Full text of 2003 : Text File, USDL 04-1945
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Internet address: http://www.bls.gov USDL 04-1945
Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902 Thursday, September 30, 2004
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT
LABOR COST TRENDS, 2003
The increase in U.S. manufacturing productivity in 2003 was the
second highest (+6.8 percent) among the 14 economies compared,
according to the U.S. Department of Labor's Bureau of Labor
Statistics. Korea registered the largest gain (+9.0 percent).
Manufacturing productivity also increased in all the compared
economies, except for Italy. (See chart 1.) In this news release,
data for Australia are included for the first time.
As in 2002, U.S. productivity growth in manufacturing in 2003 was
substantially above its average annual growth rate since 1979. Seven
of the other 12 economies for which comparisons are available also
had productivity growth in 2003 that exceeded their annual average
over the 1979-2003 period. (Average annual growth rates for selected
measures over various time periods are found in tables A and B.)
PRINTED COPY CONTAINS CHART AT THIS POINT
Chart 1. Percent change in manufacturing output per hour, 2003
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Unit labor costs in manufacturing, expressed in national currency
units, rose in 8 of the 13 economies for which 2003 data are
available, with a 1.6 percent increase in the United States. Of the
five economies that recorded declines in unit labor costs, Japan and
Taiwan experienced very small increases in hourly compensation,
Sweden had a relatively large increase in productivity, with the
remaining two having productivity increases that were slightly
greater than the corresponding hourly compensation increases.
The widespread, and mostly large, increases in unit labor costs in
U.S. dollar terms are explained by the depreciation of the dollar,
particularly with respect to the euro and other European currencies.
The U.S. dollar depreciated against the currencies of all the
economies compared, but the depreciation was very slight versus the
Taiwan dollar. Unit labor costs fell in U.S. dollar terms only in
Taiwan. (See chart 2 and table A.)
PRINTED COPY CONTAINS CHART AT THIS POINT
Chart 2. Percent change in manufacturing unit labor costs, 2002-2003
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Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 2002-2003
Percent change
Output Total Hourly Unit labor costs
Country per Total Employ- Average compen- compen- National U.S. Exchange
or area hour Output hours ment hours sation sation currency dollars rate (1)
United States 6.8 1.7 - 4.8 - 4.7 - 0.1 3.3 8.5 1.6 1.6 ---
Canada 1.2 - 0.5 - 1.7 - 0.8 - 0.9 1.9 3.6 2.4 14.7 12.1
Australia 3.3 1.2 - 2.0 - 1.9 - 0.1 NA NA NA NA 19.9
Japan 4.5 3.2 - 1.3 - 2.0 0.7 - 0.5 0.8 - 3.5 4.2 8.0
Korea 9.0 4.8 - 3.9 - 3.7 - 0.2 5.1 9.3 0.3 5.2 4.9
Taiwan 3.7 5.8 2.1 1.7 0.4 2.6 0.6 - 3.0 - 2.6 0.4
Belgium 3.2 - 0.6 - 3.7 - 3.0 - 0.7 NA NA NA NA 19.7
Denmark 4.3 0.5 - 3.6 - 3.1 - 0.5 1.0 4.8 0.5 20.5 19.9
France 1.9 - 0.5 - 2.3 - 2.2 - 0.1 0.5 2.9 1.0 20.9 19.7
Germany 2.6 0.2 - 2.4 - 2.7 0.3 - 0.2 2.3 - 0.3 19.3 19.7
Italy - 1.0 - 1.4 - 0.4 0.2 - 0.6 2.8 3.2 4.2 24.8 19.7
Netherlands NA - 2.8 NA - 3.0 NA 0.6 NA 3.5 23.8 19.7
Norway 1.6 - 3.8 - 5.4 - 4.6 - 0.8 - 1.4 4.3 2.6 15.6 12.7
Sweden 5.9 2.0 - 3.7 - 2.9 - 0.8 - 0.1 3.7 - 2.0 17.8 20.3
United Kingdom 5.5 0.4 - 4.8 - 4.5 - 0.4 0.2 5.3 - 0.2 8.5 8.8
(1) Value of foreign currency relative to the U.S. dollar.
NA=Not Available
Additional data available
Annual indexes of these variables also are estimated for the time
period 1950-2003 and are available at the Bureau of Labor Statistics,
Division of Foreign Labor Statistics website at address
http://www.bls.gov/fls/home.htm. Because the value added output data
for U.S. manufacturing industries are not available prior to 1977,
the comparative measure of output, output per hour, and unit labor
costs for the United States begin with 1977. However, for analytical
purposes, the international comparisons in this release go back to
1979.
For further information, contact the Office of Productivity and
Technology by phone at 202-691-5654, by e-mail at flspr@bls.gov, or
by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE,
Room 2150, Washington, DC 20212.
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BOX: Notes about the measures
The measures in this release are based on data available to BLS as of
August 2004. Revisions for 2002 and earlier years were made for
several countries to incorporate data not available at the time of
the March 2004 report.
United States
U.S. data in this release have been revised from 1998 forward and are
based for the first time on the 1997 North American Industry
Classification System (NAICS). Output, a value-added measure, is
based on a new methodology that balances and reconciles industry
production with commodity usage. Data for 2003 are accelerated
estimates from limited source data, prepared by the Bureau of
Economic Analysis (BEA) using extrapolations from the National Income
and Product Accounts (NIPAs). Additional details are available in
"Improved Annual Industry Accounts for 1998-2003," Survey of Current
Business, June 2004. The NAICS-based employment, hours, and
compensation data back to 1998 are taken from the series published by
BLS as part of the major sector productivity and costs measures for
the United States. (Canadian data are also on a NAICS basis for 1997
onward. See Technical Notes.)
Australia
With this press release, Australia becomes the fifteenth country for
which manufacturing productivity and unit labor costs are compared.
Australian economic data are published by fiscal year, which runs
from July 1 through June 30. The Australian Bureau of Statistics
(ABS) was able to supply unpublished calendar-year data for real
value added, employment, and hours worked for recent years. For
earlier years, and for compensation, the Bureau of Labor Statistics
made estimates using two-year moving averages of the data for fiscal
years. The earliest year for which suitable fiscal-year data are
available for real value added, employment, and hours is 1975.
Manufacturing compensation data are not available for years prior to
1990. The data for the following series, for the years given, are
estimates using two-year moving averages: real value added, 1975;
employment, 1975-1986; hours, 1975-1986; compensation, 1990-2002.
Denmark
Denmark published new employment and hours worked series for all
employed persons from 1966 forward. The data for compensation of
employees also has been revised from 1966 forward. The deflation
method used for converting output in current prices to output in real
terms has been changed from a fixed base-year to an annual chain-
linked Laspeyres method, consistent with the United Nations System of
National Accounts (SNA 93) guidelines.
Korea
Korea made changes in its national accounts methods to bring them
into closer accord with SNA 93 guidelines. These changes, from 1995
forward, have resulted in revisions downward in manufacturing value
added and revisions upward in compensation. The annual rates of
change in both series were little affected by the revisions.
END OF BOX (Notes about the measures)
-5-
Manufacturing productivity, output, and labor input
The growth in labor productivity (output per hour) in U.S.
manufacturing remained high at 6.8 percent in 2003. This growth was
not as high as the record set in 2002 of 10.2 percent, an increase
that has been revised upward by one percentage point over the figure
in the March press release. U.S. productivity growth in 2003 trailed
only that of Korea, at 9.0 percent, and was followed closely by
Sweden (+5.9 percent) and the United Kingdom (+5.5 percent). All
other economies recorded productivity increases except Italy, which
experienced a decline in productivity of 1.0 percent, following a
greater decrease in 2002. For the second year, productivity growth
continued to be low in Canada (+1.2 percent) and in Norway (+1.6
percent). The United Kingdom, Denmark, Japan, Australia, and Germany
had higher productivity growth in 2003 than in 2002.
The increases in labor productivity occurred despite a decline in
manufacturing output in 6 of the 15 economies. In 2003,
manufacturing output grew most in the Asian economies. The increase
in U.S. manufacturing output (+1.7 percent) was exceeded by only one
of the nine European countries, Sweden (+2.0 percent). Five of the
European countries experienced declines in manufacturing output in
2003, and the others had only very small increases. Output also
declined in Canada. (See table B.)
Hours worked in manufacturing declined in 2003 in all the
economies except Taiwan. Norway had the greatest decline in hours
worked (-5.4 percent), followed by the United States and the United
Kingdom, both with declines of 4.8 percent. In 2002, the United
States had the greatest decline among countries compared. In eight
of the countries with declines in hours worked, output increased in
2003, resulting in substantial productivity increases in most cases.
In four other countries, declines in manufacturing output were more
than offset by greater falls in hours worked, also resulting in
productivity increases. Only in Italy was the output decline greater
than the drop in hours worked, resulting in a fall in productivity.
(See tables A and B.)
The reductions in hours worked in manufacturing continued a
general trend during the last decades in the manufacturing sectors of
these economies. Canada and Taiwan were exceptions, with aggregate
hours worked in manufacturing increasing in both since 1979. In most
of the other economies, hours worked in manufacturing reached their
maximum levels in the 1960s and 1970s (the United States in 1979) and
have exhibited a downward trend since then. Five of the eight
European countries for which hours data are available had greater
declines than the United States over the period 1979-2003. In Taiwan
and Korea, manufacturing hours have been declining since the late
1980s. In most economies, the rate of decline slowed somewhat in the
second half of the 1990s when compared with the 1990-1995 period.
(See table B.)
For most economies, reductions in manufacturing hours over the
last several decades were the result of declines in both
manufacturing employment and average hours worked. The reduction in
average hours began earlier, but the decline in employment has been
steeper and steadier. In the United States, Australia, Italy, and
Sweden, average hours have risen slightly since 1979. (See table B.)
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In 2003, the U.S. decline in manufacturing employment was the
largest among the economies compared for the third year in a row.
Manufacturing employment also declined in all the other economies
except Italy and Taiwan. Taiwan, Japan, and Germany were the only
economies that had increases in average hours worked in 2003. (See
tables A and B.)
Manufacturing hourly compensation and unit labor costs
The United States had the second highest increase in hourly
compensation in manufacturing in 2003, expressed in national
currencies. All of the 12 economies for which statistics are
available had increases, with Korea at 9.3 percent outpacing the 8.5
percent U.S. rate. Of the 11 countries with data for the 1979-2003
period, the United States was the only one to have a greater increase
in 2003 than its average annual growth rate for the entire period.
Total compensation data are not available for Australia and Belgium
for 2003. The absence of hourly compensation data for the
Netherlands for 2003 is a result of unavailable hours data. (See
table B.)
Unit labor costs, expressed in national currency units, exhibited
a mixed pattern in 2003, with increases in 8 of the 13 countries for
which data are available. Of the seven economies with increases that
have data going back to 1979, three had increases in 2003 that were
above their 1979-2003 trend and four had increases that were below.
Italy had the greatest increase in unit labor costs at 4.2 percent
and Japan, with average gains in productivity and below average
increases in hourly compensation, had the biggest fall in unit labor
costs. U.S. unit labor costs increased by 1.6 percent in 2003, as
the increase in hourly compensation surpassed the growth in
productivity.
To compare changes in competitiveness across economies, the effect
of exchange rate fluctuations must be taken into account by
expressing unit labor costs in a common monetary unit. When a
foreign currency appreciates against the U.S. dollar, more dollars
must be paid in exchange for each national currency unit. This leads
to a larger increase, or a smaller decline, in unit labor costs in
U.S. dollar terms than the corresponding change in unit labor costs
expressed in the national currency. This makes products from that
country more expensive and lessens its competitiveness.
In 2003, the U.S. dollar depreciated against the currencies of all
the economies compared, continuing a weakening trend after 2001. In
most cases, the depreciation was much greater, with the exception of
Norway, than the depreciations that occurred in 2002: 19.7 percent
against the euro, 20.3 percent against the Swedish krona, 19.9
percent against the Australian dollar and the Danish krone, 12.7
percent against the Norwegian krone, and 12.1 percent against the
Canadian dollar. Only versus the Taiwanese dollar, at 0.4 percent,
was the depreciation of the U.S. dollar negligible. (See table B.)
The weakness in the U.S. dollar pushed up dollar-denominated unit
labor costs for most U.S. competitors in 2003, even where unit labor
costs in national currencies declined. Unit labor costs of all other
countries either increased more (seven countries), turned from
decreases to increases (four countries), or decreased less (Taiwan)
when expressed in U.S. dollars than in national currencies. In 8 of
the 13 economies, unit labor costs in U.S. dollars rose at double-
-7-
digit rates. In France, Italy, Denmark, and the Netherlands, these
increases surpassed 20 percent. The European increases were all well
above the average annual rates of increase since 1979, though they
were still less than in the 1985-1987 period, when the dollar
weakened even more. (See tables A and B and chart 3.)
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2003
Average annual rates of change 1/
Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003
or area
Output per hour
United States 3.8 3.0 3.3 4.7 6.0 10.2 6.8
Canada 2.5 2.2 3.8 2.8 0.7 2.8 1.2
Australia 3.1 2.7 2.9 3.9 3.2 2.9 3.3
Japan 3.6 3.8 3.3 4.1 2.4 3.0 4.5
Korea NA NA 9.7 10.8 5.9 9.8 9.0
Taiwan 5.9 6.4 5.3 5.6 5.5 6.3 3.7
Belgium 3.7 4.2 3.2 2.9 3.8 6.8 3.2
Denmark 2.4 2.1 2.7 2.4 2.6 3.2 4.3
France 4.2 4.2 4.0 4.5 3.5 4.8 1.9
Germany 2/ 2.4 2.1 3.3 2.5 1.9 2.5 2.6
Italy 1.6 2.2 2.2 1.0 -0.8 -1.7 -1.0
Netherlands NA 3.5 3.5 2.5 NA 2.2 NA
Norway 1.5 2.0 0.5 1.1 2.1 1.7 1.6
Sweden 4.3 2.5 5.7 7.1 3.8 9.0 5.9
United Kingdom 3.8 4.5 3.6 2.6 3.7 2.1 5.5
Output
United States 2.6 2.3 3.1 4.5 -0.5 2.4 1.7
Canada 2.6 1.9 2.4 5.9 -0.4 2.9 -0.5
Australia 1.7 1.6 0.9 2.6 1.7 3.9 1.2
Japan 2.5 4.7 0.4 2.0 -0.8 -2.0 3.2
Korea 8.6 10.1 8.4 7.9 4.8 7.6 4.8
Taiwan 6.0 7.6 5.0 5.7 2.0 6.3 5.8
Belgium 1.9 2.6 0.6 2.9 0.3 1.0 -0.6
Denmark 1.2 1.0 2.0 1.6 -0.1 -0.6 0.5
France 2.0 2.0 1.1 3.5 1.1 0.9 -0.5
Germany 2/ 0.6 1.2 -0.7 1.0 -0.1 -0.2 0.2
Italy 1.3 2.0 1.5 1.2 -1.0 -1.2 -1.4
Netherlands 1.9 2.5 1.8 2.6 -1.4 -0.8 -2.8
Norway 0.0 -0.4 1.1 1.0 -1.7 -0.7 -3.8
Sweden 3.2 1.8 3.7 7.4 1.1 4.1 2.0
United Kingdom 0.6 0.9 0.5 1.3 -1.4 -3.1 0.4
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2003
Average annual rates of change 1/
Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003
or area
Total hours
United States -1.2 -0.7 -0.1 -0.2 -6.2 -7.1 -4.8
Canada 0.1 -0.2 -1.3 3.0 -1.1 0.1 -1.7
Australia -1.4 -1.1 -2.0 -1.2 -1.5 1.0 -2.0
Japan -1.0 0.8 -2.8 -2.0 -3.1 -4.8 -1.3
Korea NA NA -1.2 -2.6 -1.0 -2.0 -3.9
Taiwan 0.1 1.2 -0.3 0.1 -3.3 -0.1 2.1
Belgium -1.7 -1.6 -2.5 -0.1 -3.4 -5.5 -3.7
Denmark -1.1 -1.1 -0.6 -0.8 -2.7 -3.7 -3.6
France -2.1 -2.1 -2.8 -1.0 -2.3 -3.8 -2.3
Germany 2/ -1.8 - .9 -3.9 -1.5 -2.0 -2.7 -2.4
Italy -0.3 -0.2 -0.7 0.1 -0.3 0.5 -0.4
Netherlands NA -1.0 -1.7 0.0 NA -2.9 NA
Norway -1.4 -2.3 0.6 -0.1 -3.7 -2.4 -5.4
Sweden -1.0 -0.7 -1.9 0.3 -2.7 -4.5 -3.7
United Kingdom -3.1 -3.4 -3.0 -1.3 -4.8 -5.1 -4.8
Employment
United States -1.2 -0.8 -0.6 -0.1 -5.5 -7.3 -4.7
Canada 0.1 -0.2 -1.5 2.8 -0.4 0.3 -0.8
Australia -1.5 -1.3 -2.3 -1.1 -1.4 1.0 -1.9
Japan -0.7 1.0 -1.6 -1.9 -3.1 -4.7 -2.0
Korea NA NA -0.9 -2.5 0.0 -1.2 -3.7
Taiwan 0.7 2.0 -0.3 0.4 -1.6 -1.8 1.7
Belgium -1.5 -1.6 -2.2 -0.7 -2.0 -3.6 -3.0
Denmark -1.0 -0.5 -1.2 -0.9 -2.6 -3.3 -3.1
France -1.4 -1.6 -2.5 -0.3 -0.9 -1.7 -2.2
Germany 2/ -1.3 -0.1 -4.2 -0.8 -1.5 -2.2 -2.7
Italy -0.7 -0.9 -1.6 0.1 0.3 0.8 0.2
Netherlands -0.9 -0.8 -1.6 0.2 -2.1 -2.9 -3.0
Norway -1.3 -2.2 0.3 0.1 -2.9 -1.2 -4.6
Sweden -1.4 -1.0 -3.5 0.0 -1.6 -2.8 -2.9
United Kingdom -2.7 -2.9 -2.6 -1.4 -4.5 -4.4 -4.5
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2003
Average annual rates of change /1
Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003
or area
Average hours
United States 0.1 0.2 0.4 -0.1 -0.7 0.2 -0.1
Canada 0.0 0.0 0.3 0.1 -0.7 -0.2 -0.9
Australia 0.1 0.2 0.3 -0.1 0.0 0.0 -0.1
Japan -0.4 -0.2 -1.3 -0.1 0.0 0.0 0.7
Korea NA NA -0.2 -0.1 -1.1 -0.7 -0.2
Taiwan -0.6 -0.8 0.0 -0.3 -1.8 1.7 0.4
Belgium -0.1 0.0 -0.3 0.6 -1.5 -2.0 -0.7
Denmark -0.2 -0.6 0.6 0.1 -0.1 -0.4 -0.5
France -0.6 -0.5 -0.3 -0.7 -1.4 -2.1 -0.1
Germany 2/ -0.5 -0.9 0.3 -0.6 -0.4 -0.5 0.3
Italy 0.4 0.6 0.9 0.0 -0.6 -0.3 -0.6
Netherlands NA -0.2 0.0 -0.2 NA 0.0 NA
Norway -0.2 -0.1 0.3 -0.2 -0.9 -1.2 -0.8
Sweden 0.4 0.3 1.7 0.2 -1.1 -1.7 -0.8
United Kingdom -0.4 -0.6 -0.4 0.1 -0.3 -0.7 -0.4
Total labor compensation in manufacturing 3/: National currency basis
United States 3.7 5.0 3.4 4.1 -0.7 -0.9 3.3
Canada 4.9 6.6 2.4 5.5 2.0 2.6 1.9
Australia NA NA 3.5 3.1 NA 4.5 NA
Japan 2.4 5.5 0.7 -1.1 -0.4 2.0 -0.5
Korea NA NA 16.8 5.4 6.4 7.9 5.1
Taiwan 7.9 13.5 6.8 4.2 -3.3 -2.8 2.6
Belgium NA 4.4 1.3 2.0 NA 1.5 NA
Denmark 4.4 6.8 2.3 3.0 2.0 0.9 1.0
France 3.6 6.5 1.1 1.1 1.8 1.5 0.5
Germany 2/ 3.0 4.6 2.3 1.6 0.7 -0.3 -0.2
Italy 7.0 11.4 4.2 2.9 2.8 3.0 2.8
Netherlands 3.0 3.1 2.8 3.4 2.7 3.5 0.6
Norway 5.0 6.5 4.0 5.0 1.5 3.4 -1.4
Sweden 5.5 8.4 2.0 5.3 1.3 -1.1 -0.1
United Kingdom 4.5 7.1 2.4 3.4 0.1 0.1 0.2
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2003
Average annual rates of change 1/
Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003
or area
Hourly compensation: National currency basis
United States 4.9 5.6 3.5 4.3 5.8 6.7 8.5
Canada 4.8 6.8 3.7 2.4 3.2 2.5 3.6
Australia NA NA 5.6 4.3 NA 3.5 NA
Japan 3.4 4.6 3.6 1.0 2.9 7.1 0.8
Korea NA NA 18.2 8.1 7.5 10.1 9.3
Taiwan 7.8 12.1 7.1 4.0 0.0 -2.8 0.6
Belgium NA 6.1 3.9 2.0 NA 7.3 NA
Denmark 5.6 7.9 2.9 3.8 4.8 4.9 4.8
France 5.8 8.8 4.0 2.2 4.2 5.4 2.9
Germany 2/ 4.9 5.6 6.4 3.2 2.7 2.5 2.3
Italy 7.3 11.7 4.9 2.8 3.1 2.4 3.2
Netherlands NA 4.1 4.5 3.3 NA 6.5 NA
Norway 6.6 9.0 3.4 5.2 5.4 6.0 4.3
Sweden 6.6 9.1 4.0 5.1 4.1 3.5 3.7
United Kingdom 7.8 10.9 5.6 4.8 5.2 5.5 5.3
Unit labor costs 3/: National currency basis
United States 1.1 2.6 0.2 -0.4 -0.2 -3.2 1.6
Canada 2.3 4.6 -0.1 -0.4 2.4 -0.3 2.4
Australia NA NA 2.6 0.4 NA 0.5 NA
Japan -0.2 0.8 0.3 -3.0 0.4 4.0 -3.5
Korea NA NA 7.8 -2.4 1.5 0.3 0.3
Taiwan 1.8 5.4 1.7 -1.5 -5.2 -8.6 -3.0
Belgium NA 1.8 0.7 -0.9 NA 0.5 NA
Denmark 3.2 5.7 0.2 1.4 2.2 1.6 0.5
France 1.6 4.4 -0.1 -2.2 0.7 0.6 1.0
Germany 2/ 2.4 3.3 3.1 0.6 0.8 0.0 -0.3
Italy 5.6 9.3 2.6 1.8 3.9 4.2 4.2
Netherlands 1.2 0.6 1.0 0.8 4.2 4.3 3.5
Norway 5.0 6.9 2.9 4.0 3.2 4.2 2.6
Sweden 2.2 6.5 -1.6 -1.9 0.3 -5.0 -2.0
United Kingdom 3.8 6.2 2.0 2.1 1.5 3.3 -0.2
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2003
Average annual rates of change 1/
Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003
or area
Unit labor costs 3/: U.S. dollar basis
United States 1.1 2.6 0.2 -0.4 -0.2 -3.2 1.6
Canada 1.5 4.6 -3.3 -2.0 4.5 -1.6 14.7
Australia NA NA 1.5 -4.3 NA 5.8 NA
Japan 2.5 4.6 9.4 -5.7 -2.0 1.0 4.2
Korea NA NA 6.0 -9.5 -0.3 3.7 5.2
Taiwan 2.0 8.2 2.0 -4.7 -8.2 -10.4 -2.6
Belgium NA 0.6 3.3 -8.4 NA 6.1 NA
Denmark 2.2 4.1 2.3 -5.8 9.5 7.3 20.5
France 0.3 2.1 1.7 -8.9 7.8 6.2 20.9
Germany2 2.7 4.5 5.6 -6.9 7.9 5.6 19.3
Italy 2.5 5.7 -3.5 -3.2 11.2 10.0 24.8
Netherlands 1.3 1.5 3.6 -6.9 11.5 10.1 23.8
Norway 3.5 4.9 2.6 -2.7 11.0 17.4 15.6
Sweden -0.5 3.4 -5.2 -6.7 4.6 1.0 17.8
United Kingdom 2.7 4.5 -0.5 1.3 4.1 7.8 8.5
Exchange rates 4/
United States --- --- --- --- --- --- ---
Canada -0.7 0.0 -3.2 -1.6 2.0 -1.4 12.1
Australia -2.2 -3.2 -1.1 -4.7 3.9 5.2 19.9
Japan 2.7 3.8 9.1 -2.7 -2.4 -2.9 8.0
Korea -3.7 -3.4 -1.7 -7.3 -1.7 3.3 4.9
Taiwan 0.2 2.7 0.3 -3.3 -3.1 -2.1 0.4
Belgium -0.8 -1.2 2.5 -7.6 7.0 5.6 19.7
Denmark -0.9 -1.5 2.0 -7.1 7.2 5.7 19.9
France -1.3 -2.2 1.8 -6.8 7.0 5.6 19.7
Germany2 0.2 1.1 2.5 -7.5 7.0 5.6 19.7
Italy -3.0 -3.3 -6.0 -4.9 7.0 5.6 19.7
Netherlands 0.1 0.9 2.6 -7.6 7.0 5.6 19.7
Norway -1.4 -1.9 -0.3 -6.4 7.6 12.7 12.7
Sweden -2.6 -2.9 -3.7 -4.9 4.3 6.4 20.3
United Kingdom -1.1 -1.6 -2.4 -0.8 2.5 4.4 8.8
NA = not available
1/ Rates of change based on the compound 3/ Adjusted for employment taxes and
rate method. government subsidies to estimate the
actual cost to employers.
2/ Data for years before 1991 pertain to the
former West Germany. 4/ Value of foreign currency relative to
the U.S. dollar.
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Trade-weighted unit labor costs
BLS constructs indexes of U.S. unit labor cost trends relative to a
trade-weighted average of unit labor cost trends in the other economies
to take account of differences in the relative importance of foreign
economies to U.S. trade in manufactured goods. Relative trade-weighted
unit labor cost indexes are calculated on both a national currency and a
U.S. dollar basis. In this release, the relative U.S. trade-weighted
indexes are estimated against 11 economies for which comparable data are
available over this period; the indexes underlying this chart are shown
in table C.
Chart 3 begins in 1979, a year in which U.S. manufacturing output
reached a business cycle peak.
PRINTED COPY CONTAINS CHART AT THIS POINT:
Chart 3. U.S. manufacturing unit labor costs relative to 11 competitors,
1979-2002
In the chart, the solid line indicates that U.S. unit labor costs
rose faster than "competitors" costs from 1979 to 1986 on a U.S. dollar
basis. In most years from 1986 to 1995, U.S. costs either rose at a
slower rate than the "competitors" costs or fell at a faster rate. From
1996 to 1998, however, the strength of the U.S. dollar caused relative
U.S. unit labor costs to rise. After a dip in 1999, the index of
relative U.S. unit labor costs rose in 2000 and 2001, only to dip again
after 2001 with a weakening of the U.S. dollar.
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Table C. U.S. manufacturing unit labor
costs relative to 11(1) competitors, 1979-2003
Unit Labor Costs Unit Labor Costs
National Currency Basis U.S. Dollar Basis
Year Own Competitors' Own Competitors'
Index Index Ratio Index Index Ratio
1979 100.0 100.0 100.0 100.0 100.0 100.0
1980 111.4 110.5 100.8 111.4 110.2 101.1
1981 116.5 118.7 98.2 116.5 109.5 106.4
1982 124.2 126.7 98.1 124.2 106.1 117.1
1983 121.6 128.9 94.3 121.6 105.1 115.6
1984 121.0 130.0 93.1 121.0 100.2 120.8
1985 123.4 130.6 94.5 123.4 97.7 126.3
1986 128.9 136.2 94.6 128.9 123.8 104.1
1987 122.8 138.6 88.6 122.8 142.9 85.9
1988 122.5 138.6 88.4 122.5 154.0 79.6
1989 128.0 141.7 90.3 128.0 152.2 84.1
1990 132.4 147.4 89.8 132.4 164.1 80.7
1991 138.0 153.1 90.2 138.0 173.6 79.5
1992 141.3 156.5 90.3 141.3 181.5 77.9
1993 142.3 157.0 90.6 142.3 177.9 80.0
1994 139.2 154.4 90.1 139.2 177.8 78.3
1995 134.0 153.8 87.1 134.0 187.0 71.7
1996 132.1 155.0 85.2 132.1 178.8 73.9
1997 129.9 153.1 84.9 129.9 164.3 79.1
1998 131.2 154.8 84.7 131.2 157.2 83.4
1999 129.8 152.0 85.4 129.8 159.4 81.5
2000 131.2 146.8 89.4 131.2 150.0 87.5
2001 132.7 150.3 88.3 132.7 143.4 92.5
2002 128.4 152.1 84.4 128.4 145.9 88.0
2003 130.4 151.4 86.2 130.4 162.3 80.4
(1) Data for Australia, Belgium, and Korea are not available for 1979 and/or for 2003.
These three countries have been omitted from this table.
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Technical Notes
The comparisons in this release make use of data made available to
BLS as of August 2004 by the statistical agencies of the individual
countries.
Labor productivity is defined as real output per hour worked.
Although the labor productivity measure presented in this release
relates output to the hours worked of persons employed in
manufacturing, it does not measure the specific contributions of
labor as a single factor of production. Rather, it reflects the joint
effects of many influences, including new technology, capital
investment, capacity utilization, energy use, and managerial skills,
as well as the skills and efforts of the workforce.
Unit labor costs are defined as the cost of labor input required to
produce one unit of output. They are computed as compensation in
nominal terms divided by real output.
The Bureau of Labor Statistics constructs trends of manufacturing
labor productivity, hourly compensation costs, and unit labor costs
from three basic aggregate measures -- output, total labor hours, and
total compensation. The hours and compensation measures refer to
employees (wage and salary earners) in Belgium and Taiwan. For all
other economies, the measures refer to all employed persons,
including employees, self-employed persons, and unpaid family
workers. For all of the economies, the term "hours" refers to hours
worked.
In general, the measures relate to total manufacturing as defined by
the International Standard Industrial Classification (ISIC). However,
the measures for Denmark include mining and exclude manufacturing
handicrafts from 1950 to 1966, and the measures for France include
parts of mining. From 1998 forward, data for the United States are in
accordance with the North American Industrial Classification System
(NAICS 97). Prior to that, they are in accordance with the Standard
Industrial Classifications (SIC 87, 1987-1997; SIC 72, 1950-1986).
From 1997 forward, data for Canada are in accordance with the NAICS
97 and, prior to 1997, with the Canadian SIC 80.
For most countries, the data for the most recent years are based on
the United Nations System of National Accounts 1993 (SNA 93) or its
sub-system, the European System of Integrated National Accounts (ESA
95). For other countries, data were compiled according to previously
used systems.
To obtain historical time series, BLS may link together data series
which were compiled according to different accounting systems by the
countries' statistical agencies.
Output. For most countries, the output measures are real value added
in manufacturing from national accounts. However, output for Japan
prior to 1970 and for the Netherlands prior to 1960 are indexes of
industrial production. The manufacturing value added measures for the
United Kingdom are essentially identical to their indexes of
industrial production.
The output measure for manufacturing in the United States is the
chain-weighted index of real gross product originating (deflated
value added), introduced by the Bureau of Economic Analysis (BEA) of
the U.S. Department of Commerce in August 1996. Because these value
added output data for U.S. manufacturing industries are not available
for years prior to 1977, the comparative U.S. measures of output,
output per hour, and unit labor costs begin with 1977. For more
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information on the U.S. measure, see "Improved Estimates of Gross
Product by Industry for 1947-98," Survey of Current Business, June
2000, pp. 24-38.
The U.S. output series used for international comparisons differs
from the manufacturing output series that BLS publishes as part of
its major sector productivity and costs measures for the United
States. While both series are based on annually-changing price
weights, the international comparisons program uses a value added
output concept, while the major sector series is on a sectoral output
basis and begins with 1949. Sectoral output is gross output less
intrasector sales and transfers. The U.S. major sector productivity
and costs measures can be found at http://www.bls.gov/lpc/home.htm.
For information on sectoral output, see "Measurement of productivity
growth in U.S. manufacturing," Monthly Labor Review, July 1995, pp.
13-28.
Value added measures have been used for the international comparisons
series because the data are more readily available from the
countries' national accounts, whereas sectoral output would require a
complex estimation procedure. Also, although BLS has determined that
sectoral output is the correct concept for U.S. measures of
productivity, there are other considerations that may make value
added a better concept for international comparisons of labor
productivity, such as differences among countries in the extent of
vertical integration of industries.
Estimation of manufacturing real output using moving price weights,
as recommended by SNA 93, is becoming prevalent. However, many
earlier time periods within the historical real output series have
been estimated using fixed price weights, with the weights updated
periodically (for example, every 5 or 10 years).
Measures of real output also may differ among countries because of
different approaches to estimating the prices of high-technology
products like computers and, in general, of products that undergo
rapid quality change.
Labor Input. For the United States, the hours worked data are taken
from the BLS major sector productivity program. The aggregate hours
worked series used for France (from 1970 forward), Australia, Canada,
Denmark, Norway, and Sweden are series published with the national
accounts. For the former West Germany after 1959 and Germany from
1991, BLS uses aggregate hours worked, which were developed by a
research institute of the German Ministry of Labor for use with the
national accounts employment figures. For the United Kingdom from
1992, an annual index of total manufacturing hours is used. For all
other countries, the U.K. before 1992, and the former West Germany
before 1959, BLS constructs its own estimates of aggregate hours,
using employment figures published with the national accounts, or
other comprehensive employment series, and estimates of average
annual hours worked. The Italian hours worked series is based on
estimates by the Bank of Italy. In this news release, the all
employed actual hours worked data for Denmark, beginning with 1966,
are new series released by that country's statistical office.
Compensation (Labor Cost). The compensation measures are from
national accounts data. Compensation includes employer expenditures
for legally required insurance programs and contractual and private
benefit plans, in addition to all payments made in cash or in kind
directly to employees. When data for the self-employed are not
available, total compensation is estimated by assuming the same
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average compensation for the self-employed as for employees. Real
compensation for the United States is derived using the Consumer
Price Index research series (CPI-U-RS).
Labor cost is defined as compensation plus employment taxes minus
employment subsidies, i.e. the cost to employers of hiring labor. For
most countries, labor cost is the same as compensation. However, for
Australia, Canada, France, and Sweden, compensation is increased to
account for important taxes on payroll or employment. For the United
Kingdom, compensation is reduced between 1967 and 1991 to account for
subsidies.
Data for Germany. German data pertain to unified Germany from 1991
forward and to the former West Germany for prior years. The data
series are linked in 1991. In the index tables, separate indexes are
shown for unified Germany and for former West Germany. West German
estimates end with 1998 and have not been revised by BLS since the
news release USDL 99-235, on Aug. 27, 1999.
Current Indicators. The measures for recent years may be based on
current indicators of output (such as industrial production indexes),
employment, average hours, and hourly compensation until national
accounts and other statistics, normally used for the long-term
measures, become available.
Trade-Weighted Measures. The trade weights for Canada, Japan, and the
European countries were obtained by re-scaling a series of weights,
developed by the International Monetary Fund, based on average trade
flows over the 1989-91 period. These weights are based on aggregate
trade data for total manufacturing and take account of both bilateral
trade and the relative importance of "third country" markets. The
1989-91 weights do not include Taiwan. BLS developed weights for
Taiwan by using data from an earlier study from the International
Monetary Fund and other sources. The weight used for Germany is based
on the trade weight of the former West Germany.
The following weights were used for the entire period for which
trade-weighted unit labor cost measures are produced:
Country Weight Country Weight
Canada 25.87 Italy 4.70
Japan 31.23 Netherlands 2.30
Taiwan 5.92 Norway 0.49
Denmark 0.49 Sweden 1.93
France 6.03 United Kingdom 9.18
Germany 11.86
Level Comparisons. The BLS measures are limited to trend comparisons.
BLS does not prepare level comparisons of manufacturing productivity
and unit labor costs because of data limitations and technical
problems in comparing the levels of manufacturing output among
countries. Each country measures manufacturing output in its own
currency units. To compare outputs among countries, a common unit of
measure is needed. Market exchange rates are not suitable as a basis
for comparing output levels. What is needed are purchasing power
parities, which are the number of foreign currency units required to
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buy goods and services equivalent to what can be bought with one unit
of U.S. currency.
Purchasing power parities are available for total gross domestic
product (GDP) from the Organization for Economic Cooperation and
Development (OECD). However, these parities are derived for
expenditures made by consumers, business, and government for goods
and services -- not for value added by industry. Therefore, they do
not provide purchasing power parities by industry. The parities
developed for total GDP are not suitable for each component industry,
such as manufacturing.
European exchange rates. On Jan. 1, 1999, 11 European countries
joined the European Monetary Union (EMU). Greece joined on Jan. 1,
2001. The euro, the official currency of the EMU, was established at
fixed conversion rates to the previous national currencies of EMU
members. Data on manufacturing value added and labor compensation for
euro-area countries are now reported in euros. And exchange rates
between the previous national currencies of euro-area countries and
the U.S. dollar are no longer reported; only the exchange rate
between the euro and the U.S. dollar is available.
In order to maintain historical continuity of data series, data for
euro-area countries for years before 1999 have been converted to
euros by applying the fixed euro/national currency conversion rates.
For countries and years where output, compensation, and exchange
rates are converted from national currency units into euros, the
following fixed conversion rates are used:
1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire
6.55957 French francs 2.20371 Netherlands guilders
1.95583 German marks
The currency exchange rates cited in this publication are annual
averages of daily buying rates in New York City.