Research >> Economics
4Q2016 Productivity Growth Increased 1.3%
|
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. Annual average productivity increased 0.2 percent from 2015 to 2016.
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.
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.
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.
Posted: March 8, 2017 Wednesday 08:30 AM