Research >> Economics
3Q2016 Productivity Growth Increased 3.1%
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Nonfarm business sector labor productivity increased at a 3.1-percent annual rate during the third quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 3.6 percent and hours worked increased 0.5 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) The quarterly increase in nonfarm business sector labor productivity was the first increase after three consecutive declines in the measure. From the third quarter of 2015 to the third quarter of 2016, productivity was unchanged.
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 are based on more recent source data than were available for the preliminary report.
Unit labor costs in the nonfarm business sector increased 0.7 percent in the third quarter of 2016, reflecting a 3.8-percent increase in hourly compensation and a 3.1-percent increase in productivity. Unit labor costs increased 3.0 percent over the last four quarters.
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 0.4 percent in the third quarter of 2016, as output and hours worked increased 0.6 percent and 0.3 percent, respectively. Output per hour increased 3.0 percent in the durable goods manufacturing sector and decreased 3.0 percent in the nondurable goods sector. Over the last four quarters, manufacturing sector productivity was unchanged, as output and hours worked both declined 0.1 percent. Unit labor costs in manufacturing increased 3.3 percent in the third quarter of 2016 and rose 3.6 percent from the same quarter a year ago. Hourly compensation increased 3.7 percent in the third quarter of 2016.
Preliminary third-quarter 2016 measures of productivity and costs were announced for the nonfinancial corporate sector. Productivity increased 7.1 percent in the third quarter of 2016--the largest gain since an 8.8-percent gain in the first quarter of 2010--as output increased 8.3 percent and hours worked increased 1.1 percent. Over the last four quarters, productivity increased 1.6 percent. Unit labor costs decreased 2.7 percent in the third quarter of 2016 and increased 0.9 percent over the last four quarters.
Revised measures
In the third quarter of 2016, nonfarm business labor productivity was not revised; output and hours were both revised up by 0.2 percentage points. Unit labor costs were revised up from a 0.3-percent increase to a 0.7-percent increase, due solely to an upward revision to hourly compensation growth from 3.4 percent to 3.8 percent. In the manufacturing sector, productivity increased 0.4 percent rather than increasing 1.0 percent as previously reported, due both to a downward revision to output and an upward revision to hours. Unit labor costs increased 3.3 percent, a larger increase than the preliminary estimate.
In the second quarter of 2016, nonfarm business labor productivity, output, and hours were unrevised. Unit labor costs increased 6.2 percent, rather than increasing 3.9 percent as previously reported, the result of a large upward revision to hourly compensation. In the manufacturing sector, labor productivity was not revised. Hourly compensation was revised up to an 8.0 percent increase from a previous estimate of 6.2 percent. As a result, unit labor costs were revised up, and increased 8.5 percent instead of 6.8 percent.
Second-quarter 2016 measures of productivity and costs were revised for the nonfinancial corporate sector. Productivity decreased 1.2 percent rather than decreasing 2.3 percent as reported on November 3, due to a 1.1-percentage point upward revision to output.
Posted: December 6, 2016 Tuesday 08:30 AM