Productivity and Costs by Industry: Manufacturing and Mining Industries -- 2016

For release 10:00 a.m. (EDT) Tuesday, May 9, 2017	                                                 USDL-17-0445

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Labor productivity rose in 31 of the 90 NAICS 4-digit manufacturing and mining industries in 2016, the U.S. 
Bureau of Labor Statistics reported today. This was fewer than in 2015 when labor productivity rose in 41 
industries. Output and hours worked also increased in fewer industries in 2016 than in the previous year.
Unit labor costs, which reflect the total labor costs required to produce a unit of output, rose in 64 of the 86 
NAICS 4-digit manufacturing industries and in 1 of the 4 mining industries. Eighteen industries with 
productivity increases recorded declines in unit labor costs.

Trends in Labor Productivity in 2016

*	Labor productivity increased in 5 of the 21 NAICS 3-digit manufacturing industries in 2016, 
as output increased in only 2 industries, and hours worked rose in 11 industries.
*	Labor productivity increased in 27 of the 86 NAICS 4-digit manufacturing industries in 2016, 
as output increased in 31 industries, and hours worked fell in 44 industries.
*	Productivity rose fastest in the agricultural chemicals industry, where output increased by 7.7 
percent and hours worked declined 5.9 percent.

*	Labor productivity increased in both measured NAICS 3-digit mining industries in 2016. 
Productivity rose 5.4 percent in oil and gas extraction and rose 4.3 percent in mining, except 
oil and gas. Both industries saw output decline less than hours worked. 
*	Productivity increased in all 4 of the NAICS 4-digit mining industries measured. Output fell 
in 3 of the industries, but hours worked declined at an even greater rate. 

Trends in Unit Labor Costs in 2016

*	Employers face increased unit labor costs when hourly compensation gains outpace 
productivity. For NAICS 3-digit industries, unit labor costs increased in 18 of the 21 
manufacturing industries.
*	Of the 64 NAICS 4-digit manufacturing industries that had increases in unit labor costs, 
productivity growth was negative in almost four-fifths of them.

*	Unit labor costs declined in both measured NAICS 3-digit mining industries as productivity 
growth outpaced hourly compensation growth.
*	Unit labor costs fell in 3 of the 4 NAICS 4-digit mining industries measured, all 3 of which 
posted declining hourly compensation and increasing labor productivity. The only industry 
with an increase in unit labor costs was nonmetallic mineral mining and quarrying, which 
had more growth in hourly compensation than in productivity.

Long-term trends in Labor Productivity and Unit Labor Costs 

Over the entire 1987-2016 period, labor productivity rose in 85 of the 90 manufacturing and 
mining industries measured. 
*	Productivity growth in the 1987-2016 period was associated with output rising in 59 
manufacturing and mining industries, while hours worked increased in only 13.
*	Productivity increased in 48 industries in the more recent 2007-2016 period that 
included a severe recession. 
*	The 2007-2016 productivity increases are predominantly the result of a decline in hours 
worked, rather than an increase in output, as 72 industries experienced decreasing hours 
worked in this period compared to 19 industries that documented increasing output. 

From 1987 to 2016, unit labor costs increased in 79 of the 90 manufacturing and mining industries.
*	Among the NAICS 4-digit industries, unit labor costs fell in 11 of the 86 manufacturing 
industries from 1987 to 2016. None of the 4 mining industries saw declines in unit labor costs.
*	From 2007 to 2016, unit labor costs decreased in 10 of the 86 manufacturing industries. 
Computer and peripheral equipment was the only industry with declines in both labor 
productivity and unit labor costs, as hourly compensation fell faster than productivity. In mining, 
oil and gas extraction saw a decline in unit labor costs while the other 3 industries had gains.

Computer and peripheral equipment had the largest productivity gains and the largest unit labor cost 
declines during the 1987 to 2007 period, as well as for the whole 1987 to 2016 interval. However, 
between 2007 and 2016, magnetic media manufacturing and reproducing posted the greatest 
productivity growth, while leather and hide tanning and finishing saw the sharpest drop in unit labor 

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Last Modified Date: May 09, 2017