Productivity and Costs, First Quarter 2018, Revised


Transmission of material in this release is embargoed until                                   USDL 18-0941
8:30 a.m. (EDT) Wednesday, June 6, 2018

Technical information: (202) 691-5606   Productivity@bls.gov  www.bls.gov/lpc
Media contact:         (202) 691-5902   PressOffice@bls.gov

                                        PRODUCTIVITY AND COSTS
                                     First Quarter 2018, Revised 

Nonfarm business sector labor productivity increased 0.4 percent during the first quarter of 2018, the 
U.S. Bureau of Labor Statistics reported today, as output increased 2.7 percent and hours worked 
increased 2.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) 
From the first quarter of 2017 to the first quarter of 2018, productivity increased 1.3 percent, reflecting a 
3.6-percent increase in output and a 2.3-percent increase in hours worked. (See tables A1 and 2.)

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of 
hours worked by all persons, including employees, proprietors, and unpaid family workers. 

Unit labor costs in the nonfarm business sector increased 2.9 percent in the first quarter of 2018, 
reflecting a 3.3-percent increase in hourly compensation and a 0.4-percent increase in productivity. Unit 
labor costs increased 1.3 percent over the last four quarters. (See tables A1 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 1.2 percent in the first quarter of 2018, as output 
increased 1.7 percent and hours worked increased 2.9 percent. Productivity declined 0.8 percent in the 
durable manufacturing sector, as output rose 3.3 percent and hours worked increased 4.2 percent. In the 
non-durable goods manufacturing sector, a 0.9-percent decrease in productivity reflected no change in 
output and a 0.9-percent increase in hours worked. Over the last four quarters, total manufacturing sector 
productivity increased 0.3 percent, as output increased 2.0 percent and hours worked increased 1.7 
percent. Unit labor costs in manufacturing increased 5.2 percent in the first quarter of 2018 and rose 2.5 
percent from the same quarter a year ago. (See tables A1 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. 

Preliminary first-quarter 2018 measures were announced today for the nonfinancial corporate sector. 
Productivity increased 1.9 percent in the first quarter of 2018 and increased 1.7 percent over the last four 
quarters. Unit profits of nonfinancial corporations fell at a 9.5 percent annual rate in the first quarter of 
2018 and increased 1.7 percent over the last four quarters. (See tables A2 and 6.) 

Revised measures

Measures released today are based on more recent source data than were available for the 
preliminary report. Table B1 presents previous and revised productivity and related measures for 
the business, nonfarm business, and manufacturing sectors for the first quarter of 2018. 

In the first quarter of 2018, nonfarm business productivity rose 0.4 percent, rather than 0.7 percent as 
reported May 3, the combined effect of a 0.1-percentage point downward revision to output and a 0.2-
percentage point upward revision to hours worked. Unit labor costs were revised up--due primarily to 
the downward revision to productivity--and increased 2.9 percent. In the manufacturing sector, 
productivity was revised down from an increase of 0.5 percent to a decrease of 1.2 percent, due almost 
entirely to a 1.6-percentage point downward revision to output. Hourly compensation was revised up 0.7 
percentage point. As a result of the downward revision to productivity and the upward revision to hourly 
compensation, unit labor costs increased 5.2 percent rather than 2.7 percent as previously reported.  

Table B2 shows previous and revised productivity and related measures for the business, nonfarm 
business, manufacturing, and nonfinancial corporate sectors for the fourth quarter of 2017.

In the fourth quarter of 2017, labor productivity in the nonfarm business sector increased at the same 
0.3-percent rate reported May 3. Hourly compensation was revised up, and increased 2.9 percent. As a result, 
unit labor costs increased 2.5 percent in the fourth quarter of 2017, rather than increasing 2.1 percent. 
Total manufacturing sector productivity increased 4.3 percent in the fourth quarter of 2017, a smaller 
increase than previously reported. Hourly compensation was revised up 2.3 percentage points; and when 
combined with the small downward revision to productivity this led to an upward revision to unit labor 
costs, which rose 0.2 percent rather than decreasing 2.2 percent.  

Manufacturing output and all related measures--including labor productivity--were revised back as far as 
2008 to incorporate revised BLS measures of sectoral output in manufacturing industries published May 
16, 2018 in Multifactor Productivity Trends In Manufacturing - 2016. The period most affected was 
from 2014 to 2016, with the average annual rate of productivity growth over this period revised down 
from -0.1 percent to -0.6 percent. The average annual rate of manufacturing productivity growth from 
2007 to 2017 was unrevised at 0.7 percent, well below the long-term rate from 1987 to 2017 of 2.7 
percent. (See tables 3, 4, and 5, and appendix tables 1, 2, and 3.) For more complete information see 
www.bls.gov/mfp/sectoraloutputrevisions.htm.

In the nonfinancial corporate sector, productivity rose 1.2 percent in the fourth quarter of 2017 rather 
than increasing 0.8 percent as previously reported, due solely to an upward revision to output. Annual 
average productivity in the nonfinancial corporate sector increased 1.0 percent in 2017, the same as the
preliminary estimate. Unit profits rose 2.2 percent in the fourth quarter of 2017, rather than the 2.6 
percent increase reported May 3. (See table 6.)

Complete annual and quarterly data series can be found on the Productivity and Costs home page: 
www.bls.gov/lpc/#data.
______________

The preliminary Productivity and Costs news release for second-quarter 2018 is scheduled to be 
released on Wednesday, August 15, 2018 at 8:30 a.m. (EDT)


=========================================================================================================================
Table A1. Labor productivity growth and related measures  revised first-quarter 2018
(percent change from previous quarter at annual rate and from same quarter a year ago)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Percent change from:    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business         Previous quarter          0.4          2.7      2.3        3.3            -0.2          2.9
                         A year ago                1.3          3.6      2.3        2.6             0.3          1.3
Business                 Previous quarter          0.7          2.6      1.8        3.9             0.4          3.1
                         A year ago                1.3          3.5      2.2        2.7             0.4          1.4
Manufacturing            Previous quarter         -1.2          1.7      2.9        3.9             0.4          5.2
                         A year ago                0.3          2.0      1.7        2.9             0.6          2.5
Durable manufacturing    Previous quarter         -0.8          3.3      4.2        5.8             2.2          6.7
                         A year ago                0.8          2.0      1.2        4.5             2.2          3.6
Nondurable manufacturing Previous quarter         -0.9          0.0      0.9        0.0            -3.4          0.9
                         A year ago               -0.5          2.0      2.5       -0.1            -2.3          0.4
=========================================================================================================================

=========================================================================================================================
Table A2. Labor productivity growth and related measures  preliminary first-quarter 2018
(percent change from previous quarter at annual rate and from same quarter a year ago)


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector               Percent change from:       productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfinancial corporate  Previous quarter           1.9          4.2      2.2        3.8             0.3          1.8
                        A year ago                 1.7          4.1      2.3        2.6             0.4          0.9
=========================================================================================================================

=========================================================================================================================
Table B1. Labor productivity growth and related measures  revised and previously published first-quarter 2018
(percent change from previous quarter at annual rate) 


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business         Revised                   0.4           2.7     2.3        3.3            -0.2          2.9
                         Previously published      0.7           2.8     2.1        3.4            -0.1          2.7
Business                 Revised                   0.7           2.6     1.8        3.9             0.4          3.1
                         Previously published      1.1           2.8     1.6        3.9             0.4          2.8
Manufacturing            Revised                  -1.2           1.7     2.9        3.9             0.4          5.2
                         Previously published      0.5           3.3     2.8        3.2            -0.3          2.7
Durable manufacturing    Revised                  -0.8           3.3     4.2        5.8             2.2          6.7
                         Previously published      1.3           5.5     4.2        4.2             0.7          2.9
Nondurable manufacturing Revised                  -0.9           0.0     0.9        0.0            -3.4          0.9
                         Previously published      0.6           1.1     0.5        1.0            -2.4          0.4
=========================================================================================================================

=========================================================================================================================
Table B2. Labor productivity growth and related measures  revised and previously published fourth-quarter 2017
(percent change from previous quarter at annual rate) 


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm business         Revised                   0.3           3.7     3.3        2.9            -0.4           2.5
                         Previously published      0.3           3.7     3.3        2.4            -0.8           2.1
Business                 Revised                  -0.4           3.6     4.1        2.1            -1.2           2.6
                         Previously published     -0.4           3.6     4.1        1.7            -1.6           2.1
Manufacturing            Revised                   4.3           5.4     1.1        4.5             1.1           0.2
                         Previously published      4.5           5.6     1.1        2.2            -1.1          -2.2
Durable manufacturing    Revised                   4.7           5.1     0.4        7.0             3.5           2.2
                         Previously published      5.1           5.5     0.4        2.3            -1.0          -2.6
Nondurable manufacturing Revised                   3.5           5.8     2.2        0.0            -3.2          -3.4
                         Previously published      3.5           5.8     2.2        2.3            -1.0          -1.1
Nonfinancial corporate   Revised                   1.2           3.9     2.7        2.6            -0.7           1.4
                         Previously published      0.8           3.5     2.7        2.0            -1.3           1.2
=========================================================================================================================

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Last Modified Date: June 06, 2018