Productivity and Costs, Fourth Quarter and Annual Averages 2016, Revised



Transmission of material in this release is embargoed until     USDL 17-0298                  
8:30 a.m. (EST) Wednesday, March 8, 2017

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                        PRODUCTIVITY AND COSTS
        Fourth Quarter and Annual Averages 2016, Revised

Nonfarm business sector labor productivity increased at a 1.3-percent annual 
rate during the fourth quarter of 2016, the U.S. Bureau of Labor Statistics 
reported today, as output increased 2.4 percent and hours worked increased 1.0 
percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the fourth quarter of 2015 to the fourth quarter 
of 2016, productivity increased 1.0 percent, reflecting increases in output 
and hours worked of 2.2 percent and 1.2 percent, respectively. (See table A1.) 
Annual average productivity increased 0.2 percent from 2015 to 2016. (See 
table C1.) 

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. Measures released today were based on 
more recent source data than were available for the preliminary report.

Unit labor costs in the nonfarm business sector increased 1.7 percent in the 
fourth quarter of 2016, reflecting a 3.0-percent increase in hourly 
compensation and a 1.3-percent increase in productivity. Unit labor costs 
increased 2.0 percent over the last four quarters. (See tables A1 and 2.) 


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         Historical Revisions to Productivity and Costs Data

Data in this release reflect the annual benchmark revision of BLS Current 
Employment Statistics program data on nonfarm employment and hours, and the 
revised seasonal adjustment of those data. The data also reflect an 
improvement in the methodology for estimating hours worked. See Revised 
measures.

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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 increased 2.0 percent in the fourth 
quarter of 2016, as output increased 1.6 percent and hours worked decreased 
0.4 percent. Output per hour increased 1.5 percent in the durable goods 
manufacturing sector and 2.7 percent in the nondurable goods sector. Over the 
last four quarters, manufacturing sector productivity increased 0.5 percent, 
as output increased 0.5 percent and hours worked were unchanged. (See tables 
A1, 3, 4, and 5.)  Unit labor costs in manufacturing increased 2.4 percent in 
the fourth quarter of 2016 and rose 2.1 percent from the same quarter a year 
ago. Hourly compensation increased 4.4 percent in the fourth quarter of 2016.

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. 

Revised measures

Quarterly and annual measures of hours and related series–including 
productivity–were revised historically for all major sectors. The revisions 
incorporate revised Current Employment Statistics (CES) program data published 
February 3, 2017. From 2012 to 2016, the data were subject to revision as a 
result of annual benchmarking of CES data and revised seasonal adjustment of 
those data. Prior to 2012, there were small revisions due to CES coverage 
changes affecting selected industries. Revisions to hours data also reflect an 
improvement to methodology for estimating hours worked, including the 
incorporation of detailed industry ratios of hours worked to hours paid, 
provided by the National Compensation Survey; the historical revisions due to 
this methodological change affected quarterly data back to 1989 and annual 
data back to 1990. (For more information see www.bls.gov/lpc/hwhpnew.htm.) 
Index measures related to hours show full historical revisions because the 
2009 base year values were revised. In addition to revisions to hours data, 
third quarter, fourth quarter, and annual average data for 2016 were revised 
to incorporate regular updates of source data on output and compensation. 

Revised and previous measures for the fourth quarter of 2016 are shown in 
table B1 for the business, nonfarm business, and manufacturing sectors. In the 
fourth quarter of 2016, nonfarm business productivity was not revised, 
increasing at the same 1.3-percent rate reported February 2; both output and 
hours worked were revised up slightly to rates of 2.4 percent and 1.0 percent, 
respectively. Unit labor costs were not revised, increasing at the same 1.7-
percent rate as previously reported.

Manufacturing productivity increased 2.0 percent rather than 0.7 percent in 
the fourth quarter of 2016, reflecting both an upward revision to output and a 
downward revision to hours. Because the upward revision to productivity was 
larger than an upward revision to hourly compensation, manufacturing unit 
labor costs increased 2.4 percent, rather than the 3.3-percent rate reported 
in the preliminary release. (See table B1.) 

In the third quarter of 2016, nonfarm business productivity growth was revised 
down slightly to an increase of 3.3 percent, due solely to a small upward 
revision to hours. Unit labor costs increased 0.7 percent, more than 
previously reported, reflecting a downward revision to productivity and a 0.4-
percentage point upward revision to hourly compensation. In the manufacturing 
sector, productivity was unchanged from the second quarter to the third 
quarter of 2016, as previously reported. Unit labor costs were revised up and 
increased 4.1 percent, rather than 3.3 percent as previously reported, 
reflecting an upward revision to hourly compensation. (See table B2.) 
Nonfinancial corporate sector productivity increased 6.3 percent in the third 
quarter of 2016, slightly lower than previously reported, with the revision 
due solely to an upward revision to hours. (See table A2.)

Table C1 presents annual average changes for the most recent 5 years for the 
nonfarm business sector and the total manufacturing sector. Annual average 
changes in productivity, output, and hours for the nonfarm business sector in 
2016 were the same as the preliminary estimates: productivity grew 0.2 
percent, output increased 1.7 percent, and hours worked increased 1.5 percent. 
Productivity increased at an average annual rate of 0.6 percent over the last 
5 years (2011 to 2016), well below the long-term rate of 2.1 percent from 1947 
to 2016. 

Unit labor costs in the nonfarm business sector rose 2.6 percent in 2016, 
reflecting increases of 2.9 percent in hourly compensation and 0.2 percent in 
productivity. Real hourly compensation, which takes into account changes in 
consumer prices, increased 1.6 percent in 2016. In each of the last 3 years 
(2014, 2015, and 2016), real hourly compensation growth has outpaced 
productivity growth; prior to 2014, the last year in which real hourly 
compensation had grown faster than productivity was 2000.

In the manufacturing sector, productivity increased 0.3 percent in 2016, 
similar to the 0.2-percent rate in 2015; in both years productivity was 
revised down due to an upward revision to hours worked. Manufacturing 
productivity increased at an average annual rate of 0.5 percent over the last 
5 years (2011 to 2016), which is well below the growth rate of 3.2 percent 
from 1987 to 2016. Unit labor costs increased 2.7 percent in 2016, rather than 
2.6 percent as reported February 2. (See table C1.)

Quarterly and annual data for all sectors from 2014 to 2016 appear in tables 
1-6. Full historical measures can be found on the Productivity and Costs home 
page, www.bls.gov/lpc/#data.
______________  






The preliminary Productivity and Costs news release for first-quarter 2017 is 
scheduled to be released on Thursday, May 4, 2017 at 8:30 a.m. (EDT).



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Table A1. Labor productivity growth and related measures – revised fourth-quarter 2016
(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          1.3           2.4      1.0         3.0           -0.4          1.7
                        A year ago                1.0           2.2      1.2         3.0            1.2          2.0
                        
Business                Previous quarter          2.0           2.3      0.3         3.9            0.4          1.9
                        A year ago                1.2           2.3      1.1         3.2            1.3          2.0
                        
Manufacturing           Previous quarter          2.0           1.6     -0.4         4.4            0.9          2.4
                        A Year ago                0.5           0.5      0.0         2.6            0.8          2.1
 
 Durable                Previous quarter          1.5           1.4     -0.1         4.2            0.7          2.6
 Manufacturing          A year ago                1.3           1.0     -0.2         2.7            0.9          1.4
  
 Nondurable             Previous quarter          2.7           1.7     -1.0         4.8            1.3          2.0
 Manufacturing          A year ago               -0.6          -0.2      0.3         2.4            0.5          2.9
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Table A2. Labor productivity growth and related measures – revised and previously published third-quarter 2016 
 (percent change from previous quarter at annual rate)
         
 
                                                 Labor                   Hours    Hourly         Real hourly    Unit labor
 Sector                                          productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------  
 Nonfinancial          Revised                    6.3           7.8      1.5         3.9            2.2         -2.2    
 Corporations    Previously published             6.5           7.8      1.2         4.1            2.4         -2.2
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Table B1. Labor productivity growth and related measures – revised and previously published fourth-quarter 2016
(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                  1.3           2.4      1.0         3.0           -0.4          1.7
                   Previously published           1.3           2.2      0.9         3.0           -0.4          1.7
                        
Business                 Revised                  2.0           2.3      0.3         3.9            0.4          1.9
                   Previously published           2.0           2.2      0.2         3.9            0.4          1.8
                        
Manufacturing            Revised                  2.0           1.6     -0.4         4.4            0.9          2.4
                   Previously published           0.7           0.8      0.0         4.1            0.6          3.3
 
 Durable                 Revised                  1.5           1.4     -0.1         4.2            0.7          2.6
 Manufacturing     Previously published           0.1           0.7      0.7         3.9            0.4          3.8
  
 Nondurable              Revised                  2.7           1.7     -1.0         4.8            1.3          2.0
 Manufacturing     Previously published           1.8           0.8     -1.0         4.3            0.8          2.4
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Table B2. Labor productivity growth and related measures – revised and previously published third-quarter 2016
(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                  3.3           4.2      0.8         4.1            2.4          0.7
                   Previously published           3.5           4.2      0.6         3.7            2.1          0.2
                        
Business                 Revised                  3.7           4.3      0.6         4.3            2.7          0.6
                   Previously published           3.9           4.3      0.4         4.0            2.3          0.0
                        
Manufacturing            Revised                  0.0           0.7      0.7         4.1            2.4          4.1
                   Previously published           0.0           0.6      0.5         3.4            1.7          3.3
  
 Durable                 Revised                  2.1           2.3      0.2         4.3            2.6          2.2
 Manufacturing     Previously published           2.1           2.2      0.1         3.8            2.1          1.7
  
 Nondurable              Revised                 -2.7          -1.2      1.5         3.8            2.1          6.6
 Manufacturing     Previously published          -2.7          -1.5      1.3         2.6            1.0          5.5
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Table C1. Labor productivity growth and related measures – annual average changes: 2012-2016


                                                Labor                   Hours    Hourly         Real hourly    Unit labor
Sector                  Year                    productivity   Output   worked   compensation   compensation   costs
-------------------------------------------------------------------------------------------------------------------------
Nonfarm Business        2016                      0.2           1.7      1.5         2.9            1.6          2.6
                        2015                      0.9           3.1      2.1         2.9            2.8          2.0
                        2014                      0.8           3.0      2.2         2.8            1.1          2.0    
                        2013                      0.3           2.0      1.7         1.2           -0.3          0.9
                        2012                      0.9           3.1      2.2         2.6            0.5          1.7
                        
Manufacturing           2016                      0.3           0.3      0.0         3.0            1.7          2.7
                        2015                      0.2           1.2      1.0         2.4            2.3          2.2
                        2014                      0.1           1.7      1.5         2.8            1.1          2.7
                        2013                      0.1           1.0      0.8         0.2           -1.3          0.0
                        2012                      1.7           4.1      2.3         1.7           -0.4          0.0       
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Last Modified Date: March 08, 2017