Economic News Release

International Comparison of Manufacturing Productivity and Unit Labor Costs Trends News Release




Internet address: http://www.bls.gov    USDL 08-0261
Technical information: (202) 691-5654   For Release: 10:00 A.M. EST
Media contact: (202) 691-5902           Thursday, February 28, 2008


INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT 
LABOR COST TRENDS 2006, REVISED


    Manufacturing labor productivity increased in 2006 in 15 of 
the 16 economies compared by the U.S. Department of Labor's Bureau 
of Labor Statistics.  (See chart 1.)  The Republic of Korea had the 
largest productivity increase of 10.8 percent, while Germany and 
Taiwan followed with increases of 7.1 and 6.9 percent, respectively.  
The United States productivity increase of 2.0 percent placed it 
twelfth among the 16 economies compared, while Canada was the only 
economy with a decline in productivity (-0.1 percent).
       
    Over the 2000-2006 period, of the 16 economies studied, only 
Korea, Sweden, and Taiwan had greater productivity growth than the 
United States.  Average annual growth rates for selected measures 
are shown in tables A and B.
       
    The data presented for the United States differ from those 
appearing in BLS Productivity and Costs news releases.  (See 
technical notes.)  


PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 1. Percent change in 
manufacturing output per hour, 2005-2006

-2-

    Manufacturing unit labor costs, expressed in national currency 
units, declined in nine of the economies and increased in seven. The 
change for the United States was +0.5 percent.  (See chart 2.)
    
    However, expressed in U.S. dollars, unit labor costs declined in 
six of the economies and increased in ten.  Declines in the dollar's 
exchange rate reversed the direction of movement in three countries.  
The reversal was largest for Korea, from a decline (-3.6 percent) in 
unit labor costs in national currency to an almost equivalent 
increase in unit labor costs expressed in U.S. dollars.  This 
difference can be explained by the strong appreciation of the won 
relative to the U.S. dollar.


PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2 Percent change in 
manufacturing unit labor cost, 2005-2006

-3-

                   Table A. Output per hour, hourly compensation, unit labor costs, and related measures
                                      Manufacturing, 16 countries or areas, 2005-2006

                                                      Percent change

      ---------------------------------------------------------------------------------------------------------------
                            Output                                        Total   Hourly  Unit Labor Costs
      Country                 per             Total    Employ-  Average  compen-  compen- National    U.S.   Exchange
      or area                Hour    Output   hours     ment     hours   sation   sation  currency  dollars   rate(1)
      ---------------------------------------------------------------------------------------------------------------


      United States           2.0      2.9      0.9     -0.5      1.4      3.4      2.5      0.5      0.5       --

      Canada                 -0.1     -1.0     -0.9     -1.0      0.1      1.0      1.9      2.0      9.0      6.8
      Australia               0.3     -1.3     -1.5     -1.2     -0.4      4.1      5.7      5.4      4.1     -1.2
      Japan                   1.9      4.3      2.4      1.5      0.8      0.9     -1.4     -3.2     -8.4     -5.3
      Korea, Republic of     10.8      8.4     -2.1     -0.4     -1.7      4.5      6.8     -3.6      3.5      7.3
      Taiwan                  6.9      7.2      0.3      1.1     -0.8      2.5      2.1     -4.4     -5.6     -1.2

      Belgium                 2.2      2.7      0.5     -1.1      1.6      2.5      2.1     -0.1      0.8      0.9
      Denmark                 5.1      5.4      0.3     -0.2      0.5      3.4      3.1     -2.0     -1.1      0.9
      France                  3.7      1.6     -2.0     -2.0      0.0      0.5      2.6     -1.0     -0.1      0.9
      Germany                 7.1      5.8     -1.2     -0.9     -0.3      2.9      4.1     -2.8     -1.9      0.9
      Italy                   1.4      3.7      2.3      1.2      1.0      4.2      1.8      0.4      1.3      0.9
      Netherlands             3.1      2.3     -0.8     -0.8      0.1      2.0      2.8     -0.3      0.6      0.9
      Norway                  3.3      4.4      1.0      1.1     -0.1      5.6      4.5      1.2      1.7      0.5
      Spain                   2.7      2.9      0.1     -0.2      0.4      3.2      3.0      0.3      1.2      0.9
      Sweden                  5.9      5.2     -0.7     -0.7      0.0      3.0      3.8     -2.0     -0.7      1.3
      United Kingdom          4.5      1.4     -2.9     -2.6     -0.3      3.8      6.9      2.3      3.6      1.3
      ---------------------------------------------------------------------------------------------------------------
      (1) Value of foreign currency relative to the U.S. dollar.


Additional data available
    Annual indexes of these variables are estimated for the time 
period 1950-2006 and are available at the Bureau of Labor 
Statistics, Division of Foreign Labor Statistics website at 
http://www.bls.gov/fls/home.htm.  However, for analytical purposes, 
the international comparisons in this release go back to 1979.
    
    For further information, contact the Office of Productivity and 
Technology by phone at 202-691-5654, by e-mail at flspr@bls.gov, or 
by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE, 
Room 2150, Washington, DC 20212. 

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Manufacturing productivity, output, and labor input
    Manufacturing productivity increased between 2 and 6 percent in 
2006 in most of the compared economies.  The United States increase 
was at the lower end of this interval with a growth of 2.0 percent.  
This was below the U.S. average annual increases during the previous 
periods displayed in Table B.  Korea led in manufacturing 
productivity growth (+10.8 percent), followed by Germany and Taiwan.  
Manufacturing productivity increased by only 0.3 percent in 
Australia and by 1.4 percent in Italy, while Canada had a slight 
decline in productivity.  (See tables A and B.)
    
    Manufacturing output increased in 14 of the 16 economies in 2006. 
Korea and Taiwan were the leaders in the growth of output.  In 2006, 
growth in manufacturing output in Germany, Denmark and Norway was 
noticeably higher than their average annual rates of increase over 
the 1979-2006 period.  The U.S. increase of 2.9 percent was almost 
the same as its average annual increase since 1979.
    
    While 14 of the economies had increases in output in 2006, 8 
economies had reductions in total hours worked in manufacturing.  
The United Kingdom had the greatest decline (-2.9 percent) in hours 
in 2006, followed by Korea (-2.1 percent) and France (-2.0 percent).  
Total hours worked increased in the United States by 0.9 percent, 
and by over 2 percent in Japan and Italy.
    
    For the period 2000-2006, total hours worked in manufacturing 
declined for all 16 economies.  The United Kingdom had the greatest 
average annual decline of 4.4 percent, followed by the United 
States, with an average annual decline of 3.2 percent.
    
    Manufacturing employment declined in 12 of the 16 economies in 
2006.  The United Kingdom had the largest decline in employment 
(-2.6 percent), while Japan had the greatest increase (+1.5 percent).  
The United States was close to the middle of the range with a change 
of -0.5 percent.    
    
    The United Kingdom and the United States experienced the steepest 
average annual declines in manufacturing employment of 4.3 and 3.2 
percent, respectively, for the 2000-2006 period.  
    
    Six of the sixteen economies experienced decreases in average 
hours worked in 2006, eight registered increases, and two had no 
change.  This compares to 13 economies with declining average annual 
manufacturing hours over the 2000-2006 period.  Korea and Taiwan had 
the greatest declines in average hours worked in 2006.  Belgium had 
the largest increase in average hours worked (+1.6 percent) and the 
United States followed with a growth of 1.4 percent, which was 
higher than the U.S. average annual increase during any previous 
period displayed in Table B.

-5-

Manufacturing hourly compensation and unit labor costs
    Total labor compensation in manufacturing increased in all 16 
economies in 2006, from 0.5 percent in France to 5.6 percent in 
Norway.  For most, the increases were between 2 and 4 percent.  U.S. 
compensation rose by 3.4 percent, which was slightly below the 
average annual increase since 1979.  (See tables A and B.)



    Hourly compensation in manufacturing increased in 15 of the 16 
economies in 2006.  The greatest increases were in the United 
Kingdom (+6.9 percent) and Korea (+6.8 percent).  Hourly 
compensation decreased only in Japan in 2006.  The U.S. increase of 
2.5 percent in hourly compensation was substantially below its 
average annual increase since 1979.  (See tables A and B.)

    Unit labor costs, expressed in national currencies, declined in 
nine economies in 2006, and increased in seven.  The largest 
increase occurred in Australia (+5.4 percent) and the greatest 
decline was in Taiwan (-4.4 percent).  Unit labor costs in U.S. 
manufacturing increased by 0.5 percent.

    Expressed in U.S. dollars, manufacturing unit labor costs 
increased in ten economies in 2006, and declined in six.  The unit 
labor costs of three economies, Korea, the Netherlands, and Belgium, 
went from decreases to increases when computed on a U.S. dollar 
basis.  This reversal happened because of the appreciation of their 
currencies versus the dollar.  Korea, with the greatest currency 
appreciation, experienced the greatest reversal, from -3.6 to +3.5 
percent.

    Movements in exchange rates often are the dominant force behind 
changes in comparative unit labor costs and international 
competitiveness.  In 2006, the U.S. dollar weakened against most of 
the currencies being compared.  The only exceptions were Japan, 
Australia, and Taiwan, where the currencies depreciated against the 
dollar.  This depreciation of the U.S. dollar against most 
currencies continues a trend that began after 2000.  In 2006, the 
dollar fell by 0.9 percent against the euro, following a decline of 
0.1 percent in 2005.

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                  Output per hour


      United States               r3.9         2.8         3.7         5.5        r4.6        r2.2        r2.0

      Canada                      r2.4         2.1         3.4         3.8        r0.8        r3.8       r-0.1
      Australia                    2.9         2.9         2.9         3.8         2.0         1.0         0.3
      Japan                       r3.7         3.8         3.3         3.4        r3.9        r6.5        r1.9
      Korea, Republic of            NA          NA         9.4        10.8         7.4         6.8        10.8
      Taiwan                       5.7         6.1         4.7         5.6         6.0         7.2         6.9

      Belgium                     r3.5         4.2         3.1        r3.0         2.8        r3.1        r2.2
      Denmark                      2.4         2.2         2.7         1.8        r2.8        r1.1        r5.1
      France                       3.8         3.6         3.8         4.6         3.4         4.3         3.7
      Germany (2)                  2.9         2.1         2.9         3.7        r3.6        r3.7        r7.1
      Italy                        1.7         2.8         2.7         0.9        -0.6        -0.1         1.4
      Netherlands                 r3.3        r3.2         3.7         3.3         3.1         3.5         3.1
      Norway                       2.0         1.9         0.1         1.4        r4.5        r3.5         3.3
      Spain                        2.5         3.3         3.1         0.8        r1.9        r1.6        r2.7
      Sweden                      r4.5        r2.1        r5.5        r6.8        r6.4         6.2        r5.9
      United Kingdom               3.6         4.1         3.1         2.2         4.4         3.6         4.5


                                                       Output


      United States               r2.8         2.2         3.6         5.4        r1.2        r1.0        r2.9

      Canada                       2.2         1.9         2.2         6.2       r-0.2        r1.6       r-1.0
      Australia                    1.4         1.6         0.8         2.6         0.7         0.2        -1.3
      Japan                       r2.7         4.7         0.4         1.2        r2.2        r5.2        r4.3
      Korea, Republic of           8.9        10.7         8.2         7.9         6.9         7.1         8.4
      Taiwan                       6.0         7.4         4.4         5.8         4.9         6.6         7.2

      Belgium                     r1.8         2.6         0.6        r2.9        r0.7       r-0.2        r2.7
      Denmark                     r1.1         1.3         2.1         1.7       r-0.3       r-3.1        r5.4
      France                       1.6         1.3         0.9         3.5         1.1         1.3         1.6
      Germany (2)                 r1.1         1.2        -1.0         2.2        r1.8        r1.4        r5.8
      Italy                        1.3         2.6         1.6         0.7        -0.8        -2.5         3.7
      Netherlands                  2.1         2.4         2.0         3.3         0.7         0.0         2.3
      Norway                       0.8        -0.5         0.7         1.4        r2.7        r4.5        r4.4
      Spain                        2.2         2.1         0.6         5.0        r1.5        r1.0        r2.9
      Sweden                       3.8        r1.7         3.8         7.4        r4.6        r4.6        r5.2
      United Kingdom               0.6         0.9         0.5         1.3        -0.3        -1.2        r1.4
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                    Total hours


      United States               -1.0        -0.6        -0.1        -0.1        -3.2        -1.2         0.9

      Canada                      -0.1        -0.2        -1.2         2.3       r-1.0       r-2.1       r-0.9
      Australia                   -1.4        -1.3        -2.0        -1.2        -1.2        -0.8        -1.5
      Japan                       -1.0         0.8        -2.8       r-2.1       r-1.7        -1.3        r2.4
      Korea, Republic of            NA          NA        -1.1        -2.6        -0.5         0.2        -2.1
      Taiwan                       0.2         1.2        -0.3         0.1        -1.0        -0.6         0.3

      Belgium                     -1.6        -1.6        -2.4        -0.1        -2.1        -3.2         0.5
      Denmark                    r-1.2        -1.0        -0.7        -0.1       r-3.0       r-4.2        r0.3
      France                      -2.1        -2.2        -2.8        -1.1        -2.2        -2.8        -2.0
      Germany (2)                 -1.7        -0.9        -3.8        -1.4        -1.7        -2.2       r-1.2
      Italy                       -0.4        -0.2        -1.0        -0.2        -0.2        -2.4         2.3
      Netherlands                 -1.2       r-0.9        -1.7         0.0        -2.3        -3.3        -0.8
      Norway                      -1.2        -2.3         0.6         0.0       r-1.7        r1.0        r1.0
      Spain                       -0.3        -1.2        -2.4         4.1       r-0.4       r-0.6        r0.1
      Sweden                     r-0.7       r-0.4       r-1.7        r0.5       r-1.7       r-1.5       r-0.7
      United Kingdom              -2.9        -3.1        -2.6        -0.9       r-4.4        -4.6       r-2.9


                                                     Employment


      United States               -1.1        -0.8        -0.5         0.0        -3.2        -0.6        -0.5

      Canada                      -0.2        -0.3        -1.5         2.2       r-0.9       r-1.1       r-1.0
      Australia                   -1.4        -1.3        -2.3        -1.1        -1.1        -1.7        -1.2
      Japan                       -0.7         1.0        -1.6        -2.0        -1.9        -0.8        r1.5
      Korea, Republic of            NA          NA        -0.8        -2.5         0.6         0.9        -0.4
      Taiwan                       0.8         2.0        -0.3         0.4         0.0         0.4         1.1

      Belgium                     -1.5        -1.6        -2.2        -0.6       r-1.7       r-1.2       r-1.1
      Denmark                     -1.1        -0.4        -1.2        -1.2       r-2.4       r-2.5       r-0.2
      France                      -1.6        -1.7        -2.5        -0.3        -1.8        -2.6        -2.0
      Germany (2)                 -1.3        -0.1        -4.2        -0.8        -1.4        -1.7       r-0.9
      Italy                       -0.7        -0.8        -1.9        -0.2         0.0        -1.7         1.2
      Netherlands                r-1.0       r-0.6        -1.6         0.1        -2.2        -3.0        -0.8
      Norway                      -1.2        -2.2         0.4         0.2       r-1.9        r0.1        r1.1
      Spain                        0.1        -0.7        -2.0         3.3        r0.7         1.0       r-0.2
      Sweden                      -1.4        -1.0        -3.5        r0.2       r-1.8       r-1.1        -0.7
      United Kingdom              -2.8        -2.9        -2.4        -1.4        -4.3        -4.5        -2.6
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                    Average hours


      United States                0.1         0.2         0.4        -0.1        -0.1        -0.6         1.4

      Canada                       0.1         0.1         0.3         0.1       r-0.1       r-1.1         0.1
      Australia                    0.0         0.0         0.3        -0.1        -0.1         0.9        -0.4
      Japan                       -0.3        -0.2        -1.3       r-0.1         0.2        -0.5         0.8
      Korea, Republic of            NA          NA        -0.2        -0.1        -1.1        -0.6        -1.7
      Taiwan                      -0.6        -0.8         0.0        -0.3        -1.0        -1.0        -0.8

      Belgium                     r0.0         0.0        -0.2         0.5       r-0.4       r-2.1        r1.6
      Denmark                    r-0.1        -0.5         0.6         1.1       r-0.7       r-1.8        r0.5
      France                      -0.5        -0.5        -0.3        -0.8        -0.4        -0.2         0.0
      Germany (2)                 -0.4        -0.9         0.4        -0.6       r-0.3       r-0.6       r-0.3
      Italy                        0.4         0.6         0.9         0.0        -0.2        -0.7         1.0
      Netherlands                 -0.1        -0.2         0.0        -0.1        -0.1        -0.4         0.1
      Norway                       0.0        -0.1         0.2        -0.2        r0.2        r0.9       r-0.1
      Spain                       -0.4        -0.5        -0.4         0.8       r-1.1       r-1.6        r0.4
      Sweden                      r0.7        r0.7        r1.9        r0.3        r0.0       r-0.4         0.0
      United Kingdom              -0.1        -0.2        -0.1         0.5        -0.2        -0.1       r-0.3


                                Total labor compensation(3): National currency basis


      United States                3.6         4.9         3.4         4.5         0.8         3.0         3.4

      Canada                      r4.6         6.5         2.4         5.2        r2.3        r2.6        r1.0
      Australia                     NA          NA         3.2         3.1        r4.2        r5.2        r4.1
      Japan                       r1.8         5.5         0.7        -1.0       r-1.6       r-0.4        r0.9
      Korea, Republic of          13.7        19.6        17.6         5.4         7.3         8.2         4.5
      Taiwan                       7.5        13.5         6.8         3.6         1.1         3.7         2.5

      Belgium                      2.7         4.4         1.3         1.9        r1.2        r0.2        r2.5
      Denmark                     r4.2         7.0         2.3         2.8        r1.7        r2.4        r3.4
      France                       3.6         7.3         1.7         1.7         0.3        -3.4         0.5
      Germany (2)                 r2.7         4.6         2.4         1.6        r0.5        -1.1        r2.9
      Italy                        6.4        11.4         3.9         2.6         2.7         0.5         4.2
      Netherlands                 r2.8        r3.2         2.7         3.4         1.5        -1.4         2.0
      Norway                       5.0         6.4         4.1         5.1        r3.0        r5.8        r5.6
      Spain                        6.9        10.1         5.5         5.6         3.3        r3.3        r3.2
      Sweden                      r5.4        r8.8        r1.9         5.3        r2.3        r1.9        r3.0
      United Kingdom               3.9         7.1         1.5         3.3         0.8       r-0.4        r3.8
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                  Hourly compensation(3): National currency basis


      United States                4.7         5.5         3.5         4.7         4.2         4.2         2.5

      Canada                      r4.7         6.8         3.6         2.9        r3.3        r4.9        r1.9
      Australia                     NA          NA         5.4         4.3        r5.4        r6.1        r5.7
      Japan                        2.8         4.6         3.6         1.2        r0.0        r0.8       r-1.4
      Korea, Republic of            NA          NA        18.9         8.1         7.8         8.0         6.8
      Taiwan                       7.3        12.1         7.1         3.4         2.1         4.4         2.1

      Belgium                      4.3         6.1         3.8         2.0        r3.4        r3.5         2.1
      Denmark                     r5.4         8.1         2.9         2.9        r4.9        r6.9        r3.1
      France                       5.9         9.8         4.6         2.8         2.5        -0.6         2.6
      Germany (2)                 r4.5         5.6         6.4         3.1        r2.3        r1.2        r4.1
      Italy                        6.8        11.6         5.0         2.8         2.9         3.0         1.8
      Netherlands                  4.0         4.1         4.5         3.4         3.9         2.0         2.8
      Norway                      r6.3         9.0         3.4         5.2        r4.8        r4.7        r4.5
      Spain                        7.2        11.4         8.2         1.4        r3.7        r3.9        r3.0
      Sweden                       6.2         9.1        r3.7        r4.8        r4.1        r3.4        r3.8
      United Kingdom               7.0        10.6         4.2         4.2         5.5        r4.4        r6.9


                                    Unit labor costs(3): National currency basis


      United States               r0.8         2.6        -0.2        -0.8       r-0.4        r1.9        r0.5

      Canada                      r2.3         4.6         0.3        -0.9        r2.4        r1.0        r2.0
      Australia                     NA          NA         2.4         0.5        r3.4        r5.1        r5.4
      Japan                      r-0.9         0.8         0.3        -2.2       r-3.7       r-5.4       r-3.2
      Korea, Republic of           4.4         8.1         8.7        -2.4         0.4         1.1        -3.6
      Taiwan                       1.5         5.6         2.3        -2.1        -3.6        -2.7        -4.4

      Belgium                     r0.8         1.8         0.7       r-0.9        r0.6        r0.4       r-0.1
      Denmark                     r3.0         5.7         0.2         1.1        r2.1        r5.7       r-2.0
      France                       2.0         5.9         0.7        -1.7        -0.8        -4.7        -1.0
      Germany (2)                 r1.6         3.3         3.4        -0.5       r-1.3       r-2.5       r-2.8
      Italy                        5.0         8.5         2.3         1.9         3.6         3.1         0.4
      Netherlands                  0.6        r0.8         0.7         0.1         0.7        -1.4        -0.3
      Norway                       4.2         6.9        r3.3         3.7         0.3        r1.2         1.2
      Spain                        4.6         7.8         4.9         0.5        r1.8        r2.3        r0.3
      Sweden                      r1.6        r6.9       r-1.8        -1.9       r-2.2       r-2.6       r-2.0
      United Kingdom               3.3         6.2         1.0         2.0        r1.1        r0.8        r2.3
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                       Unit labor costs(3): U.S. dollar basis


      United States               r0.8         2.6        -0.2        -0.8       r-0.4        r1.9        r0.5

      Canada                       2.4         4.6        -2.9        -2.4        r7.2        r8.5        r9.0
      Australia                     NA          NA         1.3        -4.2        r8.0        r8.8        r4.1
      Japan                       r1.5         4.6         9.4        -4.8       r-4.9       r-7.0       r-8.4
      Korea, Republic of           1.8         4.4         6.9        -9.5         3.2        13.1         3.5
      Taiwan                       1.8         8.5         2.7        -5.3        -4.2         1.1        -5.6

      Belgium                     r0.5         0.6         3.3       r-8.4        r5.9        r0.5        r0.8
      Denmark                     r2.5         4.1         2.2        -6.1        r7.5        r5.6       r-1.1
      France                       1.2         3.6         2.5        -8.4         4.4        -4.6        -0.1
      Germany (2)                 r2.2         4.5         5.9        -8.0        r3.9       r-2.4       r-1.9
      Italy                        2.6         5.0        -3.8        -3.1         9.0         3.2         1.3
      Netherlands                  1.1        r1.7         3.3        -7.6         6.0        -1.3         0.6
      Norway                       3.3         4.9         3.1        -2.9        r5.7        r5.9         1.7
      Spain                        2.0         3.8         0.8        -6.6        r7.2        r2.4        r1.2
      Sweden                     r-0.4        r3.8       r-5.4        -6.7        r1.5       r-4.2       r-0.7
      United Kingdom               2.7         4.5        -1.4         1.1         4.4        r0.1        r3.6


                                                  Exchange rates(4)


      United States                 --          --          --          --          --          --          --

      Canada                       0.1         0.0        -3.2        -1.6         4.6         7.4         6.8
      Australia                   -1.5        -3.2        -1.1        -4.7         4.4         3.6        -1.2
      Japan                        2.4         3.8         9.1        -2.7        -1.3        -1.8        -5.3
      Korea, Republic of          -2.5        -3.4        -1.7        -7.3         2.9        11.9         7.3
      Taiwan                       0.4         2.7         0.3        -3.3        -0.6         3.9        -1.2

      Belgium                     -0.3        -1.2         2.5        -7.6         5.3         0.1         0.9
      Denmark                     -0.5        -1.5         2.0        -7.1         5.3        -0.1         0.9
      France                      -0.8        -2.2         1.8        -6.8         5.3         0.1         0.9
      Germany (2)                  0.6         1.1         2.5        -7.5         5.3         0.1         0.9
      Italy                       -2.3        -3.3        -6.0        -4.9         5.3         0.1         0.9
      Netherlands                  0.5         0.9         2.6        -7.6         5.3         0.1         0.9
      Norway                      -0.9        -1.9        -0.3        -6.4         5.5         4.6         0.5
      Spain                       -2.5        -3.7        -3.9        -7.1         5.3         0.1         0.9
      Sweden                      -2.0        -2.9        -3.7        -4.9         3.7        -1.6         1.3
      United Kingdom              -0.5        -1.6        -2.4        -0.8         3.3        -0.7         1.3
      --------------------------------------------------------------------------------------------------------
      r=revised                                                  NA=data not available
      (1) Rates of change based on the compound rate method.
      (2) Data for years before 1991 pertain to the former West Germany.
      (3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
      (4) Value of foreign currency relative to the U.S. dollar.

-11-

Trade-weighted unit labor costs
    BLS constructs indexes of U.S. unit labor cost trends relative to 
a trade-weighted average of unit labor cost trends in the other 
economies to take account of differences in the relative importance 
of foreign economies to U.S. trade in manufactured goods.  Relative 
trade-weighted unit labor cost indexes are calculated on both a 
national currency and a U.S. dollar basis.  
    
    In this release, the relative U.S. trade-weighted indexes are 
estimated against 14 economies for which comparable data are 
available over the period of comparison; the indexes underlying this 
chart are shown in table C.
    
    Chart 3 begins in 1979, a year in which U.S. manufacturing output 
reached a business cycle peak.


PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 3. U.S. manufacturing 
unit labor cost relative to 14(1) other economies, 1979-2006 


    In the chart, the dotted line shows that, on a national currency 
basis, U.S. unit labor costs tended to fall more or increase less 
than unit labor costs in the other economies throughout this period.

    The solid line compares the unit labor costs on a U.S. dollar 
basis.  From 1979 to 1985, and again from 1995 to 2001, U.S. unit 
labor costs on a U.S. dollar basis generally rose more or declined 
less than in the other economies, due to the appreciation of the 
dollar.  Since 2001, relative U.S. unit labor costs declined with 
the weakening of the U.S. dollar. 

-12-

                              Table C. U.S. manufacturing unit labor
                          costs relative to 14(1) competitors, 1979-2006

                  ----------------------------------------------------------------
                                 Unit Labor Costs            Unit Labor Costs
                            National Currency Basis          U.S. Dollar Basis
                  Year      Own   Competitors'            Own   Competitors'   
                           Index     Index     Ratio     Index     Index     Ratio
                  ----------------------------------------------------------------

                  1979     100.0     100.0     100.0     100.0     100.0     100.0
                  1980     112.7     111.4     101.2     112.7     109.9     102.6
                  1981     117.6     120.8      97.4     117.6     108.8     108.1
                  1982     127.4     131.3      97.0     127.4     108.5     117.5
                  1983     122.7     133.8      91.7     122.7     106.6     115.1
                  1984     123.8     133.8      92.5     123.8     100.1     123.7
                  1985     126.2     136.3      92.6     126.2      98.1     128.6
                  1986     130.1     141.8      91.7     130.1     117.5     110.7
                  1987     125.4     145.0      86.5     125.4     134.2      93.4
                  1988     126.4     147.8      85.6     126.4     146.8      86.1
                  1989     129.4     151.7      85.2     129.4     148.7      87.0
                  1990     133.2     158.3      84.1     133.2     161.9      82.3
                  1991     136.7     166.6      82.1     136.7     171.6      79.7
                  1992     137.8     170.1      81.0     137.8     176.1      78.2
                  1993     136.7     170.9      80.0     136.7     168.7      81.0
                  1994     134.1     168.3      79.7     134.1     165.8      80.9
                  1995     131.6     170.0      77.4     131.6     175.3      75.1
                  1996     129.1     171.8      75.1     129.1     171.2      75.4
                  1997     127.1     169.4      75.0     127.1     157.2      80.8
                  1998     125.7     170.4      73.8     125.7     146.9      85.6
                  1999     124.4     167.0      74.5     124.4     147.0      84.6
                  2000     126.2     162.6      77.6     126.2     138.6      91.0
                  2001     127.7     168.2      75.9     127.7     134.9      94.7
                  2002     123.9     168.6      73.5     123.9     136.6      90.6
                  2003     124.7     168.1      74.2     124.7     153.0      81.5
                  2004     120.1     166.6      72.1     120.1     163.7      73.3
                  2005     122.4     165.0      74.2     122.4     167.4      73.1
                  2006     123.0     164.2      74.9     123.0     170.3      72.2
                  ----------------------------------------------------------------
                  (1) Australia has been omitted from this table because data are 
                      not available before 1990.


-13-

Technical Notes

With the exception of the United States, the comparisons in this 
release are based on data available to the Bureau of Labor 
Statistics as of the end of December 2007.   The United States data 
incorporate the BEA manufacturing output revisions of January 29, 
2008. 

Definitions. Labor productivity is defined as real output per hour 
worked. Although the labor productivity measure presented in this 
release relates output to the hours worked of persons employed in 
manufacturing, it does not measure the specific contributions of 
labor as a single factor of production. Rather, it reflects the 
joint effects of many influences, including new technology, capital 
investment, capacity utilization, energy use, and managerial skills, 
as well as the skills and efforts of the workforce.

Unit labor costs are defined as the cost of labor input required to 
produce one unit of output. They are computed as compensation in 
nominal terms divided by real output.  Unit labor costs can also be 
computed by dividing hourly compensation by output per hour, that 
is, by labor productivity.  

Methodology. BLS constructs trends of manufacturing labor 
productivity and unit labor costs from three basic aggregate 
measures: output, total labor hours, and total compensation. The 
hours and compensation measures, as well as the employment measures, 
refer to employees (wage and salary earners) in Belgium and Taiwan.  
For all other economies, the measures refer to all employed persons, 
including employees, self-employed persons, and unpaid family 
workers.  

In general, the measures relate to total manufacturing as defined by 
the International Standard Industrial Classification (ISIC). 
However, the measures for France include parts of mining. Data for 
the United States are in accordance with the North American Industry 
Classification System (NAICS 97), except compensation data before 
1987.  Canadian data are in accordance with NAICS 97 starting in 
1961.

The data for the most recent years are based on the United Nations 
System of National Accounts 1993 (SNA 93).  For earlier years, data 
were compiled according to previously used systems.

To obtain historical time series, BLS may link together data series 
which were compiled according to different accounting systems by 
national statistical offices.

Output. For most of the economies, the output measures are real 
value added in manufacturing, based on national accounts. However, 
output for Japan prior to 1970 and for the Netherlands prior to 1960 
are indexes of industrial production. The manufacturing value added 
measures for the United Kingdom are essentially identical to their 
indexes of industrial production.

Most economies now estimate manufacturing real output using moving 
price weights, as recommended by SNA 93.  However, many earlier time 
periods within the historical real output series have been estimated 
using fixed price weights, with the weights updated periodically 
(for example, every 5 or 10 years).  Taiwan and Korea still use 
fixed price weights to estimate real output.

-14-

Measures of real output also may differ among economies because of 
different approaches to quality adjustments.

For the United States, the output measure for the manufacturing 
sector is a chain-weighted index of real gross product originating 
(deflated value added) produced by the Bureau of Economic Analysis 
(BEA) of the U.S. Department of Commerce. For more information on 
the U.S. measure, see "Improved Estimates of Gross Product by 
Industry for 1947-98," Survey of Current Business, June 2000, pp. 
24-38 and "Gross Domestic Product by Industry for 1947-86. New 
Estimates Based on the North American Industry Classification 
System," Survey of Current Business, December 2005, pp. 70-84.

The U.S. manufacturing output series used for international 
comparisons differs from the manufacturing output series that BLS 
publishes as part of its major sector productivity and costs 
measures for the United States.  The international comparisons 
program uses a value added output concept, while the major sector 
series is on a sectoral output basis. Sectoral output is gross 
output less intra-sector sales and transfers. The U.S. major sector 
productivity and costs measures can be found at 
http://www.bls.gov/lpc/home.htm. For information on sectoral output, 
see "Measurement of productivity growth in U.S. manufacturing," 
Monthly Labor Review, July 1995, pp. 13-28.

Value added measures have been used for the international 
comparisons series because the data are more readily available from 
the economies' national accounts, whereas sectoral output would 
require a complex estimation procedure.  Even though BLS has 
determined that sectoral output is the correct concept for U.S. 
measures of productivity, there are other considerations that may 
make value added a better concept for international comparisons of 
labor productivity, such as differences among economies in the 
extent of vertical integration of industries.

Labor Input. For the most recent years, the term "hours" refers to 
hours worked.  For some earlier years, BLS uses other hours 
measures.  

For the United States, the employment and hours data series 
beginning with 1987 are taken from the NAICS-based manufacturing 
all-employed series published by BLS as part of the major sector 
productivity and cost measures.  For the period before 1987, these 
series are linked to NAICS-based, employees-only data from the 
Current Employment Statistics (CES) program. 

For most other economies, recent years' aggregate hours series are 
obtained from national statistical offices, usually from national 
accounts.  However, for some earlier years, BLS calculates the 
aggregate hours series using employment figures published with the 
national accounts, or other comprehensive employment series, and 
data on average hours worked.

Compensation (Labor Cost).  The compensation measures are from 
national accounts. Compensation includes employer expenditures for 
legally required insurance programs and contractual and private 
benefit plans, in addition to all payments made in cash or in kind 
directly to employees. When data for the self-employed are not 
available, total compensation is estimated by assuming the same 
average compensation for the self-employed as for employees.

-15-

Labor cost is defined as compensation plus employment taxes minus 
employment subsidies, i.e. the cost to employers of using labor. For 
most economies, labor cost is the same as compensation. However, for 
Australia, Canada, France, and Sweden, compensation is increased to 
account for important taxes on payroll or employment. For the United 
Kingdom, compensation is reduced between 1967 and 1991 to account 
for subsidies.

Data for Germany. German data prior to 1991 pertain to the former 
West Germany. The data series are linked in 1991.

Data for Australia. Australian data are published by fiscal years, 
which run from July 1 through June 30. The Australian Bureau of 
Statistics provides unpublished calendar-year data for real value 
added, employment, and hours worked. For compensation, BLS estimates 
calendar-year series using two-year moving averages of the data for 
fiscal years. Manufacturing compensation data are not available for 
years prior to 1990.

Data for Recent Years. The measures for recent years may be 
estimates based on various current indicators until national 
accounts and other preferred statistics become available.

Trade-Weighted Measures. The trade weights used to calculate the 
relative unit labor cost indexes of the United States and the other 
economies are based on the relative dollar value of U.S. trade in 
manufactured commodities (exports plus imports) with each economy in 
2006.  The trade data are compiled by the U.S. Census Bureau.

The following weights were used for the entire period for which 
trade-weighted unit labor cost measures are produced:


                Weight                            Weight

Canada          36.10              Germany        10.38
Japan           16.44              Italy           3.58
Korea            6.24              Netherlands     3.68
Taiwan           4.86              Norway          0.51
Belgium          2.81              Spain           1.26
Denmark          0.62              Sweden          1.44
France           4.75              United Kingdom  7.31


Level Comparisons. The BLS measures are limited to trend 
comparisons. BLS does not prepare level comparisons of manufacturing 
productivity and unit labor costs because of data limitations and 
technical problems in comparing the levels of manufacturing output 
among economies. Each economy measures manufacturing output in its 
own currency units. To compare outputs among economies, a common 
unit of measure is needed. Market exchange rates are not suitable as 
a basis for comparing output levels. What is needed are purchasing 
power parities, which are the number of foreign currency units 
required to buy goods and services equivalent to what can be bought 
with one unit of U.S. currency.

-16- 

Purchasing power parities are available for total gross domestic 
product (GDP) from the Organization for Economic Cooperation and 
Development (OECD). However, these parities are derived for 
expenditures made by consumers, business, and government for goods 
and services - not for value added by industry. Therefore, they do 
not provide purchasing power parities by industry. The parities 
developed for total GDP are not suitable for each component 
industry, such as manufacturing.

European exchange rates. On Jan. 1, 1999, 11 European countries 
joined the European Monetary Union (EMU). In subsequent years they 
were joined by Greece and Slovenia. The euro, the official currency 
of the EMU, was established at fixed conversion rates to the 
previous national currencies of EMU members. Data on manufacturing 
value added and labor compensation for euro-area countries are now 
reported in euros. 

In order to maintain historical continuity of data series, data for 
euro-area countries for years before 1999 have been converted to 
euros by applying the fixed euro/national currency conversion rates. 
For countries and years where output, compensation, and exchange 
rates are converted from national currency units into euros, the 
following fixed conversion rates are used:

1 euro equals:  40.3399 Belgian francs   1936.27 Italian lire
                6.55957 French francs    2.20371 Netherlands guilders
                1.95583 German marks     166.386 Spanish pesetas

The currency exchange rates cited in this publication are annual 
averages of daily buying rates in New York City.





Last Modified Date: February 28, 2008
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