1.8 percent in the third quarter, similar to the previous quarter, when they rose 1.9 percent. The implicit price deflator for nonfarm business increased 1.6 percent in the third quarter of 2004. Manufacturing Productivity increased 4.6 percent in manufacturing in the third quarter of 2004, as output increased 4.5 percent and hours of all persons edged down 0.1 percent (seasonally adjusted annual rates). In durable goods industries, productivity increased 4.8 percent, reflecting increases of 6.4 percent in output and 1.6 percent in hours. Productivity increased slightly more in the nondurable goods industries, 5.4 percent, as output rose 2.4 percent and hours fell 2.8 percent (tables 3, 4, and 5). The hourly compensation of all manufacturing workers rose 4.6 percent during the third quarter of 2004. In durable goods manufacturing, hourly compensation increased 4.0 percent and in nondurable goods manufacturing it grew 5.4 percent. When the increase in consumer prices is taken into account, real hourly compensation for all manufacturing workers rose 2.7 percent in the third quarter. Unit labor costs in manufacturing remained unchanged in the third quarter after falling 1.4 percent in the previous quarter. Unit labor costs declined 0.8 percent in durable goods manufacturing in the third quarter, and were unchanged in nondurable goods manufacturing. Nonfinancial Corporations Third-quarter 2004 measures of productivity and costs also were released for nonfinancial corporations (tables B and 6). Output per all-employee hour grew at a 4.2 percent annual rate, faster than the 3.3 percent increase in the previous quarter. Output increased 5.6 percent in the third quarter, and hours of all employees rose 1.3 percent (seasonally adjusted annual rates). The nonfinancial corporate sector includes all corporations doing business in the United States, except those classified as depository institutions, nondepository institutions, security and commodity brokers, insurance carriers, regulated investment offices, small business investment offices, and real estate investment trusts. ---------------------------------------------------------------------------- Table B. Nonfinancial corporations: Third-quarter 2004 productivity and cost measures (Seasonally adjusted annual rates) ---------------------------------------------------------------------------- Real Hourly hourly Unit Implicit Produc- compen- compen- labor Unit price Period tivity Output Hours sation sation costs profits deflator ---------------------------------------------------------------------------- Percent change from preceding quarter 2003 III 4.2 5.6 1.3 4.0 2.1 -0.3 0.9 0.3 ---------------------------------------------------------------------------- Percent change from same quarter a year ago 2003 III 3.1 4.8 1.7 4.0 1.2 0.8 13.5 1.6 ---------------------------------------------------------------------------- Hourly compensation in nonfinancial corporations increased 4.0 percent in the third quarter, down from the second quarter increase of 5.5 percent. When the rise in consumer prices is taken into account, real hourly compensation increased 2.1 percent in the third quarter. Unit labor costs for the sector declined 0.3 percent in third quarter 2004. Unit nonlabor costs rose 1.4 percent, while unit profits rose at a 0.9 percent annual rate in the third quarter. As a result of these movements, the implicit price deflator for the output of nonfinancial corporations-- which reflects a weighted average of these three measures--increased 0.3 percent. Revised Measures Current and previous measures for the second and third quarters of 2004 for the business, nonfarm business, and manufacturing sectors are compared in table C. In the third quarter, business sector productivity growth was revised up 0.1 percentage point when output was revised up more than hours. Conversely, productivity was revised down in the nonfarm business sector, as output was revised up less than hours. Unit labor costs in the business sector showed the same 1.5 percent increase in the third quarter as reported previously, while unit labor costs in nonfarm business rose slightly faster than reported on Nov. 4. In manufacturing, an upward revision to output raised the third-quarter gain in productivity to 4.6 percent. Because the revision to productivity was largely offset by an upward revision to hourly compensation, unit labor costs were revised only slightly, and now show no change from the previous quarter. --------------------------------------------------------------------- Table C. Previous and revised productivity and related measures: Quarterly percent change at seasonally adjusted annual rate --------------------------------------------------------------------- Real Hourly hourly Unit Produc- compen- compen- labor Sector tivity Output Hours sation sation costs --------------------------------------------------------------------- Third quarter 2004 Business: Previous 2.3 4.2 1.9 3.8 2.0 1.5 Revised 2.4 4.5 2.0 4.0 2.1 1.5 Nonfarm business: Previous 1.9 4.1 2.1 3.6 1.7 1.6 Revised 1.8 4.2 2.4 3.6 1.8 1.8 Manufacturing: Previous 4.3 4.0 -0.3 4.4 2.5 0.1 Revised 4.6 4.5 -0.1 4.6 2.7 0.0 --------------------------------------------------------------------- Second quarter 2004 Business: Previous 2.9 3.9 1.0 4.3 -0.4 1.4 Revised 2.9 3.9 1.0 5.2 0.5 2.3 Nonfarm business: Previous 3.9 4.2 0.3 4.9 0.2 1.0 Revised 3.9 4.2 0.3 5.9 1.1 1.9 Manufacturing: Previous 8.3 6.7 -1.4 3.8 -0.9 -4.2 Revised 8.3 6.7 -1.4 6.8 2.0 -1.4 --------------------------------------------------------------------- The second-quarter 2004 measures of hourly compensation, real hourly compensation, and unit labor costs were revised to reflect new information on compensation. In the business and nonfarm business sectors, hourly compensation and unit labor costs show larger increases than previously reported; real hourly compensation rose instead of fell in the business sector. In manufacturing, hourly compensation increased sharply in the second quarter, and real hourly compensation rose rather than fell, after revision. Manufacturing unit labor costs decreased less during the second quarter of 2004 than previously reported. Revised measures: Nonfinancial corporations Measures for the nonfinancial corporate sector also were revised to reflect updated information on output and employee compensation during the second quarter of 2004 (table D). With hours unchanged, productivity was revised upwards along with output. An upward revision to compensation implied larger increases in hourly compensation and real hourly compensation. Because the revision to compensation was greater than to output, unit labor costs increased more in the second quarter than previously reported. ----------------------------------------------------------------------------- Table D. Nonfinancial corporations: Previous and revised productivity and cost measures Quarterly percent changes at seasonally adjusted annual rates ----------------------------------------------------------------------------- Real Hourly hourly Unit Implicit Produc- compen- compen- labor Unit price tivity Output Hours sation sation costs profits deflator ----------------------------------------------------------------------------- Second quarter 2004 Previous 2.7 3.7 0.9 4.7 0.0 1.9 21.7 3.8 Revised 3.3 4.2 0.9 5.5 0.7 2.2 21.1 3.8 ----------------------------------------------------------------------------- Upcoming change Early in 2005, BLS will improve the way it uses data for farm workers, the nonfarm self employed, and nonfarm unpaid family workers in the productivity program by accounting for the effects of multiple jobholding. NEXT RELEASE DATE The next release of Productivity and Costs is scheduled for 8:30 AM EST, Thursday, February 5, 2005. Preliminary fourth-quarter and annual 2004 measures will be released at that time. Quarterly measures for the manufacturing sector will reflect the annual revision to the index of industrial production. Scheduled release dates for productivity and costs measures for major sectors of the U.S. economy in 2005 are: ---------------------------------------------------- Reference period 2005 release date 2004: Fourth quarter, Annual February 3 Fourth quarter, Annual(revised) March 3 2005: First quarter May 5 First quarter (revised) June 2 Second quarter August 9 Second quarter (revised) September 7 Third quarter November 3 Third quarter (revised) December 6 ---------------------------------------------------- These dates are based on presently available schedules for the release of underlying source data in 2005. Each issue of Productivity and Costs contains a "Next release date" paragraph that readers should use to confirm the dates above. TECHNICAL NOTES Labor Hours: Hours data for the labor productivity and cost measures include hours for all persons working in the sector-wage and salary workers, the self- employed, and unpaid family workers. The primary source of hours and em- ployment 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. 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). The BLS Hours at Work survey, conducted for this purpose, was used for years prior to 2001. 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 for farm labor, nonfarm proprietors, and nonfarm unpaid family workers. Estimates of labor input for government enter prises 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. Output: Business sector output is an annual-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 78 percent of the value of GDP in 2000. Nonfarm business, which also excludes farming, accounted for about 77 percent of GDP in 2000. 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 BEA. 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 index 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. Durables include the following 3-digit NAICS industries: wood product manufacturing; nonmetallic mineral product manufacturing; primary metal manufacturing; fabricated metal product manufacturing; machinery manufac turing; computer and electronic product manufacturing; electrical equipment and appliance manufacturing; transportation equipment manufacturing; furniture and related product manufacturing; and miscellaneous manufacturing. Nondurables include: food manufacturing; beverage and tobacco product manufac- turing; textile mills; textile product mills; apparel manufacturing; leather and allied product manufacturing; paper manufacturing; printing and related support activities; petroleum and coal products manufacturing; chemical manu- facturing; and plastics and rubber products manufacturing. Nonfinancial corporate output is an annual-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 54 percent of the value of GDP in 2000. Productivity: These productivity measures describe the relationship between real output and the labor time involved in its production. They show the changes from period to period in the amount of goods and services produced per hour. Although these measures relate output to hours at work of all persons engaged in a sector, they do not measure the specific contribution of labor, capital, or any other factor of production. Rather, 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. 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 1. Business sector: Productivity, hourly compensation, unit labor costs, and prices, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit Unit non- Implicit and hour of of all tion per tion per labor labor pay- price quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) --------------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 122.7 142.2 115.9 143.2 115.2 116.7 113.4 115.5 II 123.2 142.9 116.0 144.4 115.2 117.2 113.6 115.9 III 124.7 144.3 115.7 145.0 115.0 116.3 115.7 116.1 IV 125.0 144.7 115.7 145.5 114.8 116.3 116.8 116.5 ANNUAL 123.9 143.5 115.8 144.5 115.0 116.6 114.9 116.0 2003 I 126.2 145.5 115.3 147.4 115.3 116.8 117.7 117.1 II 128.6 147.5 114.7 149.6 116.8 116.4 119.0 117.3 III 131.2 150.8 114.9 151.7 117.7 115.6 120.8 117.5 IV 132.0 152.3 115.4 153.2 118.7 116.0 120.7 117.8 ANNUAL 129.5 149.0 115.1 150.5 117.1 116.2 119.6 117.4 2004 I 133.3 154.3 115.8 154.2 118.4 115.7 122.9 118.4 II 134.2 155.8 116.1 r156.2 r118.6 r116.4 r124.4 119.4 III 135.0 r157.5 116.6 r157.7 r119.2 r116.8 r124.3 119.6 --------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 5.9 3.5 -2.3 4.9 3.5 -1.0 1.0 -0.3 II 1.7 2.1 0.4 3.4 -0.1 1.7 1.0 1.4 III 4.8 3.8 -1.0 1.6 -0.7 -3.1 7.3 0.7 IV 1.2 1.2 0.0 1.3 -0.6 0.0 3.8 1.4 ANNUAL 4.3 1.8 -2.4 3.2 1.5 -1.1 4.5 0.9 2003 I 3.9 2.2 -1.6 5.5 1.7 1.6 3.1 2.1 II 7.6 5.6 -1.9 6.1 5.4 -1.4 4.5 0.8 III 8.5 9.3 0.7 5.6 3.1 -2.6 6.3 0.7 IV 2.4 4.2 1.7 4.0 3.3 1.6 -0.4 0.8 ANNUAL 4.5 3.8 -0.7 4.1 1.8 -0.4 4.1 1.3 2004 I 3.9 5.3 1.3 2.8 -0.8 -1.1 7.4 2.1 II 2.9 3.9 1.0 r5.2 r0.5 r2.3 r5.0 3.3 III r2.4 r4.5 r2.0 r4.0 r2.1 1.5 0.0 0.9 --------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 4.9 0.8 -3.9 3.2 1.9 -1.6 6.6 1.2 II 4.0 1.1 -2.8 3.4 2.1 -0.6 3.5 0.9 III 4.9 2.8 -2.0 3.3 1.6 -1.6 5.0 0.8 IV 3.4 2.7 -0.7 2.8 0.5 -0.6 3.2 0.8 ANNUAL 4.3 1.8 -2.4 3.2 1.5 -1.1 4.5 0.9 2003 I 2.9 2.3 -0.6 2.9 0.1 0.0 3.8 1.4 II 4.4 3.2 -1.1 3.6 1.4 -0.7 4.7 1.3 III 5.3 4.5 -0.7 4.6 2.4 -0.6 4.4 1.3 IV 5.6 5.3 -0.3 5.3 3.4 -0.3 3.4 1.1 ANNUAL 4.5 3.8 -0.7 4.1 1.8 -0.4 4.1 1.3 2004 I 5.6 6.1 0.5 4.6 2.7 -0.9 4.4 1.1 II 4.4 5.6 1.2 r4.4 r1.5 r0.0 r4.5 1.7 III 2.9 4.4 1.5 r4.0 r1.2 r1.1 r2.9 1.8 --------------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor costs, and prices, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit Unit non- Implicit and hour of of all tion per tion per labor labor pay- price quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) --------------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 122.4 142.6 116.5 142.6 114.7 116.4 115.1 116.0 II 122.8 143.2 116.7 143.8 114.7 117.1 115.4 116.5 III 124.1 144.5 116.4 144.3 114.4 116.2 117.7 116.8 IV 124.6 145.0 116.4 144.7 114.3 116.1 118.9 117.2 ANNUAL 123.5 143.9 116.5 143.8 114.5 116.5 116.8 116.6 2003 I 125.8 145.9 116.0 146.6 114.7 116.6 119.6 117.7 II 127.8 147.8 115.6 148.7 116.1 116.3 120.4 117.8 III 130.6 151.1 115.7 150.9 117.1 115.5 122.3 118.0 IV 131.7 152.8 116.1 152.5 118.2 115.9 121.9 118.1 ANNUAL 129.0 149.4 115.8 149.7 116.5 116.1 121.1 117.9 2004 I 132.8 155.0 116.7 153.3 117.7 115.4 124.3 118.7 II 134.1 156.5 116.7 r155.5 r118.0 r115.9 r125.7 119.6 III 134.7 r158.2 117.4 r156.9 r118.5 r116.5 r126.0 120.0 --------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 6.9 4.0 -2.7 5.5 4.1 -1.4 1.6 -0.3 II 1.1 1.7 0.6 3.4 -0.1 2.3 1.0 1.8 III 4.5 3.6 -0.9 1.5 -0.8 -2.9 8.0 1.0 IV 1.6 1.4 -0.2 1.2 -0.6 -0.3 4.2 1.3 ANNUAL 4.4 1.8 -2.5 3.3 1.6 -1.1 4.7 1.0 2003 I 3.7 2.4 -1.3 5.3 1.5 1.6 2.4 1.9 II 6.7 5.3 -1.4 5.7 5.0 -1.0 2.9 0.5 III 9.0 9.3 0.3 6.1 3.6 -2.7 6.3 0.6 IV 3.1 4.6 1.4 4.4 3.6 1.2 -1.2 0.3 ANNUAL 4.4 3.8 -0.6 4.1 1.7 -0.4 3.7 1.1 2004 I 3.7 5.7 2.0 2.0 -1.6 -1.6 8.0 2.0 II 3.9 4.2 0.3 r5.9 r1.1 r1.9 r4.6 2.9 III r1.8 r4.2 r2.4 3.6 r1.8 r1.8 r1.2 1.6 --------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 5.1 0.9 -4.0 3.2 2.0 -1.8 6.7 1.2 II 4.0 1.0 -2.9 3.5 2.2 -0.5 3.4 0.9 III 4.8 2.6 -2.1 3.4 1.7 -1.3 5.2 1.0 IV 3.5 2.7 -0.8 2.9 0.6 -0.6 3.7 1.0 ANNUAL 4.4 1.8 -2.5 3.3 1.6 -1.1 4.7 1.0 2003 I 2.7 2.3 -0.5 2.9 0.0 0.1 3.9 1.5 II 4.1 3.2 -0.9 3.4 1.2 -0.7 4.4 1.2 III 5.2 4.6 -0.7 4.6 2.4 -0.6 3.9 1.1 IV 5.6 5.4 -0.2 5.4 3.4 -0.2 2.5 0.8 ANNUAL 4.4 3.8 -0.6 4.1 1.7 -0.4 3.7 1.1 2004 I 5.6 6.2 0.6 4.5 2.6 -1.0 3.9 0.8 II 4.9 6.0 1.0 r4.6 r1.7 r-0.3 r4.4 1.5 III 3.1 4.7 1.5 r4.0 r1.2 r0.8 r3.1 1.7 --------------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 143.8 130.5 90.7 144.1 115.9 100.2 II 145.7 131.8 90.4 147.0 117.2 100.8 III 147.8 132.4 89.5 148.6 117.8 100.5 IV 148.8 131.3 88.2 149.9 118.3 100.7 ANNUAL 146.5 131.5 89.7 147.4 117.3 100.6 2003 I 151.0 131.3 87.0 155.7 121.8 103.1 II 152.1 130.1 85.6 158.5 123.8 104.2 III 156.0 131.5 84.3 161.6 125.5 103.6 IV 157.2 133.5 84.9 163.9 127.0 104.2 ANNUAL 154.1 131.6 85.4 159.9 124.5 103.8 2004 I 158.3 135.5 85.6 162.2 124.5 102.5 II 161.5 137.8 85.3 r164.9 r125.2 r102.1 III r163.3 r139.3 85.3 r166.7 r126.0 r102.1 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 10.0 2.5 -6.9 14.2 12.7 3.8 II 5.4 4.0 -1.3 8.2 4.5 2.6 III 5.9 1.7 -3.9 4.5 2.1 -1.3 IV 2.8 -3.1 -5.7 3.5 1.6 0.7 ANNUAL 7.0 -0.6 -7.1 6.7 5.0 -0.3 2003 I 6.0 0.1 -5.6 16.6 12.3 10.0 II 2.9 -3.6 -6.3 7.4 6.7 4.4 III 10.6 4.3 -5.7 8.1 5.6 -2.2 IV 3.3 6.2 2.8 5.7 4.9 2.3 ANNUAL 5.1 0.1 -4.8 8.5 6.1 3.2 2004 I 2.7 6.2 3.4 -4.1 -7.4 -6.6 II 8.3 6.7 -1.4 r6.8 r2.0 r-1.4 III r4.6 r4.5 r-0.1 r4.6 r2.7 r0.0 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 6.6 -3.4 -9.4 4.1 2.8 -2.4 II 7.3 -1.1 -7.9 7.0 5.6 -0.3 III 8.0 0.9 -6.6 8.2 6.5 0.2 IV 6.0 1.2 -4.5 7.5 5.1 1.4 ANNUAL 7.0 -0.6 -7.1 6.7 5.0 -0.3 2003 I 5.0 0.6 -4.2 8.1 5.1 2.9 II 4.4 -1.3 -5.4 7.9 5.6 3.3 III 5.5 -0.6 -5.8 8.8 6.5 3.1 IV 5.6 1.7 -3.8 9.4 7.3 3.5 ANNUAL 5.1 0.1 -4.8 8.5 6.1 3.2 2004 I 4.8 3.2 -1.5 4.2 2.3 -0.6 II 6.2 5.9 -0.3 r4.0 r1.1 r-2.0 III r4.7 r5.9 r1.2 r3.2 r0.4 r-1.5 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 161.4 152.6 94.6 142.2 114.4 88.1 II 163.9 154.7 94.4 145.2 115.8 88.6 III 167.0 155.9 93.4 146.4 116.1 87.7 IV 170.5 156.1 91.5 147.7 116.6 86.6 ANNUAL 165.7 154.8 93.5 145.4 115.7 87.7 2003 I 173.6 156.6 90.2 154.9 121.1 89.2 II 175.0 155.1 88.7 157.9 123.3 90.2 III 181.5 158.3 87.2 161.2 125.1 88.8 IV 183.3 161.9 88.3 163.4 126.5 89.1 ANNUAL 178.3 158.0 88.6 159.3 124.0 89.3 2004 I 185.2 165.7 89.5 160.4 123.1 86.6 II 188.7 168.3 89.2 r163.2 r123.9 r86.5 III r190.9 170.9 89.5 r164.8 r124.5 r86.3 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 11.7 2.8 -8.0 8.4 7.0 -2.9 II 6.3 5.5 -0.7 8.6 5.0 2.2 III 7.9 3.3 -4.3 3.5 1.1 -4.1 IV 8.7 0.4 -7.6 3.6 1.7 -4.7 ANNUAL 8.3 -0.7 -8.3 5.6 3.9 -2.5 2003 I 7.4 1.4 -5.6 20.8 16.4 12.5 II 3.1 -3.9 -6.8 8.0 7.3 4.7 III 15.8 8.4 -6.3 8.7 6.1 -6.1 IV 4.1 9.4 5.1 5.5 4.7 1.3 ANNUAL 7.6 2.0 -5.2 9.6 7.1 1.8 2004 I 4.3 9.9 5.4 -7.1 -10.4 -10.9 II 7.7 6.3 -1.3 r7.4 r2.5 r-0.3 III r4.8 r6.4 r1.6 r4.0 r2.1 r-0.8 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 7.1 -4.9 -11.2 3.3 2.0 -3.6 II 8.3 -1.8 -9.3 6.0 4.7 -2.0 III 9.2 1.2 -7.3 7.0 5.2 -2.0 IV 8.6 3.0 -5.2 6.0 3.7 -2.4 ANNUAL 8.3 -0.7 -8.3 5.6 3.9 -2.5 2003 I 7.6 2.6 -4.6 8.9 5.9 1.2 II 6.8 0.3 -6.1 8.7 6.5 1.9 III 8.7 1.5 -6.6 10.1 7.7 1.3 IV 7.5 3.7 -3.5 10.6 8.5 2.9 ANNUAL 7.6 2.0 -5.2 9.6 7.1 1.8 2004 I 6.7 5.8 -0.8 3.5 1.7 -3.0 II 7.9 8.5 0.6 r3.4 r0.5 r-4.1 III 5.2 8.0 r2.7 r2.3 r-0.5 r-2.8 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics Table 5. Nondurable manufacturing sector: Productivity, hourly compensation, and unit labor costs, seasonally adjusted Real Year Output per Hours Compensa- compensa- Unit and hour of of all tion per tion per labor quarter all persons Output persons hour (1) hour (2) costs -------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 126.1 107.2 85.0 146.2 117.6 116.0 II 127.5 107.8 84.5 148.8 118.7 116.7 III 128.5 107.7 83.8 151.2 119.9 117.6 IV 126.9 105.7 83.3 152.5 120.4 120.2 ANNUAL 127.3 107.1 84.2 149.6 119.1 117.6 2003 I 128.2 105.3 82.1 155.9 121.9 121.6 II 129.0 104.4 81.0 158.3 123.6 122.7 III 130.4 104.3 80.0 161.1 125.0 123.5 IV 131.5 105.0 79.9 163.3 126.5 124.2 ANNUAL 129.8 104.8 80.7 159.6 124.2 123.0 2004 I 132.0 105.5 79.9 163.9 125.9 124.2 II 134.8 107.2 79.6 r166.2 r126.1 r123.3 III r136.6 r107.9 79.0 r168.4 r127.2 r123.3 -------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 7.4 2.0 -5.1 26.5 24.9 17.7 II 4.6 2.2 -2.3 7.2 3.6 2.5 III 3.2 -0.2 -3.3 6.6 4.1 3.2 IV -4.9 -7.3 -2.5 3.7 1.8 9.0 ANNUAL 4.8 -0.6 -5.2 9.3 7.5 4.3 2003 I 4.2 -1.5 -5.5 9.1 5.1 4.7 II 2.3 -3.2 -5.5 6.3 5.7 3.9 III 4.4 -0.4 -4.6 7.2 4.7 2.7 IV 3.4 2.6 -0.7 5.6 4.8 2.2 ANNUAL 2.0 -2.2 -4.1 6.7 4.3 4.6 2004 I 1.6 1.8 0.2 1.5 -2.0 0.0 II 8.7 6.9 -1.7 r5.6 r0.8 r-2.9 III r5.4 r2.4 -2.8 r5.4 r3.5 r0.0 -------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 5.0 -1.7 -6.4 6.2 5.0 1.2 II 5.3 -0.4 -5.4 9.2 7.9 3.7 III 6.2 0.5 -5.4 10.9 9.2 4.5 IV 2.5 -0.9 -3.3 10.6 8.2 8.0 ANNUAL 4.8 -0.6 -5.2 9.3 7.5 4.3 2003 I 1.7 -1.8 -3.4 6.6 3.6 4.8 II 1.2 -3.1 -4.2 6.4 4.2 5.2 III 1.5 -3.1 -4.5 6.6 4.3 5.0 IV 3.6 -0.7 -4.1 7.1 5.1 3.3 ANNUAL 2.0 -2.2 -4.1 6.7 4.3 4.6 2004 I 2.9 0.2 -2.7 5.2 3.3 2.2 II 4.5 2.7 -1.7 r5.0 r2.1 r0.5 III r4.7 r3.4 -1.3 r4.5 r1.7 r-0.2 -------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics Table 6. Nonfinancial corporations: Productivity, hourly compensation, unit labor costs, unit profits, and prices, seasonally adjusted Output Hourly Real Unit Total Unit Implicit Year per all- compen- hourly Unit non- unit pro- price and employee Employee sation compen- labor labor costs fits deflator quarter hour Output hours (1) sation(2) costs costs(6) (7) (8) (4) ---------------------------------------------------------------------------------------------------------- Indexes 1992=100 2002 I 126.3 149.7 118.5 139.9 112.6 110.8 114.0 111.6 89.1 109.6 II 127.9 151.4 118.4 141.3 112.7 110.5 112.9 111.2 94.7 109.7 III 129.2 152.3 117.9 142.1 112.7 110.0 112.7 110.7 95.7 109.4 IV 130.2 153.1 117.6 142.9 112.8 109.7 112.3 110.4 101.8 109.6 ANNUAL 128.4 151.6 118.1 141.5 112.7 110.2 113.0 111.0 95.4 109.6 2003 I 131.3 153.4 116.8 144.1 112.7 109.8 113.2 110.7 99.2 109.7 II 134.1 156.1 116.4 146.3 114.2 109.1 111.4 109.7 111.0 109.8 III 137.2 159.4 116.2 148.5 115.3 108.2 111.1 109.0 118.7 109.9 IV 138.9 162.0 116.7 150.0 116.2 108.0 110.5 108.7 123.2 110.0 ANNUAL 135.4 157.7 116.5 147.3 114.6 108.8 111.5 109.5 113.2 109.8 2004 I 138.9 163.2 117.5 150.9 115.9 108.6 109.5 108.8 128.1 110.6 II r140.1 r164.9 117.7 r152.9 r116.1 r109.2 r109.9 109.4 r134.3 111.6 III 141.5 167.2 118.1 154.4 116.7 109.1 110.3 109.4 134.6 111.7 ---------------------------------------------------------------------------------------------------------- Percent change from previous quarter at annual rate(5) 2002 I 7.9 5.7 -2.0 1.7 0.4 -5.8 -7.3 -6.2 90.8 -1.6 II 4.9 4.8 -0.1 4.0 0.4 -0.9 -3.7 -1.7 27.4 0.2 III 4.1 2.3 -1.7 2.3 0.0 -1.7 -0.9 -1.5 4.5 -1.0 IV 3.4 2.1 -1.2 2.2 0.3 -1.1 -1.4 -1.2 28.1 0.9 ANNUAL 4.4 1.5 -2.8 3.1 1.4 -1.3 -0.2 -1.0 15.4 0.1 2003 I 3.2 0.6 -2.5 3.6 -0.2 0.4 3.0 1.1 -10.0 0.1 II 9.1 7.4 -1.5 6.2 5.5 -2.6 -6.2 -3.6 56.4 0.5 III 9.4 8.8 -0.6 6.2 3.6 -3.0 -1.0 -2.5 30.8 0.2 IV 5.0 6.7 1.6 4.2 3.4 -0.8 -2.1 -1.2 16.1 0.4 ANNUAL 5.4 4.0 -1.3 4.0 1.7 -1.3 -1.3 -1.3 18.7 0.2 2004 I 0.1 2.9 2.8 2.3 -1.3 2.1 -3.5 0.6 16.9 2.1 II r3.3 r4.2 0.9 r5.5 r0.7 r2.2 r1.3 1.9 r21.1 3.8 III 4.2 5.6 1.3 4.0 2.1 -0.3 1.4 0.2 0.9 0.3 ---------------------------------------------------------------------------------------------------------- Percent change from corresponding quarter of previous year 2002 I 3.4 -1.1 -4.3 3.2 2.0 -0.2 4.0 0.9 1.5 1.0 II 4.2 0.8 -3.2 3.4 2.1 -0.8 0.6 -0.4 8.4 0.2 III 5.0 2.5 -2.4 3.1 1.4 -1.8 -1.7 -1.8 20.6 -0.4 IV 5.1 3.7 -1.3 2.5 0.3 -2.4 -3.3 -2.7 34.3 -0.4 ANNUAL 4.4 1.5 -2.8 3.1 1.4 -1.3 -0.2 -1.0 15.4 0.1 2003 I 3.9 2.5 -1.4 3.0 0.1 -0.9 -0.8 -0.8 11.3 0.1 II 4.9 3.1 -1.7 3.6 1.4 -1.3 -1.4 -1.3 17.2 0.1 III 6.2 4.7 -1.5 4.5 2.3 -1.6 -1.4 -1.6 23.9 0.4 IV 6.6 5.8 -0.8 5.0 3.1 -1.5 -1.6 -1.6 20.9 0.3 ANNUAL 5.4 4.0 -1.3 4.0 1.7 -1.3 -1.3 -1.3 18.7 0.2 2004 I 5.9 6.4 0.5 4.7 2.8 -1.1 -3.2 -1.7 29.1 0.8 II r4.4 r5.6 1.2 r4.5 r1.6 r0.1 r-1.3 -0.3 r21.1 1.6 III 3.1 4.8 1.7 4.0 1.2 0.8 -0.7 0.4 13.5 1.6 ---------------------------------------------------------------------------------------------------------- See footnotes following Table 6. December 7, 2004 r=revised Source: Bureau of Labor Statistics SOURCES: Output data are from the Bureau of Economic Analysis and the Census Bureau of the U.S. Department of Commerce; the Bureau of Labor Statistics, U.S. Department of Labor; and the Federal Reserve Board. Compensation and hours data are from the Bureau of Labor Statistics and the Bureau of Economic Analysis. RELIABILITY: Productivity and cost measures are regularly revised as more complete information becomes available. The measures are first published within 40 days of the close of the reference period; revisions appear 30 days later, and second revisions after an additional 60 days. In the business sector, the third publication (second revision) of a quarterly index of output per hour of all persons has differed from the initial value by between -1.4 and +1.4 index points approximately 95 percent of the time. This interval is based on the performance of this measure between the fourth quarter of 1995 and the second quarter of 2004. Footnotes, Tables 1-6 (1) Wages and salaries of employees plus employers' contributions for social insurance and private benefit plans. Except for nonfinancial corporations, where there are no self-employed, data also include an estimate of wages, salaries, and supplemental payments for the self- employed. (2) The change for recent quarters is based on the Consumer Price Index for all urban consumers (CPI-U). The trend from 1978-2003 is based on the Consumer Price Index research series (CPI-U-RS). (3) Unit nonlabor payments include profits, consumption of fixed capital, taxes on production and imports less subsidies, net interest and miscellaneous payments, business current transfer payments, rental income of persons, and the current surplus of government enterprises. (4) Current dollar output divided by the output index. (5) Quarterly changes: Percent change compounded at annual rate from the original data rather than index numbers. Annual changes: Percent change between annual average levels. (6) Unit nonlabor costs include consumption of fixed capital, taxes on production and imports less subsidies, net interest and miscellaneous payments, and business current transfer payments. (7) Total unit costs are the sum of unit labor and nonlabor costs. (8) Unit profits include corporate profits before tax with inventory valuation and capital consumption adjustments.