Economic News Release

Technical notes



			TECHNICAL NOTES
			

Labor Hours: Hours data for the labor productivity and cost measures 
include hours for all persons working in the sector--wage and salary 
workers, the self-employed and unpaid family workers. The primary source 
of hours and employment data is the BLS Current Employment Statistics 
(CES) program, which provides monthly survey data on the number of jobs 
held by wage and salary workers in nonfarm establishments, counting a 
person who is employed by two or more establishments at each place of 
employment. The CES also provides average weekly paid hours of production 
and nonsupervisory workers in these establishments. Weekly paid hours are 
adjusted to hours at work using data from the National Compensation 
Survey (NCS) for 2001 forward and data from the BLS Hours at Work survey, 
conducted for this purpose, for earlier years. The Office of Productivity 
and Technology estimates average weekly hours at work for nonproduction 
and supervisory workers using information from the Current Population 
Survey (CPS), the CES, and the NCS.
     Data from the CPS are used to estimate hours worked for farm labor, 
nonfarm proprietors, and nonfarm unpaid family workers. Using CPS 
information on employment and hours worked at primary jobs and all other 
jobs, separately, the BLS productivity measures assign all hours worked 
to the correct industrial sector. Hours for government enterprises are 
derived from the CPS, the CES, and the National Income and Product 
Accounts (NIPA) prepared by the Bureau of Economic Analysis (BEA) of the 
Department of Commerce.

Output: Business sector output is a chain-type, current-weighted index 
constructed after excluding from gross domestic product (GDP) the 
following outputs: general government, nonprofit institutions, and 
private households (including owner-occupied housing). Corresponding 
exclusions also are made in labor inputs. Business output accounted for 
about 76 percent of the value of GDP in 2013. Nonfarm business, which 
excludes farming, accounted for about 74 percent of GDP in 2013.
     Annual indexes for manufacturing and its durable and nondurable goods 
components are constructed by deflating current-dollar industry value of 
production data from the U.S. Bureau of the Census with deflators from 
the BLS. These deflators are based on data from the BLS producer price 
program and other sources. The industry shipments are aggregated using 
annual weights, and intrasector transactions are removed. Quarterly 
manufacturing output measures are based on the indexes of industrial 
production prepared monthly by the Board of Governors of the Federal 
Reserve System, adjusted to be consistent with annual indexes of 
manufacturing sector output prepared by BLS. 
     Nonfinancial corporate output is a chain-type, current-weighted index 
calculated on the basis of the costs incurred and the incomes earned from 
production.  The output measure excludes the following outputs from GDP: 
general government; nonprofit institutions; private households; 
unincorporated business; and those corporations classified as offices of 
bank holding companies, offices of other holding companies, or offices in 
the finance and insurance sector. Nonfinancial corporations accounted for 
about 49 percent of the value of GDP in 2013.
     
Labor Productivity: The measure describes the relationship between real 
output and the labor time involved in its production. Measures of labor 
productivity growth show the changes from period to period in the amount 
of goods and services produced per hour worked. They reflect the joint 
effects of many influences, including changes in technology; capital 
investment; level of output; utilization of capacity, energy, and 
materials; the organization of production; managerial skill; and the 
characteristics and effort of the work force.

Labor Compensation: The measure includes accrued wages and salaries, 
supplements, employer contributions to employee benefit plans, and taxes. 
Estimates of labor compensation by major sector, required for measures of 
hourly compensation and unit labor costs, are based primarily on employee 
compensation data from the NIPA, prepared by the BEA. The compensation of 
employees in general government, nonprofit institutions and private 
households are subtracted from compensation of domestic employees to 
derive employee compensation for the business sector. The labor 
compensation of proprietors cannot be explicitly identified and must be 
estimated. This is done by assuming that proprietors have the same hourly 
compensation as employees in the same sector. The quarterly labor 
productivity and cost measures do not contain estimates of compensation 
for unpaid family workers.  
      
Unit Labor Costs: These measures describe the relationship between 
compensation per hour and labor productivity, or real output per hour, 
and can be used as an indicator of inflationary pressure on producers. 
Increases in hourly compensation increase unit labor costs; labor 
productivity increases offset compensation increases and lower unit labor 
costs. 

Presentation of the data: The quarterly data in this release are 
presented in three ways: as percent changes from the previous quarter 
presented at a compound annual rate, as percent changes from the 
corresponding quarter of the previous year, and as index number series 
where 2009=100. Annual data are presented both as index number series and 
percent changes from the previous year.  
	The index numbers and rates of change reported in the productivity 
and costs news release are rounded to one decimal place. All percent 
changes in this release and on the BLS web site are calculated using 
index numbers to three decimal places. These index numbers are available 
at the BLS web site, www.bls.gov/data/home.htm, or by contacting the BLS 
Division of Major Sector Productivity (Telephone 202-691-5606 or email 
DPRWEB@BLS.GOV).

For a more detailed explanation of methodology see "Technical Information 
About the Major Sector Productivity and Costs Methods" at 
www.bls.gov/lpc/lpcmethods.pdf.
      
Information in this release will be made available to sensory-impaired 
individuals upon request. Voice phone: 202-691-5606; Federal Relay 
Service number: 1-800-877-8339.




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Last Modified Date: November 06, 2014
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