U.S. workforce more productive than originally thought

Source: U.S. Labor Department's Bureau of Labor Statistics

Dec 21, 2010

Nonfarm business sector labor productivity increased at a 2.3% annual rate during the third quarter of 2010, the U.S. Bureau of Labor Statistics reported. Labor productivity is calculated by dividing an index of real output by an index of the combined hours worked of all persons, including employees, proprietors and unpaid family workers. Output increased 3.7% and hours worked increased 1.4% in the third quarter. Nonfarm business productivity increased 2.5% from the third quarter of 2009 to the third quarter of 2010, as output increased 4.3% and hours worked rose 1.7%.

The productivity measures are based on more recent and more complete data than were available for the preliminary report issued last month.

Unit labor costs in nonfarm businesses decreased 0.1% in the third quarter of 2010, because productivity grew 2.3% while hourly compensation increased 2.2%. Over the last four quarters, unit labor costs declined 1.1%. 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.

Business sector productivity increased 2.5% in the third quarter of 2010, as output increased 3.7% and hours increased 1.2%. Over the last four quarters, business sector productivity increased 2.6%.

Manufacturing sector productivity rose 0.6% in the third quarter of 2010, as output and hours grew 4.2% and 3.6%, respectively. In the durable manufacturing subsector, output per hour declined 0.5% as output grew 6.0% but hours grew faster, 6.5%. In nondurable goods industries productivity increased 3.2%, due both to an increase in output and a decline in hours. Over the last four quarters, total manufacturing productivity increased 4.0% as output rose 7.1% and hours increased 3.0%. Manufacturing unit labor costs increased 1.0% in the third quarter of 2010, but fell 2.9% over the last four quarters.

The data sources and methods used in the preparation of the manufacturing output series differ from those used in preparing the business and nonfarm business output series, and these measures are not directly comparable.

Preliminary third-quarter 2010 data for the nonfinancial corporate sector also were released today. Output per hour fell 2.4% as output declined 0.2% and hours rose 2.3%.