Economic News Release

Productivity and Costs, Second Quarter 2014, Revised


Transmission of material in this release is embargoed until       USDL 14-1641
8:30 a.m. (EDT) Thursday, September 4, 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, Revised
                     

Nonfarm business sector labor productivity increased at a 2.3 percent annual 
rate during the second quarter of 2014, the U.S. Bureau of Labor Statistics 
reported today, as hours increased 2.6 percent and output increased 5.0 
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 1.1 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. The measures released today were 
based on more recent source data than were available for the preliminary 
report.  

Unit labor costs in nonfarm businesses edged down 0.1 percent in the second 
quarter of 2014, and increased 1.7 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 3.3 percent in the second quarter 
of 2014, as output increased 6.9 percent and hours worked increased 3.5 
percent. The increase in output was the largest since the second quarter of 
2010 (11.6 percent). Productivity increased 3.4 percent in the durable goods 
sector and increased 4.7 percent in the nondurable goods sector. Over the 
last 4 quarters, manufacturing productivity increased 2.1 percent, as output 
increased 3.7 percent and hours increased 1.6 percent. Unit labor costs in 
manufacturing decreased 1.6 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.

Preliminary second-quarter 2014 measures of productivity and costs were 
announced for the nonfinancial corporate sector. Productivity increased 3.1 
percent in the second quarter of 2014 as output and hours rose 7.8 percent 
and 4.5 percent, respectively. Unit labor costs fell 1.2 percent, as the 
1.8 percent gain in hourly compensation was less than the 3.1 percent gain 
in productivity. (See tables C and 6.)


Revised measures
                
The measures released today are based on more recent source data than were 
available for the preliminary report. Table B presents previous and revised 
productivity and related measures for the major sectors: nonfarm business, 
business, and manufacturing. Output data for manufacturing incorporates 
revised annual output indexes constructed by BLS using data from the U.S. 
Bureau of the Census. Manufacturing measures based on output--including 
productivity and unit labor costs--were subject to revision back to the 
beginning of the series in 1987. Revised quarterly and annual series for 
recent years for all sectors appear in tables 1-6. Revised annual indexes for 
the manufacturing sectors for all years appear in appendix tables 1-3. Full 
historical annual and quarterly measures can be found on the productivity and 
costs home page: www.bls.gov/lpc/#data.

In the second quarter of 2014, nonfarm business productivity growth was 
revised down to 2.3 percent from 2.5 percent, due to a downward revision to 
output. Unit labor costs declined 0.1 percent rather than increasing 0.6 
percent as reported August 8, due primarily to a downward revision to 
hourly compensation. In the manufacturing sector, productivity growth was 
revised down, reflecting both an upward revision to hours worked and a small 
downward revision to output. Unit labor costs decreased more than previously 
reported, as hourly compensation was revised down by more than productivity.

In the first quarter of 2014, nonfarm business productivity was unrevised 
and fell 4.5 percent. Hourly compensation, and therefore unit labor costs, 
increased slightly less than previously reported. In the manufacturing 
sector, productivity increased at the same 3.2 percent rate as the 
preliminary estimate. Hourly compensation and unit labor costs were revised 
upwards.

Annual average productivity growth for 2013 in the total manufacturing sector 
was revised to 2.0 percent from 2.3 percent due to a downward revision to 
output. For the full series from 1987 to 2013, the average annual rate of 
manufacturing productivity growth was 3.2 percent, unchanged from data 
published August 8.

Table C presents previous and revised productivity and related measures for 
the nonfinancial corporate sector. In the first quarter of 2014, nonfinancial 
corporate sector productivity declined 1.1 percent, rather than 0.9 percent 
as reported August 8. Unit labor costs increased less in the first quarter 
than previously reported, as hourly compensation was revised down by more 
than productivity. 

______________  







The preliminary Productivity and Costs news release for third-quarter 2014 is 
scheduled to be released on Thursday, November 6, 2014 at 8:30 a.m. (EST).



======================================================================================================
Table A. Revised 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             2.3      1.1     2.3     0.9     3.3     2.1     3.4     2.9     4.7     1.7
Output                   5.0      3.2     5.1     3.0     6.9     3.7     9.6     5.4     4.0     1.8
Hours                    2.6      2.0     2.8     2.1     3.5     1.6     6.0     2.5    -0.7     0.1
Hourly 
 compensation            2.3      2.8     2.1     2.7     1.6     2.9     0.9     2.5     2.5     3.6
Real hourly 
 compensation           -0.7      0.8    -0.9     0.7    -1.4     0.9    -2.0     0.4    -0.5     1.5
Unit labor 
 costs                  -0.1      1.7    -0.2     1.8    -1.6     0.8    -2.3    -0.4    -2.2     1.8
======================================================================================================
Table B. Revised and previous measures: second quarter and 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, second quarter 2014
                        
Productivity    2.3     2.5       2.3     2.0       3.3     3.6       3.4      2.9      4.7      5.9
Output          5.0     5.2       5.1     4.9       6.9     7.0       9.6      8.8      4.0      5.0
Hours           2.6     2.7       2.8     2.8       3.5     3.2       6.0      5.7     -0.7     -0.9
Hourly
 compensation   2.3     3.1       2.1     3.0       1.6     2.2       0.9      1.5      2.5      3.1
Real hourly
 compensation  -0.7     0.1      -0.9     0.0      -1.4    -0.8      -2.0     -1.4     -0.5      0.1
Unit labor
 costs         -0.1     0.6      -0.2     1.0      -1.6    -1.3      -2.3     -1.3     -2.2     -2.7
------------------------------------------------------------------------------------------------------
                         Percent change, annual rate, first quarter 2014
                         
Productivity   -4.5    -4.5      -5.0    -5.0       3.2     3.2       3.5      3.4      2.8      2.8
Output         -2.4    -2.4      -3.3    -3.3       1.6     1.5       1.8      1.7      1.4      1.4
Hours           2.1     2.1       1.8     1.8      -1.6    -1.6      -1.6     -1.6     -1.4     -1.4
Hourly 
 compensation   6.6     6.8       6.9     7.1       8.9     8.3      10.0      8.9      6.8      7.0
Real hourly 
 compensation   4.6     4.8       4.9     5.1       6.9     6.2       7.9      6.9      4.8      5.0
Unit labor 
 costs         11.6    11.8      12.5    12.7       5.5     5.0       6.3      5.4      3.9      4.1
======================================================================================================
Table C. Nonfinancial corporations: preliminary second quarter and revised first quarter 2014

                                                        Real 
                                           Hourly       hourly        Unit                    Implicit
             Produc-                       compen-      compen-       labor       Unit        price
             tivity    Output     Hours    sation       sation        costs       profits     deflator
------------------------------------------------------------------------------------------------------
                             Percent change, annual rate, second quarter 2014
                             
Q to Q         3.1      7.8        4.5      1.8         -1.2          -1.2         38.8         1.7
Y to Y         0.0      2.7        2.7      2.1          0.1           2.1         -1.3         0.9

                              Percent change, annual rate, first quarter 2014
                              
Revised       -1.1      0.7        1.8      6.5          4.5           7.6        -26.9         0.5
Previous      -0.9      0.9        1.8      6.8          4.8           7.8        -27.0         0.5
======================================================================================================

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Last Modified Date: September 04, 2014
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