Full text of 2004 : Text File, USDL 05-1990
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Internet address: http://www.bls.gov USDL 05-1990
Technical information: (202) 691-5654 For Release: 10:00 A.M. EST
Media contact: (202) 691-5902 Thursday, October 27, 2005
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR
COST TRENDS, 2004
Among fourteen countries under comparison, seven, including the
United States, had manufacturing productivity gains of over 4.5 percent
in 2004, according to the U.S. Department of Labor�s Bureau of Labor
Statistics. Korea registered the largest gain (+12.1 percent), followed
by Sweden (+9.3 percent). Manufacturing productivity increased in all
of the compared economies except Italy and Australia. (See chart 1.)
U.S. productivity growth in manufacturing in 2004 was 4.7 percent,
about half the increase of 2003, and less than the average yearly
increases over the last decade. It was greater, however, than the
average annual growth rate since 1979. Six of the other 13 economies
for which comparisons are available also had productivity growth in 2004
that exceeded their annual average increases over the 1979-2004 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, 2003-2004
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Unit labor costs in manufacturing, expressed in national currency
units, fell in 11 of the 13 economies for which data were available.
Five economies posted greater declines than the United States (-2.4
percent). Unit labor costs declined most in Sweden (-6.4 percent),
reflecting that country's strong productivity growth.
In 2004, the dollar decreased in value against the currencies of all
the other 14 economies compared, although generally less than in 2003.
The decline was particularly large against the Australian dollar and the
British pound. As a result of the dollar's devaluation, besides the
United States, only Taiwan showed a decline in dollar-denominated unit
labor costs. (See chart 2 and table A.)
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2. Percent change in
manufacturing unit labor costs, 2003-2004
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Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 2003-2004
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 4.7 4.3 - 0.4 - 1.2 0.8 1.8 2.2 - 2.4 - 2.4 ---
Canada 2.9 3.8 0.8 - 1.0 1.8 0.7 - 0.1 - 3.0 4.4 7.6
Australia - 0.5 0.0 0.5 0.6 - 0.1 NA NA NA NA 12.9
Japan 6.9 5.5 - 1.3 - 2.4 1.1 - 0.8 0.5 - 6.0 0.8 7.2
Korea 12.1 11.4 - 0.6 0.5 - 1.1 10.4 11.1 - 0.9 3.2 4.1
Taiwan 4.7 9.4 4.5 3.2 1.3 5.9 1.3 - 3.2 - 0.2 3.1
Belgium 3.2 2.3 - 0.9 - 3.2 2.4 NA NA NA NA 9.9
Denmark 0.9 - 2.8 - 3.6 - 3.0 - 0.6 0.6 4.4 3.4 13.6 9.8
France 3.5 1.0 - 2.4 - 2.4 0.0 0.0 2.5 - 1.0 8.8 9.9
Germany 4.6 4.6 0.0 - 1.5 1.5 0.6 0.6 - 3.8 5.7 9.9
Italy - 0.6 0.0 0.5 - 0.3 0.9 3.2 2.6 3.2 13.4 9.9
Netherlands NA 1.2 NA - 4.0 NA - 0.2 NA - 1.4 8.3 9.9
Norway 2.1 1.8 - 0.3 - 3.0 2.8 1.6 1.9 - 0.2 4.9 5.1
Sweden 9.3 9.4 0.1 - 1.9 2.0 2.4 2.3 - 6.4 2.9 9.9
United Kingdom 5.0 1.8 - 3.0 - 3.7 0.7 0.3 3.5 - 1.4 10.5 12.1
(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 1950-2004 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.
-4-
Box: Notes about the measures
Notes about the measures
The measures in this release are based on data available to BLS as of
mid-August 2005. Revisions for 2003 and earlier years were made for
several economies to incorporate data not available at the time of the
February 2005 report.
United States
The U.S. output series in this release is a value-added measure produced
by the Bureau of Economic Analysis (BEA) as part of the integrated
annual GDP-by-industry and input-output (I-O) accounts. From 1987 they
are based on the 1997 North American Industry Classification System
(NAICS). Output for 2004 is an advance estimate by the BEA, incorporating
summary source data from the final estimate of fourth-quarter GDP from
the national income and product accounts. Additional details are available
in Erich H. Strassner and Thomas F. Howells III, "Annual Industry
Accounts: Advance Estimates for 2004," Survey of Current Business, May 2005.
The NAICS-based employment, hours, and compensation data back to 1987 are
taken from the series published by BLS as part of the major sector
productivity and cost measures for the United States.
Australia
Australian data are published by fiscal years, which run from July 1
through June 30. The Australian Bureau of Statistics provided
unpublished calendar year data for real value added, employment, and
hours worked. For compensation, the Bureau of Labor Statistics
estimated calendar-year series using two-year moving averages of the
data for fiscal years. Manufacturing compensation data for fiscal year
2005, needed for estimating calendar year 2004, are not yet available.
Such data also are not available for years prior to 1990.
Belgium
Data for compensation in manufacturing for 2004 are not available in
this report.
Netherlands
Data for hours worked in manufacturing have not been released for 2004.
Consequently, 2004 estimates of labor productivity and hourly compensation
are not available for this report.
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 was 4.7 percent in 2004. While this growth rate remained
below the U.S. average annual gains in recent periods, it exceeded the
gains of the period since 1979. (See table B.) In 2004, 8 of the 14
economies compared posted manufacturing productivity gains between 2.1
and 5.0 percent.
From 2000 to 2004, of the 14 economies for which comparable data are
available, only Korea posted higher average annual manufacturing
productivity growth than the United States. Other economies with
relatively high average annual productivity gains over 2000-2004 were
Sweden, Taiwan, and Japan. Manufacturing productivity declined in Italy
during these years, while Canada and Denmark recorded the smallest
increase. Productivity data for 2004 are not estimated for the
Netherlands because hours data are not available. (See tables A and B.)
Changes in manufacturing labor productivity correspond to changes in
output and in total hours worked. U.S. output growth was only slightly
lower in 2004 than in 2003. Nonetheless, the 2004 productivity increase
was only half of the 2003 increase, a reflection of the slower decline
of hours worked. U.S. manufacturing productivity and output increased
in every period shown in table B. Productivity increased more rapidly
than output, as aggregate hours declined throughout the period. A
similar pattern emerged for most of the other economies compared. (See
table B.)
Of the 12 economies that experienced growth in manufacturing labor
productivity in 2004, 11 also had increases in manufacturing output.
Output increased most in Korea (+11.4 percent). Other economies where
manufacturing output increased by more than 4 percent in 2004 were the
United States, Sweden, Taiwan, Japan, and Germany. Only Denmark showed
a decline in output. (See table A.)
Manufacturing hours declined by 0.4 percent in the United States in
2004, continuing a downward trend in hours during the period since 1979.
In fact, the U.S. hours decline reflects a trend in most industrial
economies, as hours worked fell over the 1979-2004 period in 11 of the
13 economies for which hours data are available over that period.
Nevertheless, hours worked in 2004 rose in five economies and remained
constant in one. Taiwan experienced the largest increase (+4.5
percent). (See table B.) The U.S. decline was smaller than those in 6
other economies.
Total hours worked are a function of both the number of people
employed and the average hours worked per person. In 2004,
manufacturing employment fell in 12 of the 15 economies. With the
exception of Italy, European employment declines in 2004 accelerated
compared to the average annual declines of the last 25 years. By
contrast, the 2004 U.S. decline (-1.2 percent) was the same as the
average annual decline since 1979. In 2004, employment increased most
in Taiwan (+3.2), and also grew in Australia and Korea. (See tables A
and B.)
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In 2004, average hours worked per person in manufacturing increased
in 10 of the 14 economies for which hours data are available, while
remaining constant in France and decreasing in only Korea, Denmark, and
Australia. Average hours increased most in Norway (2.8 percent) and
Belgium (2.4 percent). In the United States, average hours worked rose
by 0.8 percent.
Of the eight countries to experience aggregate hour declines, only in
Korea did these declines occur because average hours declined more than
employment increased. Generally, aggregate hours declined because
employment declined more than average hours increased. (See table A.)
Manufacturing hourly compensation and unit labor costs
In 2004, manufacturing hourly compensation, expressed in national
currency units, increased in 11 of the 12 economies for which comparable
data are available. Only Canada�s hourly compensation declined. Korea
had the largest growth rate (+11.1 percent). Most of the increases (six
economies) were between 1.3 and 2.6 percent. The U.S. hourly
compensation increase (+2.2 percent) was less than half its average
annual growth rate for 1979-2004. Hourly compensation data for 2004 are
not estimated for Australia, Belgium, and the Netherlands, because
either compensation or hours data are not available. (See table B.)
Relative changes in manufacturing unit labor costs, expressed in
national currency units, are directly proportional to relative changes
in hourly compensation, and inversely proportional to relative changes
in labor productivity. In 2004, both hourly compensation and labor
productivity increased in 10 of the economies compared, so that the
changes in unit labor costs were determined by the relative magnitudes
of these increases. Unit labor costs, in national currency units, fell
in 11 of the 13 economies compared. The drop was greatest in Sweden (-
6.4 percent) and Japan (-6.0 percent), reflecting both countries' large
increases in manufacturing productivity.
In the United States manufacturing unit labor costs declined by 2.4
percent as productivity gains outstripped hourly compensation gains.
This drop in U.S. unit labor costs followed a 1.4 percent decline in
2003, and was almost twice the average annual reductions over the 2000-
2004 period. In 2004, unit labor costs increased only in Denmark (+3.4
percent) and Italy (+3.2 percent). (See tables A and B.)
Often exchange rate movements are the dominant influence on the
relative changes in the unit labor costs of different economies. In
2004, the U.S. dollar depreciated against the currencies of all the
economies compared. However, the 2004 depreciation of the U.S. dollar
was smaller than in 2003 for all currencies except the British pound and
Taiwan dollar. In 2003 the U.S. dollar experienced double-digit
depreciation against 6 of the 10 currencies compared, as opposed to only
2 currencies in 2004 - the Australian dollar and the British pound.
(See tables A and B.)
-7-
The depreciation of the U.S. dollar contributed to the increase in
U.S. dollar-denominated manufacturing unit labor costs in most of the
other economies being compared. However, compared with 2003, the
increases in 2004 held at single-digit rates in all economies except for
Denmark, Italy, and the United Kingdom. Besides the United States, U.S.
dollar-denominated unit labor costs declined only in Taiwan. The Taiwan
dollar did not appreciate against the U.S. dollar (+3.1 percent) enough
to counter a 3.2 percent decline in local currency-denominated unit
labor costs. The depreciation of the U.S. dollar in 2003 and 2004 was
the main contributing factor to the increase in unit labor costs,
denominated in U.S. dollars, in most of the economies compared. (See
tables A and B and chart 3.)
-8-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2004
Average annual rates of change 1/
Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004
or area
Output per hour
United States 4.2 3.0 3.7 5.7 6.4 9.9 4.7
Canada 2.6 2.0 3.8 3.2 1.8 2.3 2.9
Australia 3.0 2.8 2.9 3.9 2.5 3.8 -0.5
Japan 4.0 3.8 3.3 4.1 5.0 11.0 6.9
Korea NA NA 9.6 10.8 6.9 7.0 12.1
Taiwan 5.7 6.2 5.2 5.5 5.4 3.6 4.7
Belgium 3.6 4.2 3.2 2.9 3.3 4.7 3.2
Denmark 2.2 2.1 2.7 1.8 2.0 5.0 0.9
France 4.2 4.2 4.6 5.1 2.5 0.3 3.5
Germany 2/ 2.7 2.1 2.9 3.7 2.8 2.5 4.6
Italy 1.5 2.2 2.2 1.0 -0.7 -0.9 -0.6
Netherlands NA 3.5 3.5 2.5 NA 4.9 NA
Norway 1.6 2.0 0.5 1.1 2.3 1.4 2.1
Sweden 4.6 2.5 5.7 7.1 5.8 6.5 9.3
United Kingdom 3.5 3.8 3.3 2.6 3.9 4.9 5.0
Output
United States 3.0 2.3 3.6 5.4 1.3 4.5 4.3
Canada 2.5 1.8 2.4 5.9 0.5 0.4 3.8
Australia 1.6 1.6 0.9 2.6 1.5 1.7 0.0
Japan 2.9 4.7 0.4 2.0 2.1 9.6 5.5
Korea 8.8 10.1 8.4 7.9 6.6 5.5 11.4
Taiwan 6.0 7.5 4.9 5.6 3.9 5.7 9.4
Belgium 2.0 2.6 0.6 2.9 0.8 0.8 2.3
Denmark 1.0 1.0 2.1 1.7 -1.1 -0.4 -2.8
France 2.0 2.0 1.7 3.9 0.3 -0.6 1.0
Germany 2/ 0.9 1.2 -1.0 2.2 1.1 -0.2 4.6
Italy 1.3 2.0 1.5 1.2 -0.8 -1.3 0.0
Netherlands 1.9 2.5 1.8 2.6 -0.3 -1.6 1.2
Norway 0.1 -0.4 1.1 1.0 -0.7 -4.1 1.8
Sweden 3.6 1.8 3.7 7.4 3.8 2.6 9.4
United Kingdom 0.6 0.9 0.5 1.3 -0.7 0.1 1.8
Continued on next page
-9-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2004
Average annual rates of change 1/
Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004
or area
Total hours
United States -1.1 -0.6 -0.1 -0.2 -4.8 -4.9 -0.4
Canada 0.0 -0.2 -1.3 2.6 -1.3 -1.9 0.8
Australia -1.3 -1.2 -2.0 -1.2 -1.0 -2.0 0.5
Japan -1.1 0.8 -2.8 -2.0 -2.7 -1.3 -1.3
Korea NA NA -1.1 -2.6 -0.3 -1.3 -0.6
Taiwan 0.3 1.2 -0.3 0.1 -1.4 2.1 4.5
Belgium -1.6 -1.6 -2.5 -0.1 -2.4 -3.7 -0.9
Denmark -1.1 -1.1 -0.7 -0.1 -3.0 -5.2 -3.6
France -2.1 -2.1 -2.8 -1.1 -2.2 -0.8 -2.4
Germany 2/ -1.7 -0.9 -3.8 -1.4 -1.6 -2.6 0.0
Italy -0.2 -0.2 -0.7 0.1 -0.1 -0.5 0.5
Netherlands NA -1.0 -1.7 0.0 NA -6.3 NA
Norway -1.4 -2.3 0.6 -0.1 -3.0 -5.4 -0.3
Sweden -0.9 -0.7 -1.9 0.3 -1.9 -3.6 0.1
United Kingdom -2.8 -2.8 -2.8 -1.3 -4.4 -4.6 -3.0
Employment
United States -1.2 -0.8 -0.5 -0.1 -4.5 -4.8 -1.2
Canada -0.1 -0.2 -1.5 2.4 -1.3 -1.4 -1.0
Australia -1.4 -1.3 -2.3 -1.1 -0.9 -1.9 0.6
Japan -0.7 1.0 -1.6 -1.9 -3.0 -2.2 -2.4
Korea NA NA -0.8 -2.5 0.8 -1.2 0.5
Taiwan 0.8 2.0 -0.3 0.4 -0.4 1.7 3.2
Belgium -1.6 -1.6 -2.2 -0.7 -2.4 -3.3 -3.2
Denmark -1.1 -0.5 -1.2 -1.2 -2.5 -4.7 -3.0
France -1.5 -1.6 -2.5 -0.3 -1.1 -0.6 -2.4
Germany 2/ -1.3 -0.1 -4.2 -0.8 -1.5 -2.6 -1.5
Italy -0.7 -0.9 -1.6 0.1 0.2 0.2 -0.3
Netherlands -1.0 -0.8 -1.6 0.2 -2.5 -3.2 -4.0
Norway -1.4 -2.2 0.3 0.1 -3.1 -4.7 -3.0
Sweden -1.4 -1.0 -3.5 0.0 -1.6 -2.8 -1.9
United Kingdom -2.6 -2.6 -2.6 -1.4 -4.4 -4.8 -3.7
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, 1979-2004
Average annual rates of change 1/
Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004
or area
Average hours
United States 0.1 0.2 0.4 -0.2 -0.3 -0.1 0.8
Canada 0.1 0.0 0.3 0.2 0.0 -0.5 1.8
Australia 0.1 0.1 0.3 -0.1 0.0 -0.1 -0.1
Japan -0.3 -0.2 -1.3 -0.1 0.3 0.9 1.1
Korea NA NA -0.2 -0.1 -1.0 -0.1 -1.1
Taiwan -0.6 -0.8 0.0 -0.3 -1.0 0.4 1.3
Belgium 0.1 0.0 -0.3 0.6 0.1 -0.4 2.4
Denmark 0.0 -0.6 0.6 1.1 -0.5 -0.5 -0.6
France -0.6 -0.5 -0.3 -0.8 -1.0 -0.2 0.0
Germany 2/ -0.4 -0.9 0.4 -0.6 -0.1 0.0 1.5
Italy 0.4 0.6 0.9 0.0 -0.3 -0.7 0.9
Netherlands NA -0.2 0.0 -0.2 NA -3.1 NA
Norway 0.0 -0.1 0.3 -0.2 0.1 -0.8 2.8
Sweden 0.5 0.3 1.7 0.2 -0.3 -0.9 2.0
United Kingdom -0.1 -0.2 -0.2 0.1 0.0 0.2 0.7
Total labor compensation in manufacturing 3/: National currency basis
United States 3.7 4.9 3.4 4.4 0.0 3.0 1.8
Canada 4.6 6.5 2.4 5.2 1.2 1.4 0.7
Australia NA NA 3.5 3.1 NA 3.2 NA
Japan 1.9 5.5 0.7 -1.1 -2.2 -0.6 -0.8
Korea 14.2 19.6 17.6 5.4 7.0 3.5 10.4
Taiwan 7.8 13.5 6.8 3.6 -0.3 3.7 5.9
Belgium NA 4.4 1.3 2.0 NA 0.3 NA
Denmark 4.2 6.8 2.3 2.8 1.5 -0.4 0.6
France 3.5 6.5 1.1 1.1 1.5 3.1 0.0
Germany 2/ 2.9 4.6 2.4 1.6 0.4 -0.5 0.6
Italy 6.8 11.4 4.2 2.9 2.9 2.7 3.2
Netherlands 2.9 3.1 2.8 3.4 1.8 0.6 -0.2
Norway 4.8 6.5 4.0 5.0 1.2 -1.4 1.6
Sweden 5.5 8.4 2.0 5.3 2.1 -0.3 2.4
United Kingdom 4.3 7.1 2.4 3.4 0.1 0.2 0.3
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, 1979-2004
Average annual rates of change 1/
Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004
or area
Hourly compensation: National currency basis
United States 4.9 5.5 3.5 4.7 5.0 8.3 2.2
Canada 4.6 6.8 3.8 2.5 2.5 3.4 -0.1
Australia NA NA 5.6 4.3 NA 5.3 NA
Japan 3.0 4.6 3.6 1.0 0.5 0.7 0.5
Korea NA NA 18.9 8.1 7.3 5.0 11.1
Taiwan 7.5 12.1 7.1 3.4 1.2 1.6 1.3
Belgium NA 6.1 3.9 2.0 NA 4.1 NA
Denmark 5.4 7.9 2.9 2.9 4.7 5.0 4.4
France 5.7 8.8 4.0 2.2 3.7 4.0 2.5
Germany 2/ 4.7 5.6 6.4 3.1 2.1 2.2 0.6
Italy 7.1 11.7 4.9 2.8 3.0 3.2 2.6
Netherlands NA 4.1 4.5 3.3 NA 7.3 NA
Norway 6.3 9.0 3.4 5.2 4.3 4.3 1.9
Sweden 6.5 9.1 4.0 5.1 4.1 3.5 2.3
United Kingdom 7.2 10.2 5.4 4.7 4.7 5.1 3.5
Unit labor costs 3/: National currency basis
United States 0.6 2.5 -0.2 -0.9 -1.3 -1.4 -2.4
Canada 2.0 4.7 0.0 -0.6 0.7 1.0 -3.0
Australia NA NA 2.6 0.4 NA 1.4 NA
Japan -0.9 0.8 0.3 -3.0 -4.2 -9.3 -6.0
Korea 5.0 8.6 8.5 -2.4 0.3 -1.9 -0.9
Taiwan 1.7 5.5 1.9 -1.9 -4.0 -1.9 -3.2
Belgium NA 1.8 0.7 -0.9 NA -0.5 NA
Denmark 3.1 5.7 0.2 1.1 2.6 0.0 3.4
France 1.4 4.4 -0.6 -2.7 1.1 3.7 -1.0
Germany 2/ 1.9 3.3 3.4 -0.5 -0.7 -0.4 -3.8
Italy 5.5 9.3 2.6 1.8 3.7 4.1 3.2
Netherlands 0.9 0.6 1.0 0.8 2.1 2.3 -1.4
Norway 4.7 6.9 2.9 4.0 2.0 2.8 -0.2
Sweden 1.8 6.5 -1.6 -1.9 -1.6 -2.8 -6.4
United Kingdom 3.6 6.2 2.0 2.0 0.7 0.1 -1.4
Continued on next page
-12-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 15 countries or areas, 1979-2004
Average annual rates of change 1/
Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004
or area
Unit labor costs 3/: U.S. dollar basis
United States 0.6 2.5 -0.2 -0.9 -1.3 -1.4 -2.4
Canada 1.6 4.7 -3.2 -2.2 4.1 13.3 4.4
Australia NA NA 1.5 -4.3 NA 21.7 NA
Japan 1.9 4.6 9.4 -5.7 -4.3 -2.1 0.8
Korea 1.4 4.9 6.7 -9.5 0.0 2.9 3.2
Taiwan 2.0 8.4 2.2 -5.1 -5.5 -1.5 -0.2
Belgium NA 0.6 3.3 -8.4 NA 19.2 NA
Denmark 2.6 4.1 2.2 -6.1 10.7 19.9 13.6
France 0.6 2.1 1.2 -9.4 9.0 24.2 8.8
Germany 2/ 2.5 4.5 5.9 -8.0 7.0 19.3 5.7
Italy 2.9 5.7 -3.5 -3.2 11.7 24.6 13.4
Netherlands 1.5 1.5 3.6 -6.9 10.0 22.4 8.3
Norway 3.5 4.9 2.6 -2.7 9.0 15.9 4.9
Sweden -0.4 3.4 -5.2 -6.7 4.0 17.0 2.9
United Kingdom 3.0 4.5 -0.5 1.2 5.6 8.9 10.5
Exchange rates 4/
United States -- -- -- -- -- -- --
Canada -0.4 0.0 -3.2 -1.6 3.4 12.1 7.6
Australia -1.7 -3.2 -1.1 -4.7 6.1 20.0 12.9
Japan 2.8 3.8 9.1 -2.7 -0.1 8.0 7.2
Korea -3.4 -3.4 -1.7 -7.3 -0.3 4.9 4.1
Taiwan 0.3 2.7 0.3 -3.3 -1.6 0.4 3.1
Belgium 5/ -0.4 -1.2 2.5 -7.6 7.7 19.7 9.9
Denmark -0.5 -1.5 2.0 -7.1 7.8 19.9 9.8
France 5/ -0.9 -2.2 1.8 -6.8 7.7 19.7 9.9
Germany 2/, 5/ 0.6 1.1 2.5 -7.5 7.7 19.7 9.9
Italy 5/ -2.5 -3.3 -6.0 -4.9 7.7 19.7 9.9
Netherlands 5/ 0.5 0.9 2.6 -7.6 7.7 19.7 9.9
Norway -1.1 -1.9 -0.3 -6.4 6.9 12.8 5.1
Sweden -2.1 -2.9 -3.7 -4.9 5.7 20.4 9.9
United Kingdom -0.6 -1.6 -2.4 -0.8 4.9 8.8 12.1
r = revised NA = not available
1/ Rates of change based on the
compound rate method.
2/ Data for years before 1991 pertain
to the former West Germany.
3/ Adjusted for employment taxes and
government subsidies to estimate
the actual cost to employers.
4/ Value of foreign currency relative to
the U.S. dollar.
5/ Euro area.
-13-
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 12 economies for which comparable data are
available over the period of comparison; the indexes underlying this
chart are shown in table C. The trade weights used in this release
represent a change from previous releases. (See Technical Notes.)
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 12 competitors, 1979-2004
In the chart, the solid line indicates that U.S. unit labor costs
rose faster than "competitors" costs from 1979 to 1985 on a U.S. dollar
basis. In most years from 1986 to 1996, U.S. costs either rose at a
slower rate than the "competitors" costs or fell at a faster rate. From
1997 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 12(1) competitors, 1979-2004
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 111.9 112.2 99.7 111.9 110.6 101.2
1981 117.1 122.4 95.6 117.1 111.0 105.5
1982 125.3 132.2 94.7 125.3 110.5 113.3
1983 121.9 134.5 90.6 121.9 109.1 111.7
1984 121.8 135.1 90.2 121.8 103.2 118.1
1985 124.0 136.6 90.8 124.0 100.5 123.5
1986 129.0 142.4 90.6 129.0 119.8 107.7
1987 123.0 145.8 84.4 123.0 136.7 90.0
1988 124.1 148.1 83.8 124.1 149.4 83.1
1989 127.0 152.0 83.6 127.0 151.7 83.7
1990 130.8 159.3 82.2 130.8 164.7 79.5
1991 134.2 166.8 80.5 134.2 174.0 77.1
1992 135.2 170.5 79.3 135.2 178.5 75.8
1993 134.3 171.0 78.5 134.3 171.3 78.4
1994 131.7 168.3 78.2 131.7 168.3 78.2
1995 129.4 170.0 76.1 129.4 177.4 72.9
1996 126.6 172.9 73.2 126.6 174.2 72.7
1997 124.7 169.3 73.7 124.7 159.4 78.3
1998 123.3 170.5 72.3 123.3 148.3 83.1
1999 122.1 166.4 73.4 122.1 148.5 82.2
2000 123.4 161.5 76.4 123.4 140.5 87.8
2001 125.0 166.4 75.1 125.0 135.9 92.0
2002 121.7 165.4 73.6 121.7 136.2 89.4
2003 119.9 163.4 73.4 119.9 150.4 79.8
2004 117.1 158.5 73.9 117.1 157.4 74.4
(1) Data for Australia are not available for 1979. Data for Belgium are not
available for 2004. These two 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 mid-August 2005 by the national statistical agencies.
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 France include parts of mining. From 1987 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 (Output: SIC 72;
Labor Input and Compensation: SIC 87). Canadian output, employment, and
hours data are in accordance with NAICS 97 beginning in 1997 while
compensation data are also in accordance with NAICS 97 starting in 1961.
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 and for earlier years, 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
national 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
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unit labor costs begin with 1977. For more 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 and "Gross Domestic Product by
Industry for 1987-2000," Survey of Current Business, November 2004, pp. 33-53.
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), 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 a measure of
aggregate hours worked that was 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.
Compensation (Labor Cost). The compensation measures are from
national accounts data and are in nominal terms. 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
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are not available, total compensation is estimated by assuming the same
average compensation for the self-employed as for employees.
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 prior to 1991 pertain to the former
West Germany. The data series are linked in 1991.
Data for Australia. Australian data are published by fiscal years,
which run from July 1 through June 30. The Australian Bureau of
Statistics provides unpublished calendar-year data for real value added,
employment, and hours worked. For compensation, the Bureau of Labor
Statistics estimates calendar-year series using two-year moving averages
of the data for fiscal years. Manufacturing compensation data are not
available for years prior to 1990.
Data for Recent Years. 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 used to calculate the
relative unit labor cost indexes of the United States and the other
economies are based on the relative dollar value of U.S. trade in
manufactured commodities (exports plus imports) with each country or
area in 2004. The trade data are compiled by the U.S. Census Bureau.
This represents a change from previous releases, where the trade weights
were based on a series of weights developed by the International
Monetary Fund, and on trade flows over the 1989-91 period.
The following weights were used for the entire period for which
trade-weighted unit labor cost measures are produced:
Country Weight Country Weight
Canada 37.53 Germany 10.54
Japan 17.58 Italy 3.75
Korea 7.01 Netherlands 3.41
Taiwan 5.45 Norway 0.42
Denmark 0.57 Sweden 1.55
France 4.99 United Kingdom 7.20
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.
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What is needed are purchasing power parities, which are the number of
foreign currency units required to 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. 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.