Economic News Release

Productivity and Costs, Fourth Quarter and Annual Averages 2015, Revised



Transmission of material in this release is embargoed until        USDL 16-0419                       
8:30 a.m. (EST) Thursday, March 3, 2016

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




                           PRODUCTIVITY AND COSTS
            Fourth Quarter and Annual Averages 2015, Revised



Nonfarm business sector labor productivity decreased at a 2.2-percent annual 
rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics 
reported today, as output increased 1.0 percent and hours worked increased  
3.2 percent. (All quarterly percent changes in this release are seasonally 
adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter 
of 2015, productivity increased 0.5 percent. (See table A.) Annual average 
productivity increased 0.7 percent from 2014 to 2015. (See table C.) 

Labor productivity, or output per hour, is calculated by dividing an index of 
real output by an index of hours worked of all persons, including employees, 
proprietors, and unpaid family workers. Measures released today were based on 
more recent source data than were available for the preliminary report.
                
Unit labor costs in the nonfarm business sector increased 3.3 percent in the 
fourth quarter of 2015, reflecting a 1.1-percent increase in hourly 
compensation and a 2.2-percent decrease in productivity. Unit labor costs 
increased 2.1 percent over the last four quarters. (See tables A and 2.)


==============================================================================
Data in this release reflect the annual benchmark revision of BLS Current 
Employment Statistics program data on nonfarm employment and hours, and the 
revised seasonal adjustment of those data. More detail can be found in tables 
1-6 and appendix tables 1-6. See Revised measures.
==============================================================================


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

Manufacturing sector labor productivity decreased 0.7 percent in the fourth 
quarter of 2015, as output increased 0.1 percent and hours worked rose 0.8 
percent. Productivity declined 1.8 percent in the durable goods manufacturing 
sector and increased 0.3 percent in the nondurable goods sector. (See tables 
A, 3, 4, and 5.) Over the last four quarters, manufacturing productivity 
increased 1.4 percent, as output increased 1.0 percent and hours declined 0.4 
percent. Unit labor costs in manufacturing increased 3.2 percent in the fourth 
quarter of 2015 and rose 1.0 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 the Technical Notes for 
a more detailed explanation. 

Revised measures

Quarterly and annual measures of hours and related series–including 
productivity–were revised back to 1990 for all major sectors. The revisions 
incorporate revised Current Employment Statistics (CES) program data published 
February 5, 2016. From 2011 forward, the data were subject to revision as a 
result of annual benchmarking of CES data and revised seasonal adjustment of 
those data. Prior to 2011, there were small revisions due to CES coverage 
changes affecting selected industries. Index measures related to hours show 
full historical revisions because the 2009 base year values were revised; 
resulting revisions to percent changes are small. Third quarter, fourth 
quarter, and annual average data for 2015 were also revised to incorporate 
regular updates of source data on output and compensation.

Revised and previous measures for the third and fourth quarters of 2015 are 
shown in table B for the business, nonfarm business, and manufacturing 
sectors. In the fourth quarter of 2015, nonfarm business productivity 
decreased 2.2 percent rather than 3.0 percent as reported February 4. The 
revised figure reflects a 0.9 percentage point upward revision to output and a 
0.1 percentage point downward revision to hours. Unit labor costs increased 
3.3 percent, a smaller increase than was previously reported, as productivity 
was revised upward and hourly compensation was revised downward.

Manufacturing productivity declined 0.7 percent rather than 0.4 percent, 
reflecting a downward revision to output and a small downward revision to 
hours. Because the downward revision to productivity was smaller than a 
downward revision to hourly compensation, manufacturing unit labor costs 
increased 3.2 percent, rather than 3.6 percent as reported in the preliminary 
release. (See table B.) 

In the third quarter of 2015, nonfarm business productivity growth was revised 
down slightly to an increase of 2.0 percent, reflecting a slight upward 
revision to hours. Unit labor costs increased 0.4 percent, less than 
previously reported, due to a 1.8 percentage point downward revision to hourly 
compensation. In the manufacturing sector, productivity was unrevised at 5.0 
percent. Unit labor costs decreased 0.9 percent, rather than increasing 2.3 
percent, reflecting a large downward revision to hourly compensation. (See 
table B.) Nonfinancial corporate sector productivity increased 1.6 percent in 
the third quarter of 2015. (See table D.)

Table C presents annual average changes for the most recent five years for the 
nonfarm business sector and the total manufacturing sector. Nonfarm business 
sector productivity increased 0.7 percent from 2014 to 2015 in the nonfarm 
business sector, a larger increase than was previously reported, reflecting 
increases of 2.8 percent in output and 2.1 percent in hours worked. The 
increase in hours was due solely to an increase in employment of 2.2 percent, 
which was the largest annual employment gain since a 2.3-percent increase in 
1998.  Productivity increased at an annual rate of less than 1.0 percent in 
each of the last five years, reflecting steady growth in both output and hours 
during these years. The average annual rate of productivity growth from 2007 
to 2015--corresponding to the current business cycle--is 1.2 percent, well 
below the long-term rate from 1947 to 2015 of 2.2 percent. 

Unit labor costs in the nonfarm business sector rose 2.1 percent in 2015, 
reflecting increases of 2.8 percent in hourly compensation and 0.7 percent in 
productivity. Real hourly compensation, which takes into account changes in 
consumer prices, increased 2.7 percent in 2015. This is the largest annual 
increase in real hourly compensation since a 3.9-percent increase in 2000.

In the manufacturing sector, productivity increased 1.3 percent in 2015, which 
is the same rate of increase as in 2014. The average annual rate of 
productivity growth from 2007 to 2015 is 2.1 percent, which is below the long-
term rate from 1987 to 2015 of 3.4 percent. Unit labor costs increased 0.8 
percent in 2015. (See table C.)

Quarterly and annual data for all sectors appear in tables 1-6 for 2013 
through 2015 and in appendix tables 1-6 for 2010 through 2012. Full historical 
annual and quarterly measures can be found on the labor productivity and costs 
home page at www.bls.gov/lpc/#data. 
______________  






The preliminary Productivity and Costs news release for first-quarter 2016 is 
scheduled to be released on Wednesday, May 4, 2016 at 8:30 a.m. (EDT).






======================================================================================================
Table A. Revised fourth-quarter 2015 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
------------------------------------------------------------------------------------------------------  
Labor Productivity      -2.2      0.5    -2.2     0.6    -0.7     1.4    -1.8     1.4     0.3     1.1
Output                   1.0      2.1     1.0     2.2     0.1     1.0    -1.2     0.4     1.6     1.7
Hours worked             3.2      1.6     3.3     1.6     0.8    -0.4     0.6    -0.9     1.2     0.6
Hourly compensation      1.1      2.6     0.9     2.6     2.4     2.4     2.9     2.1     1.6     2.9
Real hourly  
 compensation            0.9      2.1     0.7     2.1     2.2     1.9     2.7     1.7     1.3     2.5
Unit labor costs         3.3      2.1     3.2     2.0     3.2     1.0     4.8     0.7     1.2     1.8
======================================================================================================
Table B. Revised and previous measures: fourth quarter and third quarter 2015, percent change 
from previous quarter, at annual rate

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, fourth quarter 2015
Labor 
 Productivity   -2.2    -3.0     -2.2     -2.7     -0.7     -0.4     -1.8     -1.0      0.3      0.3
Output           1.0     0.1      1.0      0.6      0.1      0.5     -1.2     -0.2      1.6      1.5
Hours worked     3.2     3.3      3.3      3.4      0.8      0.9      0.6      0.8      1.2      1.1
Hourly 
 compensation    1.1     1.3      0.9      1.1      2.4      3.2      2.9      3.6      1.6      2.6
Real hourly 
 compensation    0.9     1.1      0.7      0.9      2.2      3.0      2.7      3.3      1.3      2.4
Unit labor 
 costs           3.3     4.5      3.2      3.9      3.2      3.6      4.8      4.6      1.2      2.3
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2015
Labor 
 Productivity    2.0     2.1      2.4      2.6      5.0      5.0      6.9      6.8      2.3      2.2
Output           1.8     1.8      2.2      2.2      3.2      3.2      4.0      3.9      2.2      2.4
Hours worked    -0.2    -0.3     -0.2     -0.4     -1.7     -1.7     -2.7     -2.7     -0.1      0.2
Hourly 
 compensation    2.3     4.1      2.4      4.1      4.0      7.4      3.6      7.3      4.9      7.8
Real hourly
 compensation    0.7     2.5      0.8      2.5      2.4      5.7      2.0      5.6      3.2      6.1
Unit labor 
 costs           0.4     1.9      0.0      1.6     -0.9      2.3     -3.1      0.4      2.6      5.5
======================================================================================================
Table C. Revised annual average changes in productivity and related measures: 2011-2015

Sector                            Nonfarm Business                         Manufacturing
                        2015    2014    2013    2012    2011  |  2015    2014    2013    2012     2011
--------------------------------------------------------------|----------------------------------------
Labor Productivity       0.7     0.8     0.0     0.9     0.2  |   1.3     1.3     0.7     0.7      5.6
Output                   2.8     3.0     1.7     3.1     2.2  |   2.2     2.9     1.5     3.0      7.8
Hours worked             2.1     2.2     1.7     2.2     2.0  |   0.9     1.6     0.8     2.3      2.1
Hourly compensation      2.8     2.8     1.1     2.7     2.2  |   2.2     2.7     0.2     1.7      1.7
Real hourly                                                   |
 compensation            2.7     1.2    -0.4     0.6    -0.9  |   2.0     1.1    -1.2    -0.3     -1.4
Unit labor costs         2.1     2.0     1.1     1.7     2.1  |   0.8     1.4    -0.5     1.0     -3.6
======================================================================================================
Table D. Nonfinancial corporations: revised and previous third-quarter 2015 productivity and 
cost measures          
                                                          Real 
               Labor                         Hourly       hourly       Unit                   Implicit
               produc-             Hours     compen-      compen-      labor      Unit        price
               tivity    Output    worked    sation       sation       costs      profits     deflator
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2015
Q to Q Revised   1.6      3.1       1.5        4.0         2.4           2.4       -6.6         0.5
Q to Q Previous  1.7      3.1       1.4        4.2         2.5           2.4       -6.6         0.5
====================================================================================================== 



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Last Modified Date: March 03, 2016
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