Full text of 2005, Revised : Text File, USDL 07-0283
The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Internet address: http://www.bls.gov USDL 07-0283
Technical information: (202) 691-5654 For Release: 10:00 A.M. EST
Media contact: (202) 691-5902 Thursday, February 22, 2007
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT
LABOR COST TRENDS 2005, REVISED
Manufacturing labor productivity increased in all 16 economies
covered by the U.S. Department of Labor's Bureau of Labor Statistics
in 2005. The Republic of Korea and Taiwan had the largest
productivity increases (+8.5 and +7.1 percent, respectively). The
U.S. increase of 3.3 percent placed it eighth among the 16 economies
compared. Data for Spain are included in this news release for the
first time.
The U.S. increase of 3.3 percent was less than its average annual
growth rate since 1979. Nevertheless, since 1995, of the 16
economies studied only the Republic of Korea and Sweden have had
greater productivity growth than the United States.
The data presented here differ from those appearing in the BLS
Productivity and Costs news releases. (See technical notes.)
Average annual growth rates for selected measures are shown in tables
A and B.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 1. Percent change in
manufacturing output per hour, 2004-2005
-2-
Manufacturing unit labor costs declined in seven of the economies
and increased in nine, on both a national currency and U.S. dollar
basis. However, changes in the dollar's exchange rate reversed the
direction of movement in two countries. The Republic of Korea had
the greatest shift, from a decline in unit labor costs in national
currency (-2.2 percent) to an increase in unit labor costs expressed
in U.S. dollars (+9.5 percent). This shift can be explained by the
relative appreciation of the won. Denmark, on the other hand,
experienced a slight increase expressed in kroner, and a slight
decrease expressed in U.S. dollars, because of a small relative
depreciation of the krone.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2. Percent change in
manufacturing unit labor costs, 2004-2005
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Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 2004-2005
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 3.3 2.2 -1.1 -0.5 -0.6 3.5 4.6 1.3 1.3 --
Canada 3.7 0.7 -2.8 -1.6 -1.3 0.9 3.9 0.2 7.6 7.4
Australia 1.9 0.0 -1.9 -1.7 -0.2 4.2 6.2 4.2 7.9 3.6
Japan 2.4 1.1 -1.3 -0.7 -0.6 0.3 1.6 -0.8 -2.6 -1.8
Korea, Republic of 8.5 7.0 -1.4 -0.8 -0.6 4.7 6.2 -2.2 9.5 11.9
Taiwan 7.1 6.5 -0.6 0.4 -1.0 1.0 1.6 -5.2 -1.5 3.9
Belgium 2.8 -0.5 -3.2 -0.9 -2.3 0.9 4.2 1.5 1.5 0.1
Denmark 2.0 1.6 -0.4 -2.0 1.7 1.7 2.0 0.1 -0.1 -0.1
France 3.9 1.5 -2.4 -2.3 0.0 0.3 2.7 -1.2 -1.1 0.1
Germany 5.6 3.3 -2.2 -1.7 -0.5 -1.1 1.1 -4.2 -4.1 0.1
Italy 0.2 -2.0 -2.2 -1.4 -0.8 0.8 3.0 2.9 3.0 0.1
Netherlands 4.1 0.2 -3.8 -2.3 -1.5 -0.6 3.3 -0.8 -0.7 0.1
Norway 2.8 2.4 -0.3 -0.8 0.5 3.2 3.5 0.7 5.4 4.6
Spain 0.8 0.3 -0.5 1.0 -1.5 3.5 4.1 3.2 3.3 0.1
Sweden 6.2 4.1 -2.0 -2.2 0.2 0.3 2.3 -3.6 -5.2 -1.6
United Kingdom 2.6 -1.1 -3.6 -3.6 -0.1 0.8 4.6 1.9 1.2 -0.7
---------------------------------------------------------------------------------------------------------------
(1) Value of foreign currency relative to the U.S. dollar.
BOX: Spain
Spain
With this news release, Spain becomes the sixteenth economy included
in the BLS international comparisons of manufacturing productivity
and unit labor costs. The main source of Spain's economic data is
Spain's National Statistics Institute. The data comply with
international standards of national accounts and industrial
classification. Current and constant price output series are
available from 1964 forward. Employment, hours, and compensation
data are available from 1979 forward.
END OF BOX: Spain
Additional data available
Annual indexes of these variables are estimated for the time
period 1950-2005 and are available at the Bureau of Labor Statistics,
Division of Foreign Labor Statistics website at
http://www.bls.gov/fls/home.htm. 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-
Manufacturing productivity, output, and labor input
The U.S. manufacturing productivity increase of 3.3 percent was
eighth among the 16 economies compared, behind the Republic of Korea,
Taiwan, Sweden, Germany, Netherlands, France, and Canada. Italy,
which had the lowest productivity growth in 2005, is also the only
economy to experience a productivity decline over the last five
years.
The Republic of Korea and Taiwan continued to be among the leaders
in the growth of manufacturing output, as they have been for the last
decade. Sweden, also a leader in manufacturing growth over the
decade, had more modest output growth in 2005. U.S. manufacturing
output growth, like that of most of the economies, also slowed in
2005.
In addition to the growth of manufacturing output, a decline in
total work hours was strongly evident in 2005. While 12 of the
economies had increases in output, all 16 economies had reductions in
hours. The Netherlands had the greatest decline (-3.8 percent) in
hours in 2005, followed closely by the United Kingdom (-3.6 percent)
and Belgium (-3.2 percent).
For most economies, the pace of decline in hours worked
accelerated between 1995-2000 and 2000-2005. The United States
experienced the steepest decline, followed by the United Kingdom and
Denmark.
Manufacturing employment declined in 14 of the 16 economies in
2005. Spain and Taiwan are the only economies that experienced
manufacturing employment growth.
Generally, 2005 was a year of decreases in average hours worked.
Twelve of the sixteen economies experienced decreases in 2005,
compared to only three in 2004. Belgium had the greatest decline in
average hours worked in 2005 (-2.3 percent). The U.S. decrease of
0.6 percent was below its trend over the 1979-2005 period, which is a
0.1 percent annual increase.
Manufacturing hourly compensation and unit labor costs
Total labor compensation in U.S. manufacturing increased by 3.5
percent in 2005. This was almost the same as the average annual rate
of increase over the 1979-2005 period. Of the 15 economies for which
comparable data are available, the United States is the only one that
did not have a considerably smaller increase in 2005 than its average
for the entire period since 1979. (See tables A and B.)
Australia and the Republic of Korea had the highest rate of
increase in hourly compensation among the economies compared,
followed by the United States and United Kingdom. The increase in
hourly compensation in U.S. manufacturing in 2005 was more than twice
the increase in 2004, yet about the same as over the past decade.
-5-
With hourly compensation increasing more than labor productivity,
unit labor costs in the United States increased 1.3 percent in 2005.
Seven economies, led by Taiwan, had declines in unit labor costs,
expressed in national currency units.
The U.S. dollar depreciated less against major European currencies
than it had over the past two years. Consequently, manufacturing
unit labor costs did not uniformly rise on a dollar basis. In 2005,
seven countries had decreases in their unit labor costs on a dollar
basis. Sweden was the leader among economies experiencing such
decreases, followed by Germany and Japan.
The influence of exchange rates was not entirely absent from the
unit labor cost changes. The currencies of the Republic of Korea,
Canada, Norway, Taiwan, and Australia all appreciated against the
dollar. Consequently, except for Taiwan, they all experienced
increases in dollar-denominated unit labor costs.
-6-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2005
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005
--------------------------------------------------------------------------------------------------------
Output per hour
United States 4.1 2.8 3.7 5.7 r5.6 r7.0 r3.3
Canada r2.3 2.0 3.8 r3.3 r0.6 r0.1 r3.7
Australia 2.9 2.8 2.9 r3.7 r2.4 r-0.6 1.9
Japan 3.5 3.8 3.3 3.5 3.2 5.7 2.4
Korea, Republic of NA NA 9.4 10.8 7.1 11.5 8.5
Taiwan 5.6 6.1 4.7 5.6 r5.4 4.7 r7.1
Belgium r3.4 4.2 r3.1 r2.2 r2.9 r4.9 2.8
Denmark r2.3 2.2 2.7 1.8 r2.8 r7.3 r2.0
France 4.3 4.2 4.6 5.0 3.6 3.6 3.9
Germany (2) 2.8 2.1 2.9 3.7 r3.2 r3.5 r5.6
Italy 1.8 r2.8 r2.7 0.9 -0.6 0.9 r0.2
Netherlands 3.4 3.5 3.5 3.4 2.9 5.0 4.1
Norway 2.0 r1.9 r0.1 r1.4 r4.6 r5.9 2.8
Spain 2.4 3.3 3.1 0.8 1.4 1.5 0.8
Sweden r4.8 2.5 5.8 7.2 r6.5 r11.5 r6.2
United Kingdom r3.6 4.1 r3.1 2.6 3.7 5.6 r2.6
Output
United States 2.9 2.2 3.6 5.4 r1.3 r6.5 r2.2
Canada r2.3 1.8 2.4 5.9 r-0.3 r1.9 r0.7
Australia 1.5 1.6 r0.9 r2.4 r1.2 r-0.1 r0.0
Japan 2.4 4.7 0.4 1.2 0.7 4.6 1.1
Korea, Republic of 8.9 10.7 8.2 7.9 6.6 11.1 7.0
Taiwan r5.9 7.4 4.4 5.8 r4.0 9.4 r6.5
Belgium r1.7 2.6 0.6 r2.1 0.3 r4.0 r-0.5
Denmark r1.2 1.2 2.1 1.7 r-0.1 r3.4 r1.6
France 2.1 2.0 1.7 3.9 1.2 1.7 1.5
Germany (2) r1.0 1.2 -1.0 2.2 r1.4 r3.4 r3.3
Italy 1.3 2.6 1.6 0.7 -1.2 0.8 r-2.0
Netherlands 2.0 2.5 1.8 3.3 0.1 1.6 0.2
Norway 0.6 r-0.5 r0.7 r1.4 r2.0 r5.7 r2.4
Spain 2.1 2.1 0.6 5.0 0.9 0.4 0.3
Sweden r3.7 1.8 3.8 7.4 r4.2 r10.2 r4.1
United Kingdom 0.6 0.9 0.5 1.3 -0.6 2.0 -1.1
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2005
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005
--------------------------------------------------------------------------------------------------------
Total hours
United States -1.1 -0.6 -0.1 -0.2 -4.1 -0.5 -1.1
Canada 0.0 -0.2 -1.3 r2.6 r-0.9 r1.9 r-2.8
Australia -1.3 -1.2 -2.0 -1.2 -1.2 0.5 -1.9
Japan -1.1 0.8 -2.8 -2.2 -2.4 -1.0 -1.3
Korea, Republic of NA NA -1.1 -2.6 -0.5 -0.4 -1.4
Taiwan 0.2 1.2 -0.3 0.1 -1.3 4.5 -0.6
Belgium r-1.6 -1.6 r-2.4 -0.1 -2.5 -0.9 -3.2
Denmark r-1.1 -1.0 -0.7 -0.1 r-2.9 r-3.6 r-0.4
France -2.1 -2.1 -2.8 -1.1 -2.3 -1.8 -2.4
Germany (2) -1.7 -0.9 -3.8 -1.4 -1.8 -0.1 -2.2
Italy -0.4 -0.2 r-1.0 -0.2 -0.6 -0.2 -2.2
Netherlands -1.3 -1.0 -1.7 -0.1 -2.7 -3.2 -3.8
Norway -1.4 -2.3 0.6 r0.0 r-2.5 r-0.2 -0.3
Spain -0.3 -1.2 -2.4 4.1 -0.5 -1.1 -0.5
Sweden -1.0 -0.7 -1.9 0.3 r-2.1 r-1.1 r-2.0
United Kingdom r-2.9 -3.1 r-2.6 -1.3 -4.1 -3.4 r-3.6
Employment
United States -1.2 -0.8 -0.5 -0.1 -3.7 -1.3 -0.5
Canada -0.1 -0.2 -1.5 r2.2 r-0.6 r-0.1 r-1.6
Australia -1.4 -1.3 -2.3 -1.1 -1.1 0.6 -1.7
Japan -0.8 1.0 -1.6 -2.0 -2.5 -2.1 -0.7
Korea, Republic of NA NA -0.8 -2.5 0.5 0.8 -0.8
Taiwan 0.8 2.0 -0.3 0.4 -0.3 3.2 0.4
Belgium r-1.5 -1.6 -2.2 -0.6 r-1.7 r-2.2 r-0.9
Denmark r-1.2 -0.4 -1.2 -1.2 r-2.7 r-4.2 r-2.0
France -1.6 -1.6 -2.5 -0.3 -1.8 -3.1 -2.3
Germany (2) -1.3 -0.1 -4.2 -0.8 -1.5 -1.5 -1.7
Italy -0.8 r-0.8 r-1.9 -0.2 -0.2 -1.1 -1.4
Netherlands -1.1 -0.8 -1.6 0.1 -2.6 -4.2 -2.3
Norway -1.3 -2.2 r0.4 r0.2 -2.6 r-3.5 -0.8
Spain 0.1 -0.7 -2.0 3.3 0.9 1.1 1.0
Sweden r-1.5 -1.0 -3.5 0.0 r-1.8 r-2.6 r-2.2
United Kingdom -2.8 -2.9 -2.6 r-1.2 r-4.4 r-4.3 r-3.6
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2005
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005
--------------------------------------------------------------------------------------------------------
Average hours
United States 0.1 0.2 0.4 -0.2 -0.3 0.8 -0.6
Canada 0.1 0.0 0.3 0.4 -0.2 r2.0 -1.3
Australia 0.1 0.1 0.3 -0.1 -0.1 -0.1 r-0.2
Japan -0.3 -0.2 -1.3 -0.2 0.1 1.1 -0.6
Korea, Republic of NA NA -0.2 -0.1 -1.0 -1.2 -0.6
Taiwan -0.6 -0.8 0.0 -0.3 -1.0 1.3 -1.0
Belgium -0.1 0.0 r-0.2 0.5 r-0.8 r1.3 r-2.3
Denmark 0.1 -0.5 0.6 1.1 r-0.2 r0.6 r1.7
France -0.5 -0.5 -0.3 -0.8 -0.5 1.3 0.0
Germany (2) -0.5 -0.9 0.4 -0.6 -0.3 r1.4 -0.5
Italy 0.4 0.6 0.9 0.0 -0.3 0.9 -0.8
Netherlands -0.2 -0.2 0.0 -0.2 -0.2 1.0 -1.5
Norway 0.0 -0.1 r0.2 -0.2 0.2 r3.4 0.5
Spain -0.4 -0.5 -0.4 0.8 -1.4 -2.2 -1.5
Sweden 0.5 0.3 1.7 0.2 r-0.3 r1.6 r0.2
United Kingdom r-0.1 -0.2 r0.0 r-0.1 r0.3 r1.0 -0.1
Total labor compensation(3): National currency basis
United States 3.6 4.9 3.4 4.4 0.4 1.5 3.5
Canada r4.6 6.5 2.4 5.2 r2.1 r3.1 r0.9
Australia NA NA r3.2 r3.1 r3.7 r3.2 r4.2
Japan 1.8 5.5 0.7 -1.0 -2.1 -0.6 0.3
Korea, Republic of 13.9 19.6 17.6 5.4 7.2 13.8 4.7
Taiwan r7.4 13.5 6.8 3.6 r-0.7 2.1 r1.0
Belgium 2.7 4.4 1.3 1.9 r1.2 r1.3 0.9
Denmark 4.2 7.0 2.3 2.8 r1.2 r-0.4 r1.7
France 3.8 7.3 1.7 1.7 0.8 0.5 0.3
Germany (2) 2.7 4.6 2.4 1.6 r0.1 r0.4 r-1.1
Italy 6.5 11.4 r3.9 2.6 2.5 3.0 0.8
Netherlands 2.8 3.1 2.8 3.4 1.3 0.1 -0.6
Norway r4.9 r6.4 r4.1 r5.1 r2.0 r3.0 r3.2
Spain 7.0 10.1 5.5 5.6 3.3 2.3 3.5
Sweden r5.3 8.4 2.0 5.3 r1.9 r1.6 r0.3
United Kingdom 4.0 7.1 1.3 3.4 0.4 1.2 r0.8
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2005
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005
--------------------------------------------------------------------------------------------------------
Hourly compensation(3): National currency basis
United States 4.8 5.5 3.5 4.7 4.6 2.0 4.6
Canada 4.6 6.8 3.8 r2.6 r2.9 r1.2 r3.9
Australia NA NA r5.4 4.3 r4.9 r2.7 r6.2
Japan 2.9 4.6 3.6 1.2 0.4 0.5 1.6
Korea, Republic of NA NA 18.9 8.1 7.7 14.2 6.2
Taiwan 7.2 12.1 7.1 3.4 r0.5 -2.3 r1.6
Belgium 4.4 6.1 r3.8 r2.0 r3.8 r2.2 r4.2
Denmark r5.3 8.1 2.9 2.9 r4.2 r3.3 r2.0
France 6.1 9.6 4.6 2.8 3.2 2.3 2.7
Germany (2) 4.5 5.6 6.4 3.1 r1.9 0.5 r1.1
Italy r6.9 r11.6 5.0 2.8 3.1 3.2 3.0
Netherlands 4.1 4.1 4.5 3.5 4.2 3.5 3.3
Norway 6.3 9.0 3.4 5.2 r4.6 r3.3 r3.5
Spain 7.3 11.4 8.2 1.4 3.9 3.4 4.1
Sweden 6.4 9.1 4.0 5.1 r4.1 r2.7 r2.3
United Kingdom 7.0 10.6 r4.0 4.8 r4.8 4.7 r4.6
Unit labor costs(3): National currency basis
United States 0.7 2.7 -0.2 -0.9 r-0.9 r-4.7 r1.3
Canada r2.3 4.7 0.0 -0.7 r2.4 r1.1 r0.2
Australia NA NA r2.4 r0.6 r2.5 r3.3 r4.2
Japan -0.6 0.8 0.3 -2.2 -2.7 -5.0 -0.8
Korea, Republic of 4.6 8.1 8.7 -2.4 0.5 2.4 -2.2
Taiwan r1.5 5.6 2.3 -2.1 r-4.6 -6.7 r-5.2
Belgium r1.0 1.8 0.7 r-0.2 r0.9 r-2.6 r1.5
Denmark r2.9 5.7 0.2 1.1 r1.4 r-3.7 r0.1
France 1.7 5.2 0.0 -2.1 -0.4 -1.2 -1.2
Germany (2) 1.7 3.3 3.4 -0.5 r-1.3 r-2.9 r-4.2
Italy 5.1 8.5 r2.3 1.9 3.7 2.3 r2.9
Netherlands 0.7 0.6 1.0 0.1 1.2 -1.5 -0.8
Norway r4.3 6.9 r3.4 r3.7 r0.0 r-2.5 r0.7
Spain 4.8 7.8 4.9 0.5 2.4 1.9 3.2
Sweden r1.5 6.5 -1.7 -1.9 r-2.2 r-7.9 r-3.6
United Kingdom 3.3 6.2 0.8 2.1 1.0 -0.8 r1.9
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Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2005
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005
--------------------------------------------------------------------------------------------------------
Unit labor costs(3): U.S. dollar basis
United States 0.7 2.7 -0.2 -0.9 r-0.9 r-4.7 r1.3
Canada r2.1 4.7 -3.2 -2.2 r6.6 r8.8 r7.6
Australia NA NA r1.3 r-4.1 r8.2 r16.7 r7.9
Japan 2.1 4.6 9.4 -4.9 -3.2 1.9 -2.6
Korea, Republic of 1.6 4.4 6.9 -9.5 2.5 6.6 9.5
Taiwan r1.9 8.5 2.7 -5.3 r-5.1 -3.8 r-1.5
Belgium r0.6 0.6 3.3 r-7.7 r7.1 r7.0 1.5
Denmark r2.4 4.2 2.2 -6.1 r7.6 r5.8 r-0.1
France 0.8 2.9 1.8 -8.8 5.8 8.6 -1.1
Germany (2) 2.3 4.5 5.9 -8.0 r4.8 r6.6 r-4.1
Italy 2.6 5.0 r-3.8 -3.1 10.1 12.4 r3.0
Netherlands 1.2 1.5 3.6 -7.6 7.5 8.3 -0.7
Norway r3.3 4.9 r3.1 r-2.9 r6.5 r2.4 r5.4
Spain 2.0 3.8 0.8 -6.6 8.7 11.9 3.3
Sweden r-0.6 3.4 -5.3 -6.7 r1.9 r1.3 r-5.2
United Kingdom 2.7 4.5 -1.6 1.3 r4.8 11.2 r1.2
Exchange rates(4)
United States -- -- -- -- -- -- --
Canada -0.1 0.0 -3.2 -1.6 4.2 7.6 7.4
Australia -1.5 -3.2 -1.1 -4.7 5.6 12.9 3.6
Japan 2.7 3.8 9.1 -2.7 -0.4 7.2 -1.8
Korea, Republic of -2.8 -3.4 -1.7 -7.3 2.0 4.1 11.9
Taiwan 0.4 2.7 0.3 -3.3 -0.5 3.1 3.9
Belgium -0.4 -1.2 2.5 -7.6 6.2 9.9 0.1
Denmark -0.5 -1.5 2.0 -7.1 6.2 9.8 -0.1
France -0.8 -2.2 1.8 -6.8 6.2 9.9 0.1
Germany (2) 0.6 1.1 2.5 -7.5 6.2 9.9 0.1
Italy -2.4 -3.3 -6.0 -4.9 6.2 9.9 0.1
Netherlands 0.5 0.9 2.6 -7.6 6.2 9.9 0.1
Norway -0.9 -1.9 -0.3 -6.4 6.5 5.1 4.6
Spain -2.6 -3.7 -3.9 -7.1 6.2 9.9 0.1
Sweden -2.1 -2.9 -3.7 -4.9 4.2 9.9 -1.6
United Kingdom -0.6 -1.6 -2.4 -0.8 3.7 12.1 -0.7
--------------------------------------------------------------------------------------------------------
r=revised NA=data 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.
-11-
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 14 economies for which comparable data are
available over the period of comparison; 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 14(1) other economies, 1979-
2005
In the chart, the solid line indicates that U.S. unit labor costs
rose faster than the costs in other economies 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 in other economies or fell at a
faster rate. From 1997, 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 decline again after 2001 with the weakening of the U.S.
dollar.
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Table C. U.S. manufacturing unit labor
costs relative to 14(1) other economies, 1979-2005
----------------------------------------------------------------
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 112.7 111.9 100.7 112.7 110.4 102.1
1981 117.6 121.7 96.7 117.6 109.7 107.2
1982 127.4 131.2 97.1 127.4 108.6 117.3
1983 122.7 133.3 92.0 122.7 106.5 115.2
1984 123.8 134.1 92.3 123.8 100.6 123.1
1985 126.2 135.7 93.0 126.2 98.0 128.8
1986 130.1 141.4 92.0 130.1 117.3 110.8
1987 125.4 144.8 86.6 125.4 134.2 93.4
1988 126.5 147.0 86.1 126.5 146.2 86.5
1989 129.4 150.9 85.8 129.4 148.2 87.4
1990 133.4 158.2 84.3 133.4 162.0 82.3
1991 136.8 165.9 82.5 136.8 171.2 79.9
1992 137.8 169.4 81.4 137.8 175.5 78.5
1993 136.9 170.0 80.5 136.9 168.0 81.5
1994 134.2 167.1 80.3 134.2 164.7 81.5
1995 131.9 168.6 78.2 131.9 173.9 75.9
1996 129.0 171.2 75.4 129.0 170.7 75.6
1997 127.1 168.4 75.5 127.1 156.4 81.3
1998 125.7 169.8 74.0 125.7 146.5 85.8
1999 124.4 166.2 74.9 124.4 146.4 85.0
2000 125.8 161.9 77.7 125.8 138.2 91.0
2001 127.4 167.7 76.0 127.4 134.7 94.6
2002 123.5 168.1 73.5 123.5 136.4 90.6
2003 124.3 167.7 74.1 124.3 152.7 81.4
2004 118.4 165.7 71.5 118.4 162.9 72.7
2005 120.0 164.5 72.9 120.0 167.0 71.8
----------------------------------------------------------------
(1) Australia has been omitted from this table because data are
not available before 1990.
-13-
Technical Notes
The comparisons in this release are based on data available to the
Bureau of Labor Statistics as of the end of December 2006 from the
national statistical offices of the 16 economies compared.
Definitions. 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. Unit labor costs can also be
computed by dividing hourly compensation by output per hour, that is,
by labor productivity.
Methodology. BLS 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.
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. Data for the United
States are in accordance with the North American Industry
Classification System (NAICS 97), except compensation data before
1987. Canadian output, employment, and hours data are in accordance
with NAICS 97 beginning in 1997 while compensation data are also in
accordance with NAICS 1997 starting in 1961.
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 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 offices.
Output. For most economies, 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.
-14-
Most economies now estimate manufacturing real output using moving
price weights, as recommended by SNA 93. 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). Taiwan and Korea still use fixed
price weights to estimate real output.
Measures of real output also may differ among economies because of
different approaches to estimating the prices of high-technology
products like computers and, in general, of products that undergo
rapid quality change.
For the United States, the output measure for the manufacturing
sector is a chain-weighted index of real gross product originating
(deflated value added) produced by the Bureau of Economic Analysis
(BEA) of the U.S. Department of Commerce. 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 1947-86. New Estimates Based
on the North American Industry Classification System," Survey of
Current Business, December 2005, pp. 70-84.
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. The international comparisons program uses a value added
output concept, while the major sector series is on a sectoral output
basis. 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
economies' national accounts, whereas sectoral output would require a
complex estimation procedure. Even though 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 economies in the extent of
vertical integration of industries.
Labor Input. For all of the economies for the most recent years, the
term "hours" refers to hours worked. For some earlier years, BLS
uses other hours measures.
For the United States, the employment and hours data series beginning
with 1987 are taken from the NAICS-based manufacturing all-employed
series published by BLS as part of the major sector productivity and
cost measures. For the period before 1987, these series are linked
to NAICS-based, employees-only data from the Current Employment
Statistics (CES) program.
For most other economies, recent years' aggregate hours series are
obtained from national statistical offices, usually from national
accounts. However, for some economies and for
-15-
earlier years, BLS calculates the aggregate hours series using
employment figures published with the national accounts, or other
comprehensive employment series, and data on average hours worked.
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 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 economies, 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, BLS 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 economy in
2005. The trade data are compiled by the U.S. Census Bureau.
The following weights were used for the entire period for which
trade-weighted unit labor cost measures are produced:
-16-
Weight Weight
Canada 36.80 Germany 10.33
Japan 16.59 Italy 3.65
Korea 6.20 Netherlands 3.37
Taiwan 4.89 Norway 0.42
Belgium 2.70 Spain 1.23
Denmark 0.60 Sweden 1.52
France 4.73 United Kingdom 6.97
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
economies. Each economy measures manufacturing output in its own
currency units. To compare outputs among economies, 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
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). In subsequent years they
were joined by Greece and Slovenia. 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.
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 166.386 Spanish pesetas
The currency exchange rates cited in this publication are annual
averages of daily buying rates in New York City.