Full text of Productivity and Costs : Fourth Quarter 1971

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,'I EWS

y u. S. DEPARTMENT OF LABOR
~

OFFICE OF INFORMATION, WASHINGTON, D. C. 20210

FOR RELEASE: 11:30 A. M., EST
Wednesday, January 26, 1972

USDL: 72-50
Bureau of Labor Statistics
961-2431 or 961-3349

Productivity and Costs
Fourth Quarter 1971
Productivity (output per man-hour) for the private economy rose at an annual
rate of 3.5 percent in the fourth quarter, the U. S. Department of Labor's Bureau
of Labor Statistics announced today.

This increase exceeded the average gain

over the past 2 decade!3 of 3 percent a year but was lower than the 4 percent gain
in the third quarter.

In the nonfarm sector, productivity rose at an annual rate

of 4.9 percent--substantially above both the third quarter gain of 2.3 percent and
the 20 year average increase of 2.6 percent a year.
Recent changes in productivity, hourly compensation, and unit labor costs,
at annual rates, are summarized below.

PERCENT CHANGE AT ANNUAL RATE
3rd Quarter 1971
to
4th Quarter 1971

4th Quarter 1970
to
4th Quarter 1971

Year 1970
to
Year 1971

Total Private
Output per man-hour
Compensation per man-hour
Unit labor costs
Real compensation per man.- hour

3.5
4.3

0.8
2.0

3.9
6.3
2.3
2.7

30;6
6.9
3.2
2.5

4.1
6.4

3.4
6.9
3.4

Private Nonfarm
Output per man-hour
Compensation per man-hour
Unit labor costs
Real compensation per man-hour

4.9
5.1
0.2

2.8

2.2
2.8

2.5

Manufacturing

~

Output per man-hour
Compensation per man-hour
Unit labor costs
Real compensation per man-hour

~.;.

4.6
5.1
0.5
1.6

3.6
6.2
2.6
1.8

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10

2.4
" 3.7
1.2
1.3

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Productivity growth in the private and nonfarm sectors reflected sizable
increases in both output and man-hours.

By comparison, the productivity

increases in the third quarter were accompanied by an actual decline in manhours.

The lower productivity growth in the priva.te sector reflected . the

decline in agricultural productivity in the fourth quarter, following a rapid rise
in the third quarter.
From the fourth quarter of 1970 output per man:"hour rose by 3.9 percent
in the private economy and 4.1 percent in the nonfarm sector.
In the manufacturing sector, productivity rose by 2.4 percent in the fourth

quarter, compared to a gain of 1 percent in the third quarter and a 20-year
average gain of 2.8 percent a year.

Although man-hours in manufacturing

increased at the same rate as in the private economy and slightly more than in
the nonfarm sector, the output gain was somewhat less.

As a result, output

per man..;hour in manufacturing also increased less than either of the other two
sectors.
Productivity in manufacturing rose by 4.6 percent from the fourth quarter
of 1970.
For 1971 as a whole, the average gain in productivity in the three sectors of
the economy was significantly greater than the very small increases for the previous 2 years; moreover, it exceeded the average growth rates for the past
2 decades.

The 1971 average increases in output per man-hour were 3.6 percent

in the private economy, 3.4 percent in the nonfarm sector, and 3.6 percent in
manufacturing.

The la!!lt year that productivity growth exceeded these gains

was 1966 for the private and nonfarm sectors and 1968 for manufacturing.
In the fourth quarter, gains in hourly compensation were the lowest for any

quarter of the year.

This slowdown in wage gains reflects the impact of the

economic sta1ilization program established in mid-August.




In the private

- 3 -

economy, compensation per man-hour increased by a 4.3 percent annual rate
compared with the third quarter gain of 6.1 percent.

For the year as a whole,

the average increase in hourly compensation for all three sectors was slightly
less than the 1970 rate.
Because productivity rose sharply and hourly compensation gains fell off,
unit labor costs increased only moderately in the fourth quarter.

In the private

economy, the unit labor cost increase was only 0.8 percent, compared with

2.1 percent in the third quarter.

A similar pattern of deceleration occurred in

both the nonfarm. and manufacturing sectors.

For 1971, average unit labor cost

increases were cut almost in half compared with 1970.

The average increase

in the private economy in 1971 was 3.2 percent compared with 6.3 percent in

1970.

The difference between the two rates largely reflects the difference in

productivity growth in both years.
Prices, as measured by the implicit price deflator, in the private economy did not increase much in the fourth quarter; for the nonfarm sector, the
implicit price deflator declined slightly.

The 1.,1 percent gain in the private

sector resulted primarily from sharp increases in farm. prices which were not
covered under the economic stabilization program.
Real hourly compensation rose by about 2 percent in the fourth quarter
as hourly compensation gains exceeded those of consumer prices.
quarter increase was slightly higher than the third quarter.

The fourth

The annual gain

in 1971 was 2.6 percent, more than 2-1/2 times the annual gain for 1970.




Table 1.

Year and
quarter

Output per
man-hour

1970
1st .••
2nd •••
3rd •••
4th •.•
Annual Ave.
1971
1st •••
2nd •••
3rd •••
4th •••
Annual Ave.
;,/'

1970
1st.' ••
2nd •••
3rd •••
4th •• ;
6/
Annual Ave.1971
1st •••
2nd •••
3rd •••
4th. • •
6/
Annual Ave.1971
1st •••
2nd •••
3rd •••
4th •••

See



Output per Man-Hour, Hourly Compensation, Unit Costs, and Prices in the
Private Economy, Seasonally Adjusted, (Indexes 1967-100)

Output

103 .. 0
103.7
105.3
105.3
104.3

106.7
106.9
107.3
106.1
106.a

106.9 'r
107.4 r
108.5 r
109.4 p
10a.1 p

10a.3
109.3
110.0
Ill. 8
109.9

- 1.6
3.1
6.1
0.2
0.9
6.2 r
1.9r
4.0 r
3.5 p
3.6 p
3;a r
3.6 r
3.1 r
3.9 p

Man-hours

103.7
103.i
102.0
100.a
102.4
r
r
r
p

p

- 3.0

o.a

1.5
- 4.4
0.7

Compensation per
man-hour 1/

Real
compensation per
man-hour ]j

10a.6 r
129.8 r
101.3
109.0 r
131. 7 r
101.7
109.6 r
133.7 r
101.4
135.1 p
110.1 p
102.2 p
132.6 p
109.3 p
101. 7 p
Percent Change Over Previous Quarter at
7.9
- 1.4
1.5
- 1. 7
4.7
- 2.2
4.6
9.4
4.3
0.7
6.1
- 4.5
1.2
7.2
1.6
a.5
6.2
6.1
4.3
6.9

5.1
1. 7
2.0
2.0
2.5

r
r
r
p

121.4
122.6
123.3
123.5
122.7

l.",_

r

r
p
p

Annual Rate
9.7
1.6
3.1
6.0
6.3
2.1
4.1
2.1
0.8
3.2

r
r
r
p

1.5r
2.2 r
2.5 r
5.3 p

footnotes at end of table 3.

r
r
p

p

p

110.4
Ill. 7
112.6
113.0
111.9

r

Percent Change Over Previous Year 1/
- 2.3
7.1 r
3.2 r
2.1 r
- 1.3
7.5 r
3.0 r
3.B r
- 0.5
6.7 r '
2.1+ r
3.6 r
2.7 p
1.4p
2.3 p
6.3 p

r

"

105.3

~.9 p

r
r
r
p

111.6
112.a
114.1
115.9
113.6

·"~.4

2.1
1.7
- 1.2 r
2.9 p
- 0.7 p

a.5
3.6
2.7
6.5

Implicit
price
deflator !!./

102.1
104.4

117.7
118.1
119.0
120.7
118.9

106.3
105.9
107.1
107.2
106.6

121.1
122.5
125.3
127.2
124.0

Unit nonlabor payments 1/

Unit labor
cost

p

r
r

r
p

p

117.1 'r
11B.4 r
119.1r '
119.4 p '
11B.5 p

1/
5.4'
4.2
4.9
6.2
4.9

- 1.9
9.0
a.2
6.6
2.6
8.7 r
4.6 .r
3.3 r
1.4p
6.4 p

4.4 r
4.3 r
2.5 r

8.1
7.0
5.8
4.5

4.9
5.0
4.4
3.1

r
r
r
p

r - revised
p = preliminary

LIp

4.3 p

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r
r
r
p

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Table 2.

Year and
quarter
1970
1st •••
2nd .••
3rd •..
4th ...
Annual Ave.
1971
1st ..•
2nd •••

3rd •• '.
4th •.•
Annual Ave.
1970
1st .•.
2nd •••
3rd ..•
4th •••
Annual Ave.~/
1971
1s t •••
2nd •••
3td •••
4th...
6/
Annual Ave.1971
1st •••
2nd •••
3rd •..
4th •••

Output per Man-Hour, h
iY Compensation, Unit Costs, and Prices in the
Private Nonfarm Sector, Seasonally Adjusted, (Indexes 1967 - 100)

Output per
man-hour

Output

102.1
103.1
104.6
104.1
103.5

107.1
107.2
107.7
106.2
107.1

105.8
106.5
107.1
108.4
107.0

r
r
r,
p
P

108.5
109.5
110.0
112.0
110.0

Man-hours

104.9
104.0
103.1
102.0
103.5
r
r
r
p
p

-

105.0
105.0
106.0
106.0
105.5

Unit labor
cost
117.2
117.8
118.7
120.7
118.6

Unit non- .
labor payments 1/
101.3
104.0
106.6
108.8
105.2

1.2
3.6
3.5
4.0
1.4

7.5
6.3
8.7
5.5
7.0

r
r
r
P

p

8.8 r
3.7 r
1.8r
7.5 p
2.7 p

2.1
1.0
- 0.5 r
2.~ p
- 0.7 p
Percent

8.6 r
5.2 r
1.9
6.6 r
2.1 r
3.8
5.3 r
1.3 r
3.0
5.1 p
2.8 p
0.2
6.9 p
2.5 p
3.4
Change Over Previous Year 7/

r
r
r
p
p

8.1
4.6
2.6
- 0.9
6.6

p

3. 7

1.3 ·r
2.1 r
2.0 r
5.4 p

- 2.3
- 1.2
- 0.4
1.2p

7.3
7.3
6.5
6.4

3.5
3.9
3.9
2.2

r
r
r
p

9.5
7.8
5.9
3.6

r
r
r
p

~

3.3 r
2.5 r
4.1 p

•

r
r
r

p

2.2
2.8
2.2
2.8

r
r
r
p

r
p

= revised
=

r
r
r
P

preliminary

...

.

!i/

117.4 11
118.6 r
119.4 r
119.3 P
118.7 p
4.5
5.1
5.5
7.6
5.0

- 3.4
11.2
10.4
8.2
2.8

9.1
1.9
2.9
7.2
6.3

1.1
0.2
4.0
0.1
1.0

Implicit
price
deflator
111.2
112.6
114.1
116.2
113.5

6.6r
2.7 r
2.3 r
4.9 p
3.4. p

See footnotes at end of table 3.



119.7
121.5
124.1
125.7
122.7

Real
compensation per
man-hour 1/

110.9
102.5
128.4 r
107.4 r
121. 3 r
102.8
122.4 r:
112.2
130.4 r
108.0 r
112.9
102.6
132.1 r
108.3 r
123.3 r
109.0 p
123.4 p
133.8 p
112.6
103.3 p
108.1 p
112.1
122.6 p
131.2p
102.8 P
=-------~--------=---~--~--------~--~=---~
Percent Change Over Previous Quarter at Annual Rate ~/

- 2.7
0.6
2.0
- 5.6
- 0.7

- 1.5
4.3
5.6
- 1.6
0.7

Compensation per
man-hour 1/

4.1
4.1
2.8
- 0.2
4.5

t

r
r

P
p

5.5 1"
5.3 r
4.6 r
2.7 p
~,.:

Table 3.
..

.....

-.

~ .

Output pel:' Man-Hour, Hourly Compensation and Unit Labor Costs in the
Manufacturing Sector, Seasonally Adjusted, (Indexes 1967 = 100)

- --

Year and
quarter
1970
1st •••
2nd •.•
3rd •••
4th~ ••
Annual Ave.
1971
1st •••
2nd •••
3rd •••
4th •••
Annual Ave.
1970
1st •••
2nd •••
3rd •••
4th •••
Annual Ave.!/
1971
1st •••
2nd •••
3rd •••
4th •••
Annual Ave .2..1

Output per
mSo-hour

Output !I

Man-hours

Compensation per
man-hour 1/

101.5
99.3
97.5
94.0
98.1

118.4
120.3
122.9
124.7
121.6

Real compensation
per man-hour 1/

Unit labor
costs

105.9
108.1
109.2
107.9
107.7

107.5
107.3
106.5
101.4
105.7

110.1
111.9
112.2 r
112.9 p
111.6 p

104.2
106.0
105.3 or
106.7 p
105.4 P

0.8
8.6
4.1
- 4.7
1.5

- 7.1
- 0.7
- 2.9
-17.8
- 3.8

- 6.3
- 8.5
- 6.9
-13.8
- 5.3

6.0
6.5
9.1 ,
5.8
6.6

- 0.1
0.0
4.3
0.2
0.6

6.7
- 1.4
4.4
11.1

11.5
7.1
- 2.6 r
5.4 P
- 0.3 p

2.8
' 0.4
- 3.6 r
2.9 P
- 3.7 p

8.4
4.2
4.2
3.7
6.2

5.2 r
- 0.3 r
0.2 r
1.3p

- 0.0 r
- 2.4 r
3.1 r
1.2p
2.6 p

8.5
6.7
1.0
2.4
3.6

r
r
P
p

104.0
104.0
105.1
105.1
104.6

94.6
127.2 r
106.5
94.7
128.6 r
106.4
93.9
129.9 r
106.5
106.8
94.5 p
131.1 P
94.4 p
129.1 p
106.5
Percent Change Over Previous Quarter at Annual

r
r
r
p
p

111.8
111.4
112.6
115.6
112.9
r
r
r
p
p
Rate 11

loS p

115.6
114.9
115.8
116.1
115.7

r
r
r
P
P

5.0

Percent Change Over Previous Year II
-

1971
1st •••

2nd •••
3rd •••
4th •••



4.0
3.6 r
2.7 r
4.6 p

3.1
- 1.2
- 1.1 r
5.2 p

See footnotes at end of table 3.

6.8
- 4.6
- 3.8 r
0.6 p

7.5
6.9
5.6
5.1

r
r
r
p

--

-

2.4 r
2.4 r
1.'3 r
1.6p

3.3
3.2
2.8
0.5

r
r
r
p

r - revised
p .. preliminary , "';',"

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FOOTNOTES, TABLES I TO 3

Source: Output data from the Office of Business Economics,
, U.S. Department of Commerce and the Federal Reserve Board. Compensation and man-hours data from the Bureau of Labor Statistics,
U.S. Department of Labor and the Office of Business Economics.

!I Wages and salaries of employees plus employers' contributions for social insurance and private benefits plans. Also includes
an estimate of wages, salaries, and supplemental payments for the
self-employed.
11 Compensation per man-hour adjusted for , changes in the
Consumer Price Index.
11 Nonlabor payments include profits, depreciation, interest,
rental income and indirect taxes.
~I
Current dollar gross product divided by constant dollar
gross product.

il Percent change compounded at annual rate from original
data.

!I Percentage change of annual average.

II

Current quarter divided by comparable quarter a year ago.

81 Quarterly measures adjusted to annual estimates of output
(gross product originating)~from the Office of Business Economics,
U.S. Department of Commerce.

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