Productivity and Costs, Third Quarter 2018, Revised



Transmission of material in this release is embargoed until                                  USDL 18-1910
8:30 a.m. (EST) Thursday, December 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
                                    Third Quarter 2018, Revised
                                
Nonfarm business sector labor productivity increased 2.3 percent during the third quarter of 2018, the 
U.S. Bureau of Labor Statistics reported today, as output increased 4.1 percent and hours worked 
increased 1.8 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) 
From the third quarter of 2017 to the third quarter of 2018, productivity increased 1.3 percent, reflecting 
a 3.7-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 0.9 percent in the third quarter of 2018, 
reflecting a 3.1-percent increase in hourly compensation and a 2.3-percent increase in labor productivity. 
Unit labor costs also increased 0.9 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 increased 1.0 percent in the third quarter of 2018, as output 
increased 4.1 percent and hours worked increased 3.1 percent. Productivity increased 1.7 percent in the 
durable manufacturing sector, as output rose 5.2 percent and hours worked increased 3.5 percent. In the 
non-durable goods manufacturing sector, a 0.5-percent rise in productivity reflected a 2.9-percent 
increase in output and a 2.4-percent increase in hours worked. Over the last four quarters, total 
manufacturing sector productivity increased 1.4 percent, as output increased 3.6 percent and hours 
worked increased 2.1 percent. Unit labor costs in manufacturing decreased 1.2 percent in the third 
quarter of 2018 and also decreased 1.2 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 third-quarter 2018 measures of productivity and costs were announced for the nonfinancial 
corporate sector. Productivity increased at a 5.5-percent annual rate in the third quarter of 2018 and 
increased 1.9 percent over the last four quarters. Unit labor costs decreased 2.1 percent in the third 
quarter of 2018 and were unchanged (0.0 percent) over the last four quarters. Unit profits--a measure 
available only for the nonfinancial corporate sector--increased at a 14.4-percent annual rate in the third 
quarter of 2018. A four-quarter increase in unit profits of 11.1 percent is the largest since the first
quarter of 2012, when the measure increased 18.8 percent. (See tables A2 and 6.)

Revised measures

Measures released today are based on more recent source data than were available for the preliminary 
report. Regular updates of source data from the BLS, the Bureau of Economic Analysis (BEA), and the 
Board of Governors of the Federal Reserve System are reflected in data for the second and third quarters 
of 2018.        

Table B1 presents revised and previous productivity and related measures for the nonfarm business, 
business, and manufacturing sectors for the third quarter of 2018. Revised quarterly and annual series for 
all sectors in recent years appear in tables 1-6.

In the third quarter of 2018, nonfarm business labor productivity increased 2.3 percent--about the 
same as the preliminary estimate of 2.2 percent--as both output and hours worked increased at the same 
rates reported November 1. Unit labor costs were revised down 0.3 percentage point due primarily to a 
downward revision to hourly compensation. In the manufacturing sector, productivity increased 1.0 
percent rather than 0.5 percent as previously reported, as an upward revision to output was greater than 
an upward revision to hours worked. Unit labor costs were revised from a 0.9-percent increase to a 1.2-
percent decline for the third quarter of 2018--the combined effect of the upward revision to 
productivity and a downward revision to hourly compensation. 

Table B2 shows previous and revised productivity and related measures for the nonfarm business, 
business, manufacturing and nonfinancial corporate sectors for the second quarter of 2018.

In the second quarter of 2018, labor productivity, output, and hours worked were unrevised for the 
nonfarm business sector. Unit labor costs decreased 2.8 percent, rather than decreasing 1.0 percent as 
previously reported, due to a downward revision to hourly compensation. Productivity, output, and 
hours worked were also unrevised in the manufacturing sector. A large downward revision to 
manufacturing hourly compensation resulted in a similar downward revision to unit labor costs; after 
revision, unit labor costs fell 6.1 percent in the second quarter of 2018, in contrast to the 0.1 percent 
increase reported previously. In the nonfinancial corporate sector, productivity decreased 1.9 percent 
rather than 0.9 percent as reported November 1, due solely to a downward revision to output; hours 
were unrevised. Because hourly compensation was revised down by more than productivity, unit labor 
costs increased less than previously reported.  

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 fourth-quarter and annual averages 2018 
is scheduled to be released on Wednesday, February 6, 2019 at 8:30 a.m. (EST).


================================================================================================
Calendar year 2019 release dates for Productivity and Costs news releases are now available at 
www.bls.gov/schedule/news_release/prod2.htm.
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Table A1. Labor productivity growth and related measures - revised third-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           2.3          4.1      1.8        3.1           1.1           0.9
                        A year ago                 1.3          3.7      2.3        2.2          -0.4           0.9
                        
Business                Previous quarter           1.9          4.1      2.1        2.8           0.8           0.9
                        A year ago                 1.2          3.6      2.4        2.2          -0.4           1.0
                        
Manufacturing           Previous quarter           1.0          4.1      3.1       -0.2          -2.2          -1.2
                        A Year ago                 1.4          3.6      2.1        0.2          -2.4          -1.2
 Durable
 manufacturing          Previous quarter           1.7          5.2      3.5        0.3          -1.7          -1.4
                        A year ago                 1.7          4.1      2.4        0.8          -1.8          -0.9
 Nondurable
 manufacturing          Previous quarter           0.5          2.9      2.4       -1.4          -3.3          -1.9
                        A year ago                 1.4          3.0      1.6       -1.1          -3.6          -2.4
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Table A2. Labor productivity growth and related measures - preliminary third-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         Previous quarter              5.5          6.6      1.1        3.2           1.2           -2.1
corporate            A year ago                    1.9          4.2      2.2        2.0          -0.6            0.0
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Table B1. Labor productivity growth and related measures - revised and previously published third-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                    2.3          4.1      1.8        3.1           1.1           0.9
                   Previously published            2.2          4.1      1.8        3.5           1.4           1.2
                                                        
Business                Revised                    1.9          4.1      2.1        2.8           0.8           0.9
                   Previously published            1.9          4.1      2.1        3.2           1.2           1.2
                        
Manufacturing           Revised                    1.0          4.1      3.1       -0.2          -2.2          -1.2
                   Previously published            0.5          3.4      2.9        1.5          -0.5           0.9

 Durable                Revised                    1.7          5.2      3.5        0.3          -1.7          -1.4
 manufacturing     Previously published            1.5          4.9      3.4        1.8          -0.2           0.3
                        
 Nondurable             Revised                    0.5          2.9      2.4       -1.4          -3.3          -1.9
 manufacturing     Previously published           -0.1          1.9      2.0        0.8          -1.2           0.9
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Table B2. Labor productivity growth and related measures - revised and previously published second-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                    3.0          5.0      2.0        0.0          -1.6           -2.8
                   Previously published            3.0          5.0      2.0        1.9           0.3           -1.0
                        
Business                Revised                    3.6          5.1      1.5        0.5          -1.1           -2.9
                   Previously published            3.6          5.1      1.5        2.4           0.7           -1.1
                        
Manufacturing           Revised                    1.2          2.6      1.4       -5.0          -6.5           -6.1
                   Previously published            1.2          2.6      1.4        1.3          -0.3            0.1
 Durable
 manufacturing          Revised                    0.3          2.0      1.7       -4.8          -6.4           -5.1
                   Previously published            0.3          2.0      1.7        1.1          -0.6            0.8
 Nondurable
 manufacturing          Revised                    2.4          3.3      0.8       -5.4          -6.9           -7.6
                   Previously published            2.4          3.3      0.8        1.7           0.0           -0.7

Nonfinancial            Revised                    -1.9         0.8      2.8        0.0          -1.7            1.9
corporate          Previously published            -0.9         1.9      2.8        1.8           0.2            2.7
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Last Modified Date: December 06, 2018