Economic News Release

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



Internet address: http://www.bls.gov        USDL 08-1343
Technical information: (202) 691-5654       For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902               Friday, September 26, 2008

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR 
COST TRENDS, 2007

       Manufacturing labor productivity increased in 2007 in 14 of the 16 
economies compared by the U.S. Department of Labor's Bureau of Labor 
Statistics.  (See chart 1.)  The Republic of Korea and Taiwan had the 
largest productivity increases of 8.7 percent each, while Germany followed 
with an increase of 5.0 percent.  The United States productivity increase 
of 4.1 percent was the fourth largest among the 16 economies compared.  
Italy and Norway both had declines in productivity (-0.5 and -0.2 percent, 
respectively).
       
       Over the 2000-2007 period, of the 16 economies studied, only Korea, 
Taiwan, and Sweden had greater productivity growth in manufacturing than 
the United States.  Average annual growth rates for selected measures 
over various time periods 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 hours, 2006-2007

-2-

    Expressed in national currency units, manufacturing unit labor costs 
increased in ten and declined in six of the economies in 2007.  The 
decline for the United States (-0.5 percent) was the fifth steepest 
decline among the economies compared.  (See chart 2.)
    
    However, expressed in U.S. dollars, manufacturing unit labor costs 
increased in 13 of the economies and declined in three.  Declines in 
the dollar's exchange rate reversed the direction of movement in three 
countries.  The largest contrast was for Australia, from +2.8 percent 
in unit labor costs in national currency to +14.5 percent in unit labor 
costs expressed in U.S. dollars.  This difference can be explained by 
the strong appreciation of the Australian dollar relative to the U.S. 
dollar.

PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2 Percent change in 
manufacturing unit labor costs, 2006-2007

-3-

                   Table A. Output per hour, hourly compensation, unit labor costs, and related measures
                                      Manufacturing, 16 countries or areas, 2006-2007

                                                      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           4.1      2.3     -1.7     -1.7      0.0      1.7      3.5     -0.5     -0.5       --

      Canada                  2.1     -1.0     -3.1     -2.9     -0.2      0.6      3.8      1.6      7.4      5.6
      Australia               3.1      3.4      0.2      1.8     -1.5      6.3      6.0      2.8     14.5     11.4
      Japan                   2.8      2.8     -0.1      0.3     -0.4     -0.3     -0.3     -3.0     -4.2     -1.2
      Korea, Republic of      8.7      6.5     -2.1     -1.3     -0.8      5.5      7.8     -0.9      1.8      2.7
      Taiwan                  8.7     10.3      1.5      1.4      0.1      3.2      1.6     -6.5     -7.5     -1.1

      Belgium                 2.1      2.5      0.3      0.4     -0.1      3.0      2.7      0.5      9.7      9.1
      Denmark                 0.7      4.1      3.4      0.4      2.9      5.2      1.7      1.1     10.4      9.2
      France                  2.6      1.2     -1.3     -1.3      0.0      1.6      2.9      0.3      9.5      9.1
      Germany                 5.0      6.3      1.3      1.3     -0.1      3.0      1.7     -3.1      5.8      9.1
      Italy                  -0.5      1.0      1.5      0.9      0.6      3.7      2.1      2.6     12.0      9.1
      Netherlands             2.8      3.2      0.4      0.2      0.3      3.4      2.9      0.2      9.3      9.1
      Norway                 -0.2      4.3      4.6      3.8      0.7      9.5      4.7      4.9     14.9      9.5
      Spain                   3.8      2.8     -1.0     -0.6     -0.4      3.8      4.9      1.0     10.3      9.1
      Sweden                  0.9      2.5      1.6      0.5      1.1      5.2      3.5      2.6     12.0      9.1
      United Kingdom          2.5      0.6     -1.9     -2.2      0.4      0.5      2.5     -0.1      8.5      8.6
      ---------------------------------------------------------------------------------------------------------------
    
      (1) Value of foreign currency relative to the U.S. dollar.


Additional data available
    Annual indexes of the variables shown in table A are estimated for 
the time period 1950-2007 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. 

-4-

Manufacturing productivity, output, and labor input
    Manufacturing productivity increased in 14 of the 16 economies 
compared in 2007.  The United States increase of 4.1 was the fourth 
largest among the 16 economies.  This was slightly above the 3.9 
percent U.S. average annual increase since 1979.  Korea and Taiwan led 
in manufacturing productivity growth (+8.7 percent each), followed by 
Germany (+5.0 percent).  Manufacturing productivity decreased in Italy 
and in Norway  (-0.5 percent and -0.2 percent respectively).  (See 
tables A and B.)
    
    Manufacturing output increased in 15 of the 16 economies in 2007.  
Taiwan and Korea were the leaders in the growth of output.  In 2007, 
growth in manufacturing output in Germany, Taiwan and Norway was 
noticeably higher than their average annual rates of increase over the 
1979-2007 period.  The U.S. increase of 2.3 percent was somewhat lower 
than its average annual increase since 1979.
    
    While 15 of the manufacturing sectors had increases in 2007 in 
output, 9 had increases in total hours worked.  Norway and Denmark had 
the largest increases in total hours worked of 4.6 and 3.4 percent, 
respectively.  Canada had the steepest decline (-3.1 percent) in hours 
in 2007, followed by Korea (-2.1 percent), the United Kingdom  
(-1.9 percent).  The United States had the fourth steepest decline in 
hours worked (-1.7 percent).
    
    For the period 2000-2007, total hours worked in manufacturing 
declined for all 16 economies.  The United Kingdom had the steepest 
average annual decline (-3.9 percent), followed by the United States (-
3.1 percent).
    
    Manufacturing employment increased in 10 of the 16 economies in 
2007.  Norway had the largest increase in employment (+3.8 percent), 
and Australia was second (+1.8 percent).  Canada had the largest 
decline in employment (-2.9 percent), followed by the United Kingdom (-
2.2 percent) and the United States (-1.7 percent). 
    
    Over the 2000-2007 period, the United Kingdom and the United States 
experienced the steepest average annual declines in manufacturing 
employment (-4.0 and -3.0 percent respectively).
    
    In 2007 average hours worked in manufacturing declined in 7 of the 
16 economies and increased in 7.  The United States and France showed 
no change in average hours worked.  This compares to 11 economies with 
declining average annual manufacturing hours over the 2000-2007 period.  
Australia and Korea had the steepest declines in average hours worked 
in 2007.  Denmark had the largest increase in average hours worked 
(+2.9 percent) and Sweden followed with a growth of 1.1 percent.
        
-5-
    
Manufacturing hourly compensation and unit labor costs
    Total labor compensation in manufacturing increased in 15 of the 16 
economies in 2007.  The largest increases were in Norway (+9.5 percent) 
and Australia (+6.3 percent). U. S. compensation rose by 1.7 percent.  
Japan was the only economy with a decline in total labor compensation.  
(See tables A and B.)
    
    Hourly compensation in manufacturing also increased in 15 of the 16 
economies in 2007, with Japan again the exception.  The largest 
increases were in the Korea (+7.8 percent) and Australia (+6.0 
percent).  The U.S. increase of 3.5 percent in hourly compensation was 
below its average annual increase since 1979.  (See tables A and B.)
    
    Expressed in national currencies, unit labor costs increased in 10 
economies in 2007 and decreased in 6.  The largest increase occurred in 
Norway (+4.9 percent) and the largest decline was in Taiwan (-6.5 
percent).  Unit labor costs in U.S. manufacturing decreased by 0.5 
percent.
    
    Expressed in U.S. dollars, manufacturing unit labor costs increased 
in 13 economies in 2007 and declined in 3.  The unit labor costs of 
three economies, Germany, the United Kingdom, and Korea, went from 
decreases to increases when computed on a U.S. dollar basis.  
Australia, with the largest currency appreciation, showed the largest 
difference, from +2.8 percent in unit labor costs in national currency 
to +14.5 percent in unit labor costs expressed in U.S. dollars.
    
    Movements in exchange rates often are the dominant force behind 
changes in comparative unit labor costs and international 
competitiveness.  In 2007, the U.S. dollar weakened against most of the 
currencies being compared.  The only exceptions were Japan and Taiwan, 
where the currencies depreciated against the dollar.  This depreciation 
of the U.S. dollar against most currencies continues a trend that began 
in 2001.  In 2007, the dollar fell 9.1 percent against the euro, 
following a decline of 0.9 percent in 2006.

-6-
    
                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                  Output per hour


      United States                3.9         2.8         3.7         5.6         4.6         2.2         4.1

      Canada                       2.4         2.1         3.4         3.8         1.1        -0.1         2.1
      Australia                    2.3         2.2         1.3         3.5         2.1         1.0         3.1
      Japan                        3.6         3.8         3.3         3.4         3.8         1.9         2.8
      Korea, Republic of            NA          NA         9.4        10.8         7.6        10.1         8.7
      Taiwan                       5.9         6.1         4.7         5.6         6.4         7.1         8.7

      Belgium                      3.4         4.2         3.1         3.0         2.7         2.2         2.1
      Denmark                      2.3         2.2         2.7         1.8         2.5         5.1         0.7
      France                       3.8         3.8         3.4         4.6         3.5         4.0         2.6
      Germany (2)                  3.0         2.1         2.9         3.7         3.8         7.1         5.0
      Italy                        2.2         3.4         3.8         1.4        -0.2        -0.4        -0.5
      Netherlands                  3.3         3.2         3.7         3.3         3.2         3.2         2.8
      Norway                       1.9         1.9         0.1         1.4         3.7         2.9        -0.2
      Spain                        2.5         3.3         3.1         0.8         2.1         2.0         3.8
      Sweden                       4.4         2.1         5.5         6.8         5.6         5.9         0.9
      United Kingdom               3.6         4.1         2.8         2.7         3.9         4.9         2.5


                                                       Output


      United States                2.8         2.2         3.6         5.4         1.4         2.9         2.3

      Canada                       2.1         1.9         2.2         6.2        -0.3        -1.0        -1.0
      Australia                    1.5         1.6         0.8         2.6         1.1        -1.0         3.4
      Japan                        2.7         4.7         0.4         1.2         2.3         4.3         2.8
      Korea, Republic of           8.8        10.7         8.2         7.9         6.9         8.5         6.5
      Taiwan                       6.2         7.4         4.4         5.8         5.7         7.5        10.3

      Belgium                      1.9         2.6         0.6         2.9         0.9         2.7         2.5
      Denmark                      1.2         1.3         2.1         1.7         0.3         5.4         4.1
      France                       1.6         1.5         0.6         3.4         1.2         1.1         1.2
      Germany (2)                  1.3         1.2        -1.0         2.2         2.5         5.8         6.3
      Italy                        1.5         2.6         1.6         1.2        -0.2         1.2         1.0
      Netherlands                  2.2         2.4         2.0         3.3         1.4         2.7         3.2
      Norway                       1.0        -0.5         0.7         1.4         3.3         6.9         4.3
      Spain                        2.2         2.1         0.6         5.0         1.5         1.9         2.8
      Sweden                       3.7         1.7         3.8         7.4         4.3         5.2         2.5
      United Kingdom               0.6         0.9         0.5         1.3        -0.1         1.6         0.6
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

-7-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                    Total hours


      United States               -1.1        -0.6        -0.1        -0.1        -3.1         0.7        -1.7

      Canada                      -0.2        -0.2        -1.2         2.3        -1.3        -0.9        -3.1
      Australia                   -0.8        -0.7        -0.5        -0.9        -1.0        -1.9         0.2
      Japan                       -0.9         0.8        -2.8        -2.1        -1.4         2.4        -0.1
      Korea, Republic of            NA          NA        -1.1        -2.6        -0.7        -1.4        -2.1
      Taiwan                       0.3         1.2        -0.3         0.1        -0.6         0.3         1.5

      Belgium                     -1.5        -1.6        -2.4        -0.1        -1.7         0.5         0.3
      Denmark                     -1.1        -1.0        -0.7        -0.1        -2.2         0.3         3.4
      France                      -2.1        -2.2        -2.8        -1.1        -2.3        -2.8        -1.3
      Germany (2)                 -1.6        -0.9        -3.8        -1.4        -1.3        -1.2         1.3
      Italy                       -0.7        -0.8        -2.1        -0.2        -0.1         1.6         1.5
      Netherlands                 -1.1        -0.9        -1.7         0.0        -1.8        -0.5         0.4
      Norway                      -0.9        -2.3         0.6         0.0        -0.4         3.9         4.6
      Spain                       -0.3        -1.2        -2.4         4.1        -0.6        -0.1        -1.0
      Sweden                      -0.7        -0.4        -1.7         0.5        -1.2        -0.7         1.6
      United Kingdom              -2.8        -3.1        -2.3        -1.4        -3.9        -3.1        -1.9


                                                     Employment


      United States               -1.2        -0.8        -0.5         0.0        -3.0        -0.6        -1.7

      Canada                      -0.3        -0.3        -1.5         2.2        -1.2        -1.0        -2.9
      Australia                   -1.3        -1.3        -2.3        -1.1        -0.7        -1.2         1.8
      Japan                       -0.6         1.0        -1.6        -2.0        -1.6         1.5         0.3
      Korea, Republic of            NA          NA        -0.8        -2.5         0.4         0.3        -1.3
      Taiwan                       0.9         2.0        -0.3         0.4         0.2         1.1         1.4

      Belgium                     -1.4        -1.6        -2.2        -0.6        -1.4        -1.1         0.4
      Denmark                     -1.1        -0.4        -1.2        -1.2        -2.0        -0.2         0.4
      France                      -1.6        -1.8        -2.5        -0.3        -1.8        -1.9        -1.3
      Germany (2)                 -1.2        -0.1        -4.2        -0.8        -1.0        -0.9         1.3
      Italy                       -0.7        -0.8        -1.9        -0.2         0.2         0.9         0.9
      Netherlands                 -1.0        -0.6        -1.6         0.1        -1.8        -0.6         0.2
      Norway                      -1.0        -2.2         0.4         0.2        -0.7         3.9         3.8
      Spain                        0.1        -0.7        -2.0         3.3         0.5        -0.2        -0.6
      Sweden                      -1.4        -1.0        -3.5         0.2        -1.4        -0.7         0.5
      United Kingdom              -2.8        -2.9        -2.7        -1.2        -4.0        -2.7        -2.2
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

-8-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                                    Average hours


      United States                0.1         0.2         0.4        -0.1        -0.1         1.3         0.0

      Canada                       0.1         0.1         0.3         0.1        -0.1         0.1        -0.2
      Australia                    0.6         0.6         1.9         0.3        -0.3        -0.7        -1.5
      Japan                       -0.3        -0.2        -1.3        -0.1         0.1         0.8        -0.4
      Korea, Republic of            NA          NA        -0.2        -0.1        -1.1        -1.7        -0.8
      Taiwan                      -0.6        -0.8         0.0        -0.3        -0.8        -0.8         0.1

      Belgium                      0.0         0.0        -0.2         0.5        -0.3         1.6        -0.1
      Denmark                      0.0        -0.5         0.6         1.1        -0.2         0.5         2.9
      France                      -0.5        -0.5        -0.3        -0.8        -0.5        -0.9         0.0
      Germany (2)                 -0.4        -0.9         0.4        -0.6        -0.3        -0.2        -0.1
      Italy                       -0.1         0.1        -0.2         0.0        -0.3         0.7         0.6
      Netherlands                 -0.1        -0.2         0.0        -0.1         0.0         0.1         0.3
      Norway                       0.0        -0.1         0.2        -0.2         0.3         0.0         0.7
      Spain                       -0.4        -0.5        -0.4         0.8        -1.1         0.2        -0.4
      Sweden                       0.7         0.7         1.9         0.3         0.2         0.0         1.1
      United Kingdom               0.0        -0.2         0.4        -0.1         0.1        -0.4         0.4


                                Total labor compensation(3): National currency basis


      United States                3.5         4.9         3.4         4.5         0.8         4.9         1.7

      Canada                       4.4         6.5         2.4         5.2         2.0         1.0         0.6
      Australia                     NA          NA         3.2         3.1         4.5         4.4         6.3
      Japan                        1.7         5.5         0.7        -1.0        -1.5         0.9        -0.3
      Korea, Republic of          13.5        19.6        17.6         5.4         7.3         7.0         5.5
      Taiwan                       7.3        13.5         6.8         3.6         1.3         2.3         3.2

      Belgium                      2.7         4.4         1.3         1.9         1.5         2.5         3.0
      Denmark                      4.2         7.0         2.3         2.8         2.2         3.4         5.2
      France                       3.5         6.7         1.6         1.7         1.3         1.9         1.6
      Germany (2)                  2.7         4.6         2.4         1.6         0.9         2.9         3.0
      Italy                        6.3        11.6         3.9         2.4         2.9         3.6         3.7
      Netherlands                  2.8         3.2         2.7         3.4         1.8         2.3         3.4
      Norway                       5.3         6.4         4.1         5.1         4.5         9.8         9.5
      Spain                        6.8        10.1         5.5         5.6         3.6         4.2         3.8
      Sweden                       5.3         8.8         1.9         5.3         2.6         2.1         5.2
      United Kingdom               3.8         7.1         1.5         3.3         0.7         3.7         0.5
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

-9-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


                                  Hourly compensation(3): National currency basis


      United States                4.6         5.5         3.5         4.7         4.0         4.1         3.5

      Canada                       4.7         6.8         3.6         2.9         3.4         1.9         3.8
      Australia                     NA          NA         3.8         4.0         5.6         6.4         6.0
      Japan                        2.6         4.6         3.6         1.2         0.0        -1.4        -0.3
      Korea, Republic of            NA          NA        18.9         8.1         8.1         8.6         7.8
      Taiwan                       7.0        12.1         7.1         3.4         2.0         1.9         1.6

      Belgium                      4.2         6.1         3.8         2.0         3.3         2.1         2.7
      Denmark                      5.3         8.1         2.9         2.9         4.5         3.1         1.7
      France                       5.8         9.1         4.5         2.8         3.7         4.9         2.9
      Germany (2)                  4.4         5.6         6.4         3.1         2.2         4.1         1.7
      Italy                        7.1        12.5         6.1         2.7         3.0         2.0         2.1
      Netherlands                  3.9         4.1         4.5         3.4         3.6         2.8         2.9
      Norway                       6.3         9.0         3.4         5.2         4.9         5.7         4.7
      Spain                        7.2        11.4         8.2         1.4         4.2         4.3         4.9
      Sweden                       6.0         9.1         3.7         4.8         3.9         2.9         3.5
      United Kingdom               6.8        10.5         3.9         4.7         4.8         7.1         2.5


                                    Unit labor costs(3): National currency basis


      United States                0.7         2.6        -0.2        -0.8        -0.6         1.9        -0.5

      Canada                       2.2         4.6         0.3        -0.9         2.3         2.0         1.6
      Australia                     NA          NA         2.4         0.5         3.4         5.4         2.8
      Japan                       -0.9         0.8         0.3        -2.2        -3.6        -3.2        -3.0
      Korea, Republic of           4.3         8.1         8.7        -2.4         0.4        -1.4        -0.9
      Taiwan                       1.1         5.6         2.3        -2.1        -4.2        -4.9        -6.5

      Belgium                      0.8         1.8         0.7        -0.9         0.6        -0.1         0.5
      Denmark                      2.9         5.7         0.2         1.1         1.9        -2.0         1.1
      France                       1.9         5.1         1.0        -1.7         0.1         0.9         0.3
      Germany (2)                  1.4         3.3         3.4        -0.5        -1.5        -2.7        -3.1
      Italy                        4.8         8.8         2.2         1.2         3.1         2.4         2.6
      Netherlands                  0.6         0.8         0.7         0.1         0.4        -0.4         0.2
      Norway                       4.2         6.9         3.3         3.7         1.1         2.7         4.9
      Spain                        4.5         7.8         4.9         0.5         2.0         2.3         1.0
      Sweden                       1.6         6.9        -1.8        -1.9        -1.6        -2.9         2.6
      United Kingdom               3.1         6.2         1.1         2.0         0.9         2.1        -0.1
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

-10-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2007

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2007   1979-1990   1990-1995   1995-2000   2000-2007   2005-2006   2006-2007
      --------------------------------------------------------------------------------------------------------


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


      United States                0.7         2.6        -0.2        -0.8        -0.6         1.9        -0.5

      Canada                       2.6         4.6        -2.9        -2.4         7.1         9.0         7.4
      Australia                     NA          NA         1.3        -4.2         8.9         4.1        14.5
      Japan                        1.3         4.6         9.4        -4.8        -4.8        -8.4        -4.2
      Korea, Republic of           1.9         4.4         6.9        -9.5         3.3         5.8         1.8
      Taiwan                       1.5         8.5         2.7        -5.3        -4.9        -6.0        -7.5

      Belgium                      0.8         0.6         3.3        -8.4         6.4         0.8         9.7
      Denmark                      2.8         4.1         2.2        -6.1         7.9        -1.1        10.4
      France                       1.4         2.7         2.8        -8.4         6.0         1.8         9.5
      Germany (2)                  2.3         4.5         5.9        -8.0         4.2        -1.8         5.8
      Italy                        2.8         5.2        -3.9        -3.7         9.1         3.3        12.0
      Netherlands                  1.4         1.7         3.3        -7.6         6.2         0.5         9.3
      Norway                       3.7         4.9         3.1        -2.9         7.2         3.2        14.9
      Spain                        2.3         3.8         0.8        -6.6         8.0         3.2        10.3
      Sweden                      -0.1         3.8        -5.4        -6.7         2.8        -1.6        12.0
      United Kingdom               2.9         4.5        -1.4         1.1         4.9         3.4         8.5


                                                  Exchange rates(4)


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

      Canada                       0.3         0.0        -3.2        -1.6         4.8         6.8         5.6
      Australia                   -1.0        -3.2        -1.1        -4.7         5.4        -1.2        11.4
      Japan                        2.2         3.8         9.1        -2.7        -1.3        -5.3        -1.2
      Korea, Republic of          -2.3        -3.4        -1.7        -7.3         2.8         7.3         2.7
      Taiwan                       0.3         2.7         0.3        -3.3        -0.7        -1.2        -1.1

      Belgium                      0.0        -1.2         2.5        -7.6         5.8         0.9         9.1
      Denmark                     -0.1        -1.5         2.0        -7.1         5.8         0.9         9.2
      France                      -0.4        -2.2         1.8        -6.8         5.8         0.9         9.1
      Germany (2)                  0.9         1.1         2.5        -7.5         5.8         0.9         9.1
      Italy                       -1.9        -3.3        -6.0        -4.9         5.8         0.9         9.1
      Netherlands                  0.8         0.9         2.6        -7.6         5.8         0.9         9.1
      Norway                      -0.5        -1.9        -0.3        -6.4         6.0         0.5         9.5
      Spain                       -2.1        -3.7        -3.9        -7.1         5.8         0.9         9.1
      Sweden                      -1.6        -2.9        -3.7        -4.9         4.5         1.3         9.1
      United Kingdom              -0.2        -1.6        -2.4        -0.8         4.1         1.3         8.6
      --------------------------------------------------------------------------------------------------------
      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 
competitors' index, which is a trade-weighted average of unit labor 
cost trends in the other economies, in order 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.  Australia has been omitted because unit 
labor cost data are not available before 1990.  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, 1979-2007
    

    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 from 1979 until 1998.  After 
that, the year-to-year fluctuations do not follow a clear trend.
    
    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, 1979-2007

                  ----------------------------------------------------------------
                                 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     111.3     101.3     112.7     109.9     102.6
                  1981     117.6     120.7      97.5     117.6     108.6     108.3
                  1982     127.4     131.1      97.2     127.4     108.2     117.8
                  1983     122.7     133.5      91.9     122.7     106.1     115.6
                  1984     123.8     133.4      92.8     123.8      99.5     124.4
                  1985     126.2     136.0      92.8     126.2      97.6     129.2
                  1986     130.1     141.5      91.9     130.1     117.0     111.2
                  1987     125.4     144.6      86.7     125.4     133.6      93.9
                  1988     126.4     147.4      85.8     126.4     146.0      86.6
                  1989     129.4     151.3      85.5     129.4     147.9      87.5
                  1990     133.3     157.9      84.4     133.3     161.1      82.7
                  1991     136.7     166.1      82.3     136.7     170.7      80.1
                  1992     137.8     169.6      81.3     137.8     175.2      78.7
                  1993     136.7     170.4      80.3     136.7     167.6      81.6
                  1994     134.1     167.8      79.9     134.1     164.7      81.4
                  1995     131.6     169.6      77.6     131.6     174.4      75.5
                  1996     129.0     171.4      75.3     129.0     170.4      75.7
                  1997     127.1     168.9      75.2     127.1     156.4      81.3
                  1998     125.7     169.9      74.0     125.7     146.3      86.0
                  1999     124.4     166.6      74.7     124.4     146.2      85.1
                  2000     126.1     162.2      77.8     126.1     137.7      91.6
                  2001     127.7     167.6      76.2     127.7     134.0      95.3
                  2002     123.8     168.1      73.7     123.8     135.9      91.1
                  2003     124.6     167.6      74.3     124.6     152.1      81.9
                  2004     119.9     165.9      72.3     119.9     162.7      73.7
                  2005     119.5     164.4      72.7     119.5     166.4      71.9
                  2006     121.9     164.1      74.3     121.9     169.8      71.7
                  2007     121.2     163.4      74.2     121.2     178.0      68.1
                  ----------------------------------------------------------------
                  (1) Australia has been omitted from this table because data are 
                      not available before 1990.


-13-

Technical Notes

The comparisons in this release are based on data available to the 
Bureau of Labor Statistics as of the end of August 2008 from the 
national statistical offices of the 16 economies compared.

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 
2007.  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		36.12		Germany		10.64
Japan		16.00		Italy		3.54
Korea		6.09		Netherlands	3.67
Taiwan		4.84		Norway		0.54
Belgium		3.02		Spain		1.36
Denmark		0.65		Sweden   	1.42
France		4.82		United Kingdom	7.29


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.

Purchasing power parities, for most economies, are available for total 
gross domestic product (GDP) from the Organization for Economic 
Cooperation and Development 

-16-

(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: September 26, 2008
Recommend this page using: