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News Bureau of Labor Statistics United StaSs Department 86 of Labor ' 733-? Washington, D.C. 20212 information: (202) 523-9261 Current data : (202) 523-1221 or 1208 Media contact: (202) 523-1913 For Release 10:00 AM EOT Wednesday, August 27, 1986 AND COSTS Second Quarter 1986 Revisions for Business, Ncnfarm Business, and Manufacturing and Preliminary Measures for Nonfin^jicial Corporations - .. • . .. • . The Bureau of Labor Statistics of the 4KS. I^pSL^itjait of Labor today reported revised productivity data—as measured by output per hour of all persons— for the second quarter of 1986. Based on information nov available, the seasonally-adjusted annual rates of productivity change in the second quarter were: minus 0.3 percent in the business sector, minus 0.5 percent in the nonfartn business sector, plus 2.2 percent in ranufacturing, minus 0.3 percent in durable goods manufacturing, and plus 6.3 percent in nondurable goods nanufacturing. Second-quarter measures are summarized in table A and appear in detail in tables 1 through 5. In nonfinancial corporations, productivity declined 2.3 percent in the second quarter, as output declined 3.0 percent and allenplcyee hours were cut back 0.7 percent (tables B and 6). Business Productivity declined at a 0.3 percent annual rate during the second quarter of 1986 in the business sector, as output fell 0.4 percent and hours of all persons engaged in the sector decreased 0.1 percent (seasonally adjusted annual rates). The declines in output and hours during the second quarter of 1986 were the first since the fourth quarter of 1982. Oonpared with the second quarter of 1985, productivity increased 0.8 percent as output rose 2.3 percent and hours of all persons increased 1.6 percent (table 1). Hourly conpensation increased at a 2.7 percent annual rate during the second quarter of 1986, oonpared with a 2.5 percent gain during the first quarter . This measure includes v^ages and salaries , supplements , ertplqyer contributions to enployee-benefit plans, and taxes. Unit labor costs, which reflect changes in hourly compensation and productivity, increased at a 3.0 percent annual rate during the second quarter, oonpared with a 0.7 percent decline during the first quarter. Real hourly oonpensation, which takes into account changes in the Consumer Price Index for All Urban Consumers (CPI-U) , increased 4 . 5 percent in the second quarter, oorrpared with a 1.0 percent increase in the first quarter of 1986. The second-quarter increase was the largest since 1982. An 1.7 percent decline in the CPI-U marked the first quarterly drop in these, prices since http://fraser.stlouisfed.org/ 1961. Federal Reserve Bank of St. Louis -2- Table A. Productivity and costs: Revised second quarter 1996 measures (Seasonally adffeted annual rates) - _ Sector k ;"' ''•*' Productivity Output Hours Hourly compensation Real hourly compensation Unit labor costs 4.5 3.9 4.3 4.3 4.5 3.0 2.8 0.4 2.9 -3.3 Percent change from preceding (quarter Business NOnfarm business Manufacturing Durable Nondurable -0.3 -0.5 2.2 -0.3 6.3 -0.4 -0.3 -1.3 -4.9 4.7 -0.1 0.2 -3.4 -4.6 -1.5 2.7 2.2 2.5 2.6 2.8 Percent change from sane quarter a year ago Business Nonfarm business Manufacturing Durable Nondurable 0.8 0.6 1.9 1.8 2.3 2.3 2.4 1.8 0.7 3.6 1.6 1.8 -0.1 -1.1 1.3 3.3 3.1 3.3 4.0" 2.3 1.7 1.4 1.6 2.3 0.6 2.6 2.5 1.3 2.1 0.0 The inplicit price deflator for the business sector, which reflects changes in unit labor costs and unit nonlabor payments, increased 1.7 percent in the second quarter, its snallest rise since 1970. Productivity declined 0.5 percent in the nonfarm business sector during the second quarter of 1986, as output fell 0.3 percent and hours of all persons — enplcyees, proprietors, and unpaid family vsorkers— increased 0.2 percent. The decline in output was the first since the fourth quarter of 1982, and the gain in nonfarm hours was the snallest in the period. During the past 4 quarters, productivity rose 0.6 percent (table 2). Hourly compensation increased 2.2 percent in the second quarter, but rose 3.9 percent vAien the drop in the CPI-U is taken into account. Unit labor costs increased 2.8 percent. The imp licit price deflator for the nonfarm business sector rose 1 . 5 percent in the second quarter, conpared with a 2.3 percent increase one quarter earlier. -3- Productivity increased at a 2.2 percent seasonally adjusted annual rate in manufacturing in the second quarter of 1986, as output fell 1.3 percent and hours of all persons decreased 3*4 percent; This was the first quarter in which manufacturing output and hours both declined since the recovery began in 1983. Hourly compensation of nanufacturing workers increased 2.5 percent during the second quarter, or 4.3 percent when the decrease in consumer prices is taken into account. Unit labor costs edged up at a 0.4 percent annual rate, conpared with a 0.6 percent increase during the first quarter of 1986. Movements in output and hours were widely divergent in the durable and nondurable sectors during the second quarter. Productivity increased strongly among nondurables producers and declined for durables (table A). Over the past 4 quarters, productivity movements in the two sectors had not diverged greatly. From the second quarter of 1985 to the second quarter of 1986, nondurables productivity increased 2.3 percent, While durables showed a 1.8 percent gain (tables 4, 5). Durable goods industries account for 60 percent of the manufacturing sector. MnrfH nqrvH ^ 1 corporations Preliminary second-quarter 1986 measures of productivity and costs also were announced today for the nonfinanciai corporate sector (tables 3 and 6). Output per all-eirployee hour declined 2.3 percent from the first to the second quarter of 1986, as output decreased 3.0 percent and hours of all ertployees fell 0.7 percent. Productivity has declined in the past 3 quarters in these corporations (table 6). Ncnfinancial corporations include all corporations doing business in the United States, except banks, stock and cormodity brokers, and finance and insurance agencies. Hourly oorrpensation increased 1.5 percent (the smallest quarterly increase since 1983) and increased 3.2 percent when the drcp in the CPI-U is taken into account. Unit labor costs rose 3*3 percent, unit nonlabor costs decreased 0.5 percent, and unit profits fell 9.4 percent. The irrplicit deflator for nonfinancial cor orate output increased 1.4 percent in the second quarter. Table B. Nbnfinancial oorporations: Preliminary second-quarter productivity and cost measures Quarterly change at seasonally adjusted annual rate Percent Period Real Hourly hourly Unit Implicit Producconpen- ooit^en- labor Unit price tivity CXitput Hours sation sation costs profits deflator 1986 I to 1986 II -2.3 -3.0 -0.7 1.5 3.2 3.8 -9.4 1.4 1985 II to 1986 II -0.2 1.5 1.7 2.6 0.9 2.8 -1.4 1.3 Revised measures Preliminary and revised productivity and cost measures for the second quarter are conpared in table C for the business and nanufacturing sectors. Revised output measures shew declines for the business and nonfam business sectors rather than the increases -which had been reported on July 30, based on preliminary information then available. Hours'of labor input have been revised upwards slightly. Table C. Preliminary and revised productivity and related measures, second quarter 1986 Percent change from preceding quarter (Seasonally adjusted annual rates) Hourly compensation Real hourly coitpensation Unit labor costs Sector Productivity Output [fours Business: Preliminary Revised 1.6 -0.3 1.3 -0.4 -0.3 -0.1 2.7 2.7 4.5 4.5 1.1 3.0 Nonfarm business: Preliminary Revised 1.7 -0.5 1.7 -0.3 0.0 0.2 2.2 2.2 3.9 3.9 0.5 2.8 1.9 2.2 -1.5 -1.3 -3.4 -3.4 1.9 2.5 3.6 4.3 0.0 0.4 Manufacturing: Preliminary Revised Next release date The next issue of Productivity and Costs is scheduled for release at 10:00 AM EST Wednesday, October 29, 1986, and will contain preliminary third-quarter measures for business, nonfarm business, and manufacturing. -6TEOWICAL NOTES Business sector output is equal to gross national product in constant 1982 dollars, less the rest-of-the-world sector, general government, output of nonprofit institutions, output of paid ertplcyees of private households, rental value of owner-occupied dwellings, and the statistical discrepancy in conputing the national income accounts. Corresponding exclusions are also made in labor inputs. Business output has accounted for about 77 percent of gross national product in recent years. Total manufacturing measures are computed ty summing series prepared for the durable and nondurables goods sectors* The durable sector includes the following 2-digit SIC industries: Primary metals; fabricated metal products; nonelectrical nachinery; electrical machinery; transportation equipment; instrxjments; lumber and lumber products; furniture and fixtures; stone/ clay, and glass products; and miscellaneous manufactures- The nondurable sector includes these 2-digit SIC industries: Textile mill products, apparel products, leather and leather products, printing and publishing, chemical and chemical products, petroleum products, rubber and plastic products, food, and tobacco products. Manufacturing output has accounted for about 24 percent of gross national product in recent years. Nonfinancial corporate output is equal to gross national product in constant 1982 dollars, less the rest-of-the-world sector, general government, unincorporated business, output of paid employees of private households and nonprofit institutions, rental value of owner-occupied- dwelling, the output of corporations engaged in baking, finance, stock and commodity trading, and credit and insurance agencies, and the statistical discrepancy in conputing the national income accounts. Nonfinancial corporate output has accounted for about 59 percent of gross national product in recent years. The productivity and associated cost measures in this news release describe the relationship between output in real terms and the labor time involved in its production. They show the changes from period to period in the amount of goods and services produced per hour. Although these measures relate output to hours of all persons engaged in a sector, they do not measure the specific contribution of labor, capital, or any other factor of production. Rather, they reflect the joint effects of nary influences, including changes in technology; capital investment; level of output; utilization of capacity, energy, and materials; the organization of production; mangerial skill; and the characteristics and effort of the \*ork force. -7- Tahle 1. Business sector: Productivity, hourly compensation, unit labor cost, and prices, seasonally adjusted Year and quarter Output per hour of all persons Output Compensation per hour(l) Hours of ail persons Real coropensation per hour(2) Unit labor cost Unit nonImplicit labor payprice ments(3) tafia tor (4) Indexes 1977*100 1<*«5 !4*Mi I II III TV 105,7 106.4 107,3 106.4 121.3 122.3 123.5 123.8 114.8 115.0 115.2 116.4 ANNUAL 106.4 122.7 115.3 175.3 98,8 164.8 159.7 163.0 107.3 12S.3 r!25.2 116.8 rll6.8 179.1 r!80.4 99.2 100.3 167.0 r!6U.2 162.2 r!61.9 165,3 r 166.0 I II r!07.2 172.3 174.5 176.4 178.0 98.4 98.7 99.1 99.0 163.1 164.0 164.4 167.3 158.3 160.0 161.4 159.6 161.4 162.6 163.4 164,6 Percent change from previous quarter at annual rate(5) 1*85 1986 3.8 1.0 1.0 1.8 -0.5 3.3 2.4 1.0 7,2 1.6 4.2 3.7 -4.3 2.7 3.0 1.9 3.0 2.2 4.3 0.7 3.2 2.2 2.^ 4.7 1.4 r-n.4 r-0.1 2.5 2.7 1,0 4.5 -0,7 r3,0 6.6 r-0,7 1.8 r'..7 2.6 0,6 0.7 4.3 4.2 5.1 4.4 -3.2 3.6 3.3 4.1 1.0 ANNUAL 1.0 3.3 I II r-0.3 I II III IV 0.9 2.7 3.4 3.3 Percent change fron corresponding quarter of previous year 1985 1986 I II III IV 0.8 0.8 1.7 0.9 3.8 2.8 3.4 3.0 3.0 2.0 1.7 2.1 3.9 4.5 4.4 4.4 0.3 0.7 1.0 2.7 2.0 2.8 1.2 3.0 o.a 3.1 3.6 2.6 3.4 ANNUAL 1.0 3.3 2.2 4,3 0.7 3.2 2.2 2.9 I II 1.5 3.3 r2.3 1.8 rl.6 3.9 3.3 0.8 1.7 2.4 rO.8 r2.6 2.5 rl.2 r2.1 See footnotes following table 6. r«revised 3.; 2.7 2.7 2.4 August 27, 1986 Source: Bureau of Labor Statistics Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor cost, and prices/ seasonally adjusted Year and quarter Output per hour of all persons Output Hours of all persons Compensation per hourU) Real compensation per hour(2) Unit labor cost Unit nonlabor payments(3) Impl ici t price deflator ( 4 ) Indexes 1977*100 1985 1986 I II III IV 104.4 104.9 105.4 104.5 121.1 122.1 123.3 123.6 116.0 116.4 116.9 118.2 172.1 174.0 175.4 177.0 98.2 98.4 98.5 98.4 164.8 165.9 166.3 169.3 158.9 160.8 163.0 16U.3 162.7 164.1 165.2 166.2 ANNUAL 104.8 122.5 116.9 174.6 98.4 166.7 160.6 164.6 I II 105.6 r!05.5 125.1 r!25.0 118.5 rll8.5 178.3 179.3 98.8 99.7 168.8 r!70.0 163.9 r!63.5 167.1 r!67.7 3.6 2.7 1.0 7.4 2.5 4.7 5.7 -6.6 3.2 3.4 2.6 2.4 Percent change from 1985 1986 previous quarter at annual rate(5) I II III IV 0.3 1.8 2.2 -3.5 3.2 3.0 4.0 1.0 2.9 1.2 1.8 4.6 3.9 4.6 3.2 3.7 0.7 0.5 0.7 -0.6 ANMUAL U.5 3.0 2.6 4.0 0.4 3.5 2.9 3.3 4.3 r-0.5 5.1 r-0.3 0.8 rO.2 3.1 2.2 1.6 3.9 -1,2 r2.8 9.3 r-0.9 2.3 rl.5 .. ' - i - t ii Percent change from corresponding quarter of previous year 1985 1986 i ii in IV 0.5 0.2 1.0 0.2 3,6 2.5 3.1 2.8 3.1 2.3 2.1 2.6 3.9 4.2 4.0 3.9 0.3 0.5 0.6 0.3 3.4 4.0 3.0 3.7 3.7 2.8 3.7 1.5 3.5 3.6 3.2 2.9 ANNUAL 0.5 3.0 2.6 4.0 0.4 3.5 2.9 3.3 I 1.2 rO.6 3.3 r2.4 2.1 1.8 3.6 3.1 0.5 1.4 2.5 r2.5 3.1 rl,7 2.7 r2.2 n See footnotes following table 6. r*revised p»preliminary August 27, 1986 Source: Bureau of Labor Statistics Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor cost, seasonally adjusted Year and quarter Output per hour of all persons Output (6) Hours of all persons Compensation per hour(l) Real ccmpensation per hour (2) Unit labor cost Indexes 1977=100 1985 1986 I II III IV 119.3 121.7 123.0 122.9 118.8 119.9 121.2 121.9 99.6 98.5 98.5 99.1 173.8 175.6 178.1 179.3 99.2 99.3 100.0 99.7 145.7 144.3 144.8 145.8 ANNUAL 121.7 120.4 98.9 176.7 99.5 145.1 I II 123.4 124.0 122.4 r!22.1 99.3 98.4 180.2 r!81.4 99.8 rlO ., 146.1 r!46.2 Percent change from previous quarter at annual rate(5) 1985 1986 I II III IV 3.9 8.2 4.4 -0.3 3.2 3.7 4.3 2.4 -0.6 -4.2 -0.1 2.7 5.5 4.3 5.6 2.8 2.2 0.3 3.0 -1.4 1.5 -3.6 1.2 3.0 ANNUAL 4.4 3.8 -0.5 5.0 1.4 0.6 I II 1.4 r2.2 1.9 r-1.3 0.4 -3.4 2.1 r2.5 0.6 r4.3 0.6 rO.4 Percent change from corresponding quarter of previous year 1985 1986 I II III IV 4.0 5.2 4.4 4.0 4.8 4.0 3.2 3.4 0.8 -1.2 -1.2 -0.6 5.1 5.3 5.3 4.5 1,4 1.6 1.9 1.0 1.1 0.1 0.9 0.5 ANNUAL 4.4 3.8 -0.5 5.0 1.4 0.6 I II 3.4 1.9 3.1 rl.8 -0.3 -0.1 3.7 r3.3 0.6 rl.6 0.3 rl.3 See footnotes following table 6. rcrevised p-preliminary August 27, 1986 Source: Bureau of labor Statistics -10- Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor cost, seasonally adjusted Year and quarter Output per hour of all persons (Xitput (6) Hours of all persons Compensatlon per hour(l) Real ccmpensation per hour (2) Unit labor cost Indexes 1977«100 1985 1986 I II III IV 121.4 124.4 126.3 126.4 122.6 124.1 125.6 126.4 100.9 99.8 99.5 100.0 172.0 173.2 176.5 178.0 98.2 97.9 99.2 98.9 141.6 139.2 139.8 140.8 ANNUAL 124.6 124.7 100.1 174.9 98.5 140.3 126.7 r!26.6 126.5 r!25.0 99.9 98.7 178.9 L-1C0.1 99.1 rlOO.2 141.2 r!42.2 7.8 3.3 2.8 -1.0 5.1 -0.9 -1.9 -6.5 1.6 2.9 5. Q 1.4 -1.7 0.7 r4.3 1.2 r2.9 I II Percent change from previous quarter at annual rate(5) 1985 1986 -0.9 -4.6 -1.1 I II III IV 8.2 10.2 6.1 0.5 7.2 5.1 ANNUAL 6.8 6.6 -0.2 I II 0.9 r-0.3 0.3 r-4.9 -0.6 r-4.6 4.9 2.7 2.2 6.1 3.0 2.2 r2.6 Percent change from corresponding quarter of previous year 1985 1986 8.7 7.4 5.4 5.0 2.0 -0.4 -1.2 -1.1 4.8 4.8 1..1 IV 6.5 7.8 6.7 6.2 5.6 5.0 2.1 1.5 -1.6 -2.8 -1.1 -1.1 ANNUAL 6.8 6.6 -0.2 5.0 1.4 -1.7 I II 4.3 rl.8 3.2 rO.7 -1.1 r-1.1 4.1 r4.0 0.9 r2.3 -0.3 r2.1 I II III See footnotes following table 6. r=revised preliminary' 1.A August 27, 1986 Source: Bureau of labor Statistics -11Table 5. Nondurable manufacturing sector: Productivity, hcxirlycompensation, and unit labor cost, seasonally adjusted Year and quarter Output per hour of all persons Output (6 ) ' Hours of all persons Conpensation per hour(l) Real compensation per hour (2) Unit labor cost Indexes 1977-100 1985 1986 I II III w 116.0 117.5 118.0 117.6 113.2 113.6 114.5 115.1 97.6 96.7 97.0 97.9 176.5 179.4 180.4 181.3 100.8 101.5 101.3 100.8 152.1 152.7 152.8 154.1 ANNUAL 117.3 114.1 97*3 179.4 101.0 152.9 I II 118.3 r!20.2 116.4 rll7.7 98.3 98.0 ioi.2 183.5 100.9 102.1 154.0 r!52.7 Percent change from previous quarter at annual rate (5) 1985 1986 I II III IV -2.6 5.2 1.8 -1.4 -2.8 1.5 3.3 -0.2 -3.5 1.5 3.4 4.4 6.9 2.1 1.9 1.2 2.8 -0.4 -2.3 7.2 1.7 0.3 3.4 ANNUAL 0.7 -0.3 -1.0 5.0 1.4 4.3 I II 2.4 4.5 r4.7 2.0 r-1.5 2.2 r6.3 0.7 4.5 -0.2 r-3.3 1.7 2.3 1.5 0.3 5.2 4.8 4.0 3.1 2.8 Percent change from corresponding quarter of previous year 1985 1986 I II III IV 0.1 1.2 0.9 0.7 -0.9 -1.1 -0.3 1.0 -1.0 -ill 0.3 5.3 6.1 4.9 3.8 ANNUAL 0.7 -0.3 -1.0 5.0 1.4 4.3 I II 2.0 r2.3 2.8 r3.6 0,8 1.3 3.3 2.3 0.2 0.6 1.3 rO.O See footnotes following table 6. r-revised preliminary igust 27, 198€ Source: Bureau of Labor Statistics -12- Table 6. Nonfinancial corporatiaii3s Productivity, hourly condensation, unit labor cost, unit profits, and prices, seasonally adjusted Output Year per alland quarter employee hour Output Employee Hourly Real hours compensa- hourly compen— tion sation(2) (1) Unit labor coat Unit nonlabor C09t(7) Total unit cost <8> Unit Implicit pro- price fits deflator (9) (4) Indeces 1977-100 1985 1986 I II III IV 106.0 106.5 107.8 107.0 123.1 124.2 126.0 126.1 116.1 116.6 116.8 117.8 169.9 171.6 173.1 174.5 97.0 97.0 97.2 ANNUAL 106.8 124.8 he.* I II 106.9 p!06.3 126.9 pl26.0 pile. 5 118.7 178.5 179.8 178.3 179.8 164.9 165.8 165.0 167.2 129.3 160.6 97.0 160.3 161.1 160.5 163.0 130.2 141.7 131.2 161.6 162.2 162.9 172.3 97.0 161.2 179.1 165.8 133.1 161.8 175.4 pl76.0 97.1 P97.9 164.0 p!65.6 181.1 p!80.9 168.3 p!69.4 131.7 p!28.4 164.0 p!64.5 2.8 2.3 -1.9 5.5 -3.6 3.0 40.1 -26.4 2.2 2.3 1.7 1.7 Percent change from previous quarter at annual rate(5) 1985 1986 1 II III IV 0.8 2.2 4.9 -2.8 3.2 3.1 5.* 0.5 2.4 1*4 1*0 3.4 3.8 4.2 3.4 3.3 0.6 0.2 0.9 -0.9 3.0 2.0 -1.4 6.3 2.2 3.0 -3.3 3.3 MMJAL 1.2 3.7 2.5 3.9 0.3 2.7 2.6 2.7 -0.2 2.4 I II -0.5 p-2.3 2.6 p-3.0 3.1 p-0.7 2.0 pi. 5 0.5 P3.2 2.5 p3.8 3.1 p-0.5 2.7 p2.6 1.3 p-9.4 2.5 pi. 4 Percent change from corresponding quarter of previous year 1985 1986 I II III IV 0.6 0.6 2.2 1.2 4.1 3.1 4.2 3.3 3.5 2.5 2.0 2.1 3.8 4.1 3.9 3.7 0.2 0.4 0.5 0.2 J.2 3.5 1.6 2.4 4.3 3.9 1.1 1.3 3.5 3.6 1.5 2.1 -3.8 -5.9 8.7 0.6 2.7 2.6 2.2 2.0 ANNUAL 1.2 3.7 2.5 3.9 0.3 2.7 2.6 2.7 -0.2 2.4 I II 0.9 p-0.2 3.2 pi. 5 2.2 pl.7 3.2 p2.6 0.2 pO.9 2.3 p2.8 1.5 pO.6 2.1 p2.2 1.8 p-1.4 2.1 pi. 8 r=revised p=preliminary August 27, 1986 Source: Bureau of Labor Statistics -13SOURCE: Output data from Bureau of Economic Analysis, U.S. Department of Conroerce, and the Federal Reserve Board. Compensation and hours data from the Bureau of Labor Statistics, U.S. Department of Labor, and the Bureau of Economic Analysis. RELIABILITY: Productivity and cost measures are regularly revised as more conplete information becomes available. Preliminary results are published 30 days after the close of the reference period; revisions appear 30 days laterf and second revisions after an additional 60 days. In the business sector, the probability is 0.95 that the third publication (second revision) of a quarterly index of output per hour of all persons will differ from the preliminary value by between -1.7 and 4-1.9 index points. Ihis interval is based on the performance of this measure between the first quarter of 1976 and the second quarter of 1985. Footnotes, Tables 1-6 (1) Wages and salaries of the employees plus employers* contributions for social insurance and private benefit plans. Bccept for nonfinancial corporations, v*\ere there are no self-employed, data also include an estimate of wages, salaries, and supplemental payments for the self-employed. (2) Compensation per hour adjusted for changes in the Consumer Price Index for All Urban Consumers. (3) Unit nonlabor payments include profits, capital consumption allowances, interest, rental income of persons, and indirect taxes. (4) Current dollar gross product divided by constant dollar gross product. (5) Quarterly changes: percent change compounded at annual rate fron the original data rather than index numbers. Annual changes: percent change between annual average levels. (6) Quarterly manufacturing output measures are based on the index of industrial production prepared monthly by the Board of Governors of the Federal Reserve adjusted by BLS to annual manufacturing output levels (gross product originating) from the National Income and Product Accounts prepared by the Bureau of Economic Analysis of the U.S. Department of Commerce. (7) Unit nonlabor cost includes capital consumption allowances, interest, rental income of persons, and indirect taxes. (8) Total unit cost is the sun of labor and nonlabor costs. (9) Unit profits include corporate profits with inventory valuation and capital consumption adjustments.