Economic News Release

Productivity and Costs, Second Quarter 2014, Preliminary



Transmission of material in this release is embargoed until     USDL 14-1431
8:30 a.m. (EDT) Friday, August 8, 2014

Technical information: (202) 691-5606    dprweb@bls.gov   www.bls.gov/lpc
Media contact          (202) 691-5902    PressOffice@bls.gov



                        PRODUCTIVITY AND COSTS
                  Second Quarter 2014, Preliminary
                
                
Nonfarm business sector labor productivity increased at a 2.5 percent annual 
rate during the second quarter of 2014, the U.S. Bureau of Labor Statistics 
reported today, as hours increased 2.7 percent and output increased 5.2 
percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the second quarter of 2013 to the second quarter
of 2014, productivity increased 1.2 percent as output and hours worked rose
3.2 percent and 2.0 percent, respectively. (See table A.) 

Labor productivity, or output per hour, is calculated by dividing an index of
real output by an index of hours worked of all persons, including employees, 
proprietors, and unpaid family workers.  


------------------------------------------------------------------------------
        Historical Revisions to Productivity and Costs Data
        
Data in this release reflect the comprehensive revision to the National 
Income and Product Accounts (NIPA) released by the Bureau of Economic 
Analysis of the U.S. Department of Commerce on July 30, 2014. See Revised
measures section.
------------------------------------------------------------------------------

Unit labor costs in nonfarm businesses increased 0.6 percent in the second
quarter of 2014, as the 3.1 percent increase in hourly compensation was 
larger than the increase in productivity. Unit labor costs increased 1.9 
percent over the last four quarters. (See tables A and 2.) 

BLS defines unit labor costs as the ratio of hourly compensation to labor
productivity; increases in hourly compensation tend to increase unit labor
costs and increases in output per hour tend to reduce them.

Manufacturing sector productivity increased 3.6 percent in the second quarter 
of 2014, as output increased 7.0 percent and hours worked increased 3.2 
percent. Productivity increased 2.9 percent in the durable goods sector and 
increased 5.9 percent in the nondurable goods sector. Over the last four 
quarters, manufacturing productivity increased 2.1 percent, as output 
increased 3.7 percent and hours increased 1.5 percent. Unit labor costs in
manufacturing decreased 1.3 percent in the second quarter of 2014 and 
increased 0.8 percent from the same quarter a year ago. (See tables A and 3.)

The concepts, sources, and methods used for the manufacturing output series 
differ from those used in the business and nonfarm business output series; 
these output measures are not directly comparable. See Technical Notes for a 
more detailed explanation. 

Revised measures

Output and related measures--including productivity and unit labor costs--in
the business and nonfarm business sectors were subject to revision for the 
entire series going back to 1947. The most notable revisions in these series
are generally limited to the period from 2010 onward. Hourly compensation and
related measures for all sectors were subject to revision back to 2010. 
Measures of output for the business and nonfarm business sectors and measures
of compensation for all sectors incorporate the revised National Income and
Product Accounts (NIPA) data released on July 30 by the Bureau of Economic 
Analysis, U.S. Department of Commerce. Hours were revised for the business and
nonfarm business sectors for 2010 forward to include revised NIPA data on 
government enterprises and to incorporate revised NIPA data on the proportion
of sector compensation paid to employees of nonprofit institutions. 

Table B presents revised and previous productivity and related measures for 
the nonfarm business, business, and manufacturing sectors for the first 
quarter of 2014 and table C presents annual data for nonfarm business and 
total manufacturing from 2011 to 2013. Revised quarterly and annual series
for recent years appear in tables 1-6 for all sectors and annual indexes for
all years appear in appendix tables 1-3 for business, nonfarm business, and 
nonfinancial corporate sectors. Full historical annual and quarterly measures
can be found on the productivity and costs home page: www.bls.gov/lpc/#data.

In the first quarter of 2014, nonfarm business productivity decreased 4.5 
percent--rather than falling 3.2 percent as reported June 4--reflecting a
downward revision to output which was larger than a small downward revision
to hours. This decline in productivity was the largest since the fourth 
quarter of 1981, when productivity decreased 4.7 percent.  Unit labor costs 
rose 11.8 percent in the first quarter of 2014--more than double the 
previously reported rate--due to both the downward revision to productivity
and an upward revision to hourly compensation.  Real hourly compensation 
increased 4.8 percent after revision, rather than the previous estimate of
0.4 percent.  In the manufacturing sector, productivity growth in the first 
quarter was 3.2 percent, as output growth was revised down and hours were not
revised. Unit labor costs increased 5.0 percent, rather than falling 0.4 
percent as previously reported, due to both the downward revision to 
productivity and an upward revision to hourly compensation.

Annual Average productivity growth for 2013 in the nonfarm business sector
was revised up to 0.9 percent from a previous estimate of 0.5 percent due to
an upward revision to output. (See table C). Unit labor costs increased 0.2 
percent, less than the 1.1 percent gain reported June 4.  Productivity was 
revised down in both 2012 and 2011, to increases of 1.0 percent and 0.1 
percent in those years, respectively. Growth in unit labor costs was revised
up from 1.2 percent to 1.7 percent in 2012, and from 2.0 percent to 2.1
percent in 2011.  

In the manufacturing sector, annual average productivity growth was not 
revised. Unit labor costs declined 1.6 percent in 2013, rather than 1.3
percent as previously reported. In 2012, unit labor costs fell 0.2 percent
after revision, and in 2011 increased 0.8 percent rather than the previous
estimate of 0.4 percent. 

Nonfinancial corporate sector output and related measures were subject to
revision for the entire series going back to 1947, and hourly compensation
and related measures were revised back to 2010. First-quarter 2014 
productivity growth was revised up to a decline of 0.9 percent; the revision
was due solely to an upward revision to output. Annual average productivity in
2013 and 2012 grew more than previously reported--reflecting upward revisions 
to output in both years, and in 2011 a downward revision to productivity was 
due to a downward revision to output. (See tables D and 6.)
______________  




The revised Productivity and Costs news release for second-quarter 2014 is 
scheduled to be released on Thursday, September 4, 2014 at 8:30 a.m. (EDT).


======================================================================================================
Table A. Preliminary second-quarter 2014 measures: percent change from previous quarter 
at annual rate (Q to Q) and from same quarter a year ago (Y to Y)

Sector                    Nonfarm                                        Durable         Nondurable
                          Business         Business      Manufacturing   Manufacturing   Manufacturing
                       Q to Q   Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y
------------------------------------------------------------------------------------------------------ 
Productivity            2.5      1.2      2.0     0.8     3.6     2.1    2.9      2.7     5.9      2.0
Output                  5.2      3.2      4.9     3.0     7.0     3.7    8.8      5.2     5.0      2.1
Hours                   2.7      2.0      2.8     2.1     3.2     1.5    5.7      2.4    -0.9      0.0
Hourly 
 compensation           3.1      3.1      3.0     3.0     2.2     2.9    1.5      2.4     3.1      3.8
Real hourly 
 compensation           0.1      1.0      0.0     0.9    -0.8     0.9   -1.4      0.3     0.1      1.7
Unit labor 
 costs                  0.6      1.9      1.0     2.1    -1.3     0.8   -1.3     -0.3    -2.7      1.7
======================================================================================================
Table B. Revised and previous measures: first quarter 2014 

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
------------------------------------------------------------------------------------------------------
                        Percent change, annual rate, first quarter 2014
                        
Productivity    -4.5    -3.2     -5.0     -3.5      3.2      3.8       3.4     4.1       2.8      3.3
Output          -2.4    -1.1     -3.3     -1.7      1.5      2.2       1.7     2.3       1.4      2.1
Hours            2.1     2.2      1.8      1.8     -1.6     -1.6      -1.6    -1.7      -1.4     -1.2
Hourly 
 compensation    6.8     2.3      7.1      2.6      8.3      3.4       8.9     2.5       7.0      5.0
Real hourly 
 compensation    4.8     0.4      5.1      0.7      6.2      1.5       6.9     0.6       5.0      3.1
Unit labor 
 costs          11.8     5.7     12.7      6.3      5.0     -0.4       5.4    -1.5       4.1      1.7

===================================================================================================================
Table C. Revised and previous annual average measures: 2011-2013

Sector                       Nonfarm Business                  |                 Manufacturing
                                                               |
                  2013             2012              2011      |       2013            2012             2011  
             Revised Previous Revised Previous Revised Previous| Revised Previous Revised Previous Revised Previous
---------------------------------------------------------------|---------------------------------------------------
                                Percent change                 |                     Percent change
                                                               |
Productivity    0.9     0.5     1.0     1.5     0.1      0.5   |   2.3      2.3      1.9     1.9      1.0      1.0
Output          2.6     2.2     3.2     3.7     2.2      2.5   |   2.9      2.9      4.3     4.3      3.1      3.1
Hours           1.7     1.7     2.2     2.2     2.1      2.0   |   0.7      0.7      2.3     2.3      2.1      2.1
Hourly                                                         |
 compensation   1.1     1.6     2.7     2.6     2.2      2.5   |   0.6      0.9      1.7     1.9      1.7      1.3
Real hourly                                                    |
 compensation  -0.3     0.1     0.6     0.5    -0.9     -0.7   |  -0.8     -0.5     -0.3    -0.2     -1.4     -1.8
Unit labor                                                     |
 costs          0.2     1.1     1.7     1.2     2.1      2.0   |  -1.6     -1.3     -0.2     0.0      0.8      0.4
===================================================================================================================

Table D. Nonfinancial corporations: revised and previous first-quarter 2014 measures, and revised 
         annual measures 2011-2013
                                                        Real 
                                           Hourly       hourly        Unit                    Implicit
             Produc-                       compen-      compen-       labor       Unit        price
             tivity    Output     Hours    sation       sation        costs       profits     deflator
------------------------------------------------------------------------------------------------------ 
                        Percent change, annual rate, first quarter 2014
                        
Revised      -0.9       0.9        1.8      6.8          4.8           7.8        -27.0         0.5
Previous     -3.9      -2.2        1.8      2.1          0.2           6.3        -27.2         0.3

                                Percent change, annual average
                                
2013          0.3       2.3        2.0      1.4         -0.1           1.1          1.4         0.9
2012          1.9       4.3        2.3      2.9          0.8           0.9          7.9         1.4
2011         -0.2       2.5        2.8      2.1         -1.0           2.4          3.1         2.3

====================================================================================================== 













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Last Modified Date: August 08, 2014
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