Research >> Economics
3Q2017 Productivity Growth increased 3.0%
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Nonfarm business sector labor productivity increased 3.0 percent during the third quarter of 2017, the U.S. Bureau of Labor Statistics reported today, as output increased 4.1 percent and hours worked increased 1.1 percent. The productivity increase was the largest since the third quarter of 2014, when output per hour increased 4.4 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2016 to the third quarter of 2017, productivity increased 1.5 percent, reflecting a 3.0-percent increase in output and a 1.5-percent increase in hours worked.
Unit labor costs in the nonfarm business sector declined 0.2 percent in the third quarter of 2017, as the 3.0-percent increase in productivity was greater than a 2.7-percent increase in hourly compensation. Unit labor costs decreased 0.7 percent over the last four quarters.
Manufacturing sector labor productivity fell 4.4 percent in the third quarter of 2017, as output decreased 1.1 percent and hours worked increased 3.5 percent. This was the largest quarterly decline in manufacturing sector productivity since the fourth quarter of 2008 (-5.4 percent). Productivity decreased 4.7 percent in the durable goods manufacturing sector and 4.4 percent in the nondurable goods sector in the third quarter of 2017. Over the last four quarters, total manufacturing sector productivity increased 0.3 percent, as output increased 1.5 percent and hours worked increased 1.2 percent. Unit labor costs in manufacturing increased 4.8 percent in the third quarter of 2017 and rose 0.3 percent from the same quarter a year ago.
Preliminary third-quarter 2017 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity was unchanged in the third quarter of 2017 and increased 0.2 percent over the last four quarters. Unit labor costs increased 2.5 percent in the third quarter of 2017 and increased 0.6 percent over the last four quarters.
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 2017.
Table B1 presents revised and previous productivity and related measures for the nonfarm business, business, and manufacturing sectors for the third quarter of 2017. Revised quarterly and annual series for all sectors in recent years appear in tables 1-6. Historical annual indexes for the manufacturing sectors appear in appendix tables 1-3.
In the third quarter of 2017, nonfarm business labor productivity increased 3.0 percent--the same as the preliminary estimate; output and hours worked were both revised up by 0.3 percentage points. Unit labor costs were revised from a 0.5-percent increase to a 0.2-percent decline for the third quarter of 2017. In the manufacturing sector, productivity decreased 4.4 percent rather than declining 5.0 percent as previously reported, as an upward revision to output was greater than an upward revision to hours worked. Unit labor costs increased 4.8 percent, a smaller increase than the preliminary estimate.
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 2017.
In the second quarter of 2017, nonfarm business labor productivity, output, and hours were unrevised. Unit labor costs decreased 1.2 percent, rather than increasing 0.3 percent as previously reported. In the manufacturing sector, productivity was revised up 0.2 percentage point to an increase of 3.6 percent, due to a slight upward revision to output. Unit labor costs decreased 1.2 percent instead of a decline of 1.0 percent. Second-quarter 2017 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity increased 3.3 percent rather than 4.4 percent as reported on November 2. Unit labor costs decreased 3.0 percent rather than the preliminary estimate of a 2.3-percent decline.
There were historical revisions to manufacturing output and all related measures--including productivity--back to 1987 to reflect revised output indexes constructed by the BLS using an improved methodology for estimating the sectoral output of manufacturing industries. A new technique for benchmarking output estimates to the Economic Census was an important component of the revisions, and the period between Census years 2007 and 2012 saw the largest revisions. For more complete information see www.bls.gov/mfp/sectoraloutputrevisions.htm.
Revisions to labor productivity mirrored revisions to output; hours worked were not revised. A large upward revision to the change in the annual manufacturing productivity index from 2008 to 2009 was more than offset by downward revisions in adjacent years, and the average annual rate of growth from 2007 to 2012 was revised down from 2.9 percent to 1.2 percent. The average annual rate of manufacturing productivity growth during the current business cycle from 2007 to 2016 was revised down from 1.6 percent to 0.9 percent, and the long-term rate for the entire series from 1987 to 2016 is now 2.8 percent, compared to the previous estimate of 3.2 percent.
Posted: December 6, 2017 Wednesday 08:30 AM