Full text of Productivity and Costs : Third Quarter 1971

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's. DtPARTMENT OF tABOR
OF INFORMATION. WASHINGTON. O. C. 20210

....-----------------

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FOR RELEASE: 11:00 A~M.
Wednesday. -nctober 27 •. 1971

USDL - 71-568
Bureau of Labor Statistics
961-3349 or 961-2431

Productivity and Costs
Third Quarter 1971
Productivity (output perman-hour) --for the private economy increased
at an annual rate of 4.3 percent in the third quarter, the U.S. Department
of Labor's Bureau of Labor Statistics announced today.

This increase

exceeded the 3.4 percent rate of productivity gain in the second

quart~r.

The greater increase resulted from the sharp productivity rise in
agriculture.

In the nonfarm sector, productivity rose at an annual rate

of 2.1 percent -- substantially below the second quarter increase of
4.3 percent.

(

Output per
man-hour

Compensation
per man-hour

Unit
Labor
Costs

Real
Compensation
per man-hour

Total Private
Percent Change Over Previous Quarter at Annual Rate
1971
3rd

4.3

6.2

1.8

1.8
;. -

Percent 'Change Over Previous Year '
1971
3rd

7.2

3.5

2.7

Private Nonfarm
Percent Change Over Previous Quarter at Annual Rate
1971
3rd
1971
3rd

5.4
3.2
2.1
Percent Change Over Previous Year
2.8

6.9

4.0

1.0
2.5

• . ! •.




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3.5

2

The productivity increases were accompanied by a slower growth in
output and an

ac~ual

decline in

~-hours.

De~pite

gains in employment

during this quarter, man-hours declined because of a cutback of the
workweek.
Compared to the same quarter a year ago, productivity rose by
3.5 percent in the private economy and by 2.8 percent in the nonfarm
sector.
For the manufacturing sector, during the third quarter productivity
actually declined by 2.1 percent (annual rate).

The falloff in man-hours

was exceeded by the decline in output, which reflected in part the sharp
drop in steel production.

The decline in man-hours here reflected

cutbacks in both employment and average weekly hours.

Compared to the

same quarter a year ago, manufacturing productivity rose by slightly less
than two percent.
Hourly compensation grew at a significantly slower pace in the third
quarter in all three sectors.

In the private economy ' the increase was

6.2 percent (compared to an average of 8.2 percent for the
quarters of 1971).

fi~st

two

In the nonfarm sector the increase was 5.4 percent

(annual rate)-- compared to an average gain of 8.5 percent in the first
two quarters of the year.
of all -- 4.4 percent.

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Manufacturing experienced the smallest,increase

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The productivity increases were

accom~anied

output and an actual decline in man-hours.
'

.

by a slower growth in '

Despite gains in employment

during this quarter, man-hours declined because of a cutback of the
workweek.
Compared to the same quarter a year ago, productivity rose by
3.5 percent in the private economy and by 2.8 percent in the nonfarm
sector.
For the manufacturing sector, during the third quarter productivity
actually declined by 2.1 percent (annual rate).

The falloff in man-hours

';

was exceeded by the decline in output, which reflected in part the sharp
drop in steel production.

The decline in man-hours here reflected

cutbacks in both employment and average weekly hours.

Compared to the

same quarter a year ago, manufacturing productivity rose by slightly less
than two percent.
Hourly compensation grew at a $ignificantly slower pace in the third
quarter in all three sectors.

In the private economy ' the increase was

6.2 percent (compared to an average of 8.2 percent for the first two
quarters of 1971).

In the nonfarm sector the increase was 5.4 percent

(annual rate) -- compared to an average gain of 8.5 percent in the first
two quarters of the year.
of all -- 4.4 percent.




Manufacturing experienced the smallest. il1crease

1·

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,

,

3

The smaller increases in hourly compensation during the third
quarter reflected in part the establishment of the wage freeze midway
. ' -'"

in the quarter (August 15).

In addition, shifts in relative importance

of industrial sectors and occupational groups also contributed to the
smaller increase in hourly compensation in the third quarter.

For an

explanation of how these factors affect average hourly compensation, see
the note covering average earnings and wage changes released on October 5
(USDL

71-520).
The smaller increase in hourly compensation, together with the greater

productivity gains, resulted in a slackening in the growth of unit labor
costs in the entire private economy -- 1.8 percent at annual rate compared
to 3.8 percent in the previous quarter.

In the nonfarm sector, however,

unit labor costs showed virtually the same increase in both quarters (3.2
and 3.4).

In this sector the reduced productivity gain approximately

matched the reduced rate of increase in hourly compensation .
During the third quarter the increase in average hourly compensation
continued to exceed the increase in consumer prices, and real hourly

compen-

sation (compensation per man-hour adjusted for price changes) rose by about
two percent in the private economy and one percent in the nonfarm sector.

In

manufacturing the increase in hourly compensation and in consumer prices
were virtually the same and there was no change in real hourly compensation.
Compared to the third quarter a year ago, real hourly compensation increased
by about 2-1/2 percent in the private and nonfarm sectors and by two percent

l·
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in manufacturing.




(Attached is October 5 release).

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Table 1.

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Output per Man-Hour, ,orly Compensation', Unit Costs, anc1' Prices in the
Private Economy, Seasonally Adjusted, (Indexes 1967-100)

Output per
man-hour

Compensation per
man-hour 1.1

Real
compensation per
man-hour Jj

Unit labor
cost

Unit nonlabor payments 1/

Implicit
price
deflator

Year and
quarter

Output

Man-hours

1970
1st ...
2nd ...
3rd ...
4th ...

106.7
106.9
107.3
106.1

103.7
103.1
102.0
100.8

103.0
103 . 7
105.3
105.3

121.1
122.5
125.3
127.2

106.3
105.9
107.1
107.2

117.7
118.1
119.0
120.7

102.1
104.4
106.4
108.1

111.6
112 ·, 8
114.1
115.9

Annual Ave. 106.8

102.4

104.3

124.0

106.6

118.9

105.3

113.6

1971
1st ...
2nd ...
3rd ...

101. 3
101.7
101.4

106.9
107.8
109.0

129.9
132.2
134.2

108.7
109.5
109.9

121.5
122.6
123.2

110.3
111.5
113.2

117.1
118.3
119.3

1970
1st. ..
2nd ...
3rd ...
4th ...

108.3
109.7
110.5

Percent Chanse Over Previous guarter at Annual Rate jJ
9.7
1.5
- 1.6
7.9
3.1
4.7
1.6
- 1.7
6.1
4.6
9.4
3.1
6.0
0.2
0.7
6.1

;~

- 1.9,
9.0
8.2
6.6

5.4
4.2
4.9
6.2

- 3.0
0.8
1.5
- 4.4

- 1. 4
- 2.2
- 4.3
- 4.5

6/
Annual Ave. - 0.7

- 1.6

0.9

7.2

1.2

6.3

2.6

4.9

1971
1st ...
2nd ...
3rd ...

2.1
1.7
- 1.3

6.3
3.4
4.3

9.0
7.3
6.2

5.6
2.8
1.8

2.6
3.8
1.8

8.0
4.6
6.1

4.5
4.1
3.4

- 2.3
1. 3
- 0.5

Percent Chanae Over
, Previous Year
3.9
2.3
7.3
4.0
7.9
3.4
2.7
3.5
7.2

3.3
3.8
3.5

8.0
6.9
6.3

4.9
4.9
4.5

1971
1st. ..
2nd •••
3rd ...
Sc~




8.6
5.2
2.9
1.5
2.6
3.0

-

footnotes at end of table 3.

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77

NOTE:

Data have been revised to reflec '
new man-hour benchmarks.
~vlsions of earlier data are
shown on Table 4.

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Table 2.

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Output per Man-Hour, ttour1y Compensation, Unit Costs, and Prices in the
Private Nonfarm Sector, Seasonally Adjusted, (Indexes 1967-100)

Output per
man-hour

Compensation per
man-hour 1/

Real
compensation per
man-hour 1/

Unit labor
cost

Unit nonlabor paymenta 1/

Implicit
price
deflator

Year and
quarter

Output

Man-hours

1970
1st ..•
2nd •••
3rd .•.
4th .••

107.1
107.2
107.7
106.2

104.9
104.0
103.1
102.0

102.1
103.1
104.6
104.1

119.7
121.S
124.1
12S.7

10S.0
10S.0
106.0
106.0

117.2
117.S
l1S.7
120.7

101.3
104.0
106.6
10S.S

111.2
112.6
114.1
116.2

Annual Ave. 107.1

103.S

103.S

122.7

10S.S

l1S.6

10S.2

113.S

1971
1st ...
2nd ••.
3rd .•.

108.5
109.9
110.3

102.5
102.8
102.6

105.8
107.0
107.5

128.5
131.0
132.7

107.S
10S.4
108.7

121.4
122.4
123.4

110.7
112.0
113.6

117.4
11S.5
119.7

1970
1st ...
2nd ...
3rd ...
4th .•.

- 2.7
0.6
2.0
- 5.6

1.2
- 3.6
- 3.5
- 4.0

- 3.4
11.2
10.4
8.2

4.5
S.l
5.5
7.6

6/
Annual Ave. - 0.7

- 1. 4

0.7

7.0

1.0

6.3

2.8

5.0

1971
1st ...
2nd ...
3rd ...

8.9
5.3
1.5

2.1
1.0
- 0.6

6.7
4.3
2.1

9.1
7.8
5.4

5.7
3.3
1.0

2.3
3.4
3.2

7.4
4~8

5.S

4.1
3.9
4.1

1971
1st. ..
2nd •••
3rd ...

1.3
2.5
2.4

- 2.3
- 1. 2
- 0.4

Percent Change Over Previous Year
3.7
7.4
2.4
3.7
7.8
3.3
2.8
2.5
6.9

3.6
3.9
4.0

9.3
7.7
6.6

5.5
5.2
4.9

Percent Change Over Previous Quarter at Annual Rate 5/
7.5
- 1.5
9.1
1.1
4.3
6.3
- 0.2
1.9
5.6
8.7
4.0
2.9
1.6
5.5
7.2
0.1

,See footnotes at end of table 3.



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17

NOTE:. Data have been revised to ref:
new man-hour benchmarks.
Revisions of earlier data are
shown on Table 4 •

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Table 3.

...... . . . . .

Output per Man-Hour, Hourly Co~. , _nsation and Unit Labor Costs in the Man~facturin~
Sector, Seasonally Adjusted, (Indexes 1967=100)
Unit labor
costs

Output per
man-hour

107.5
107.3
106.5
101.4

101.5
99.3
97.5
94.0

105.9
108.1
109.2
107 . 9

118.4
120.3
122.9
124.7

104.0
104.0
105.1
105.1

111.8
111.4
112.6
115.6

Annual Ave.

105.7

98.1

107.7

121.6

104.6

112.9

1971
1st ...
2nd •..
3rd • . •

104.2
106.0
10 ... 5

94.6
94.7
93 .. 9

110.1
111.9
111.3

127.8
129.4
130.8

106.9
107.2
107.1

116.0
115.7
117 . 6

Percent Change Over Previous Quarter at Annual Rate 5/
- 0.8
- 6.3
6.0
- 0.1
8.6
- 8.5
6.5
0.0
4.1
- 6.9
9.1
4.3
5.8
-13.8
- 4.7
0.2

6.7
- 1.4
4.4
11.1

1970
1st ...
2nd ..•
3rd •..
4th •..

i

- 7.1
- 0.7
- 2.9
-17.8

2./

~/

Output

I

Compensation per
man-hour 1/

Real compensation
per man-hour 1/

Man-hours

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

Annual Ave.

- 3.8

- 5.3

1.5

6.6

0.6

5.0

1971
1st ...
2nd •..
3rd ...

11.5
7.1
- 5.5

2.8
0.4
- 3.4

8.4
6.7
- 2.1

10.3
5.2
4.4

7.0
0.8
0 .. 0

1.4
- 1.0
6.7

1971
1st . ..
2nd •••
3rd ...

- 3.1
- 1. 2
- 1.9

- 6.8
- 4.6
- 3.7

2.9
3.1
2.0

3.8
3.9
4.4

Percent Change Over Previous Year
7.9
4.0
7.6
3.5
6.4
1.9

See footnotes at end of table 3.


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Federal Reserve Bank of-,'::.St.
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77

NOTE:

Data have been revised to reflect
new man-hour benchmarks and the
new Federal Reserve Board Index
of manufacturing production.

FOOTNOTES, TABLES 1 TO 4

,

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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.
1/ Wages and salaries of employees plus employers' contributions lor social insurance and private benefits plans. Also includes
an estimate of wages, salaries, and supplemental payments for the
self-employed.
2/ Compensation per Plan-hour adjusted for changes in the
Consumer Price Index.
3/ Nonlabor payments include profits, depreciation, interest,
rental income and indirect taxes.

4/ Current dollar gross product divided by constant dollar
gross product.
5/ Percent change compounded at annual rate from original
data.
6/ Percentage change of annual average.
7/ Current quarter divided by comparable quarter a year ago.
8/ Quarterly measures adjusted to annual estimates of output
(gross product originating) from the Office of Business Economics,
U. S. Department of Commerce.

1
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Table 4.
Revised Indexes of Output per Man-Hour, Hourly Compensation
and Unit Labor Costs, 1965-69 (Indexes 1967=100)

Year
and
Quarter

Output

ManHours

Seasona11I Adjusted
CompenReal
Output sation per CompenUnit
per
sation
labor
manman-hour
cost
hour 11 per manhour '1../

Unit
non-labor Implicit
payprice
ments 11 deflator

Total Private

• Hl68
1st .••.•.
2nd ......
3rd ......

4th •••••.
Annual Ave.
1969
Is t ......
2nd ......
3rd ......

4th .•.•••
Annual Ave.

102.6
104.6
105.6
106.3
104.8

100.8
101.8
102.2
102.5
101. 8

101.S
102.7
103.3
103.7
102.9

104.4
106.3
10S.6
110.9
107.6

102.0
102.7
103.6
104.6
103.2

102.5
103.5
105.1
106.9
104.6

101.5
102.5
102.2
102.2
102.0

102.1
103.1
104.0
105.1
103.6

107.1
107.5
108.0
107.6
107.5

103.4
104.2
104.5
104.0
104.0

103.6
103.1
103.4
103.4
103.4

112.6
114.4
116.6
118.9
115.6

104.9
104.8
105.4
105.9
105.3

10S.7
110.9
112.8
115.0
111.9

102.5
102.6
102.9
102.6
102.6

106.3
107.7
109.0
110.2
108.3

Private Nonfarm
1968
1st ......
'J.d ••••••

;:

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.Ird ••••••

"

4th ......

Annual Ave.

102.8
104.9
105.9
106.6
105.1

100.9
102.0
102.7
103.0
102.1

101.9
102.9
103.2
103.5
· 102.9

104.6
106.1
10S.0
110.3
107.3

102.2
102.5
103.1
104.1
102.9

102.6
103.1
104.7
106.6
104.3

101.3
102.7
102.6
102.4
10~.3

102.1
103.0
103.9
105.0
103.5

107.2
107.9
10S.3
107.8
107.8

104.0
104.9
105.4
105.2
104.9

103.1
102.8
102.7
102.4
102.7

111.9
113.7
115.5
117.5
114.7

104.3
104.2
104.4
104.7
104.5

108.6
110.6
112.5
114.7
111.6

102.4
102.2
102.8
102.2
102.3

106.3
107.4
10S.8
110.0
108.1

n.a.
n.a.
n.a.
n.a.
n.a.

1969
1st ......

2nd .•..••
3rd ......
4th ......

Annual Ave.

Manufacturing
1968
1st ......
2nd ......
3rd ......
4th ......

Annual Ave.
1969
1st ......
2nd •.....

3rd ......
4th ......

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Ave •

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104.7
106.4
107.4
10S.3
106.7

100.9
101.6
102.3
102.8
101.9

103.8
104.7
105.0
105.4
104.7

104.6
106.2
107.9
110.0
107.2

102.2
102.6
103.0
103.8
102.9

100.8
101.4
102.8
104.4
102.3

n.a.
n.a.

109.0
109.9
111.3
109.5
109.9

103.0
104.0
104.0
103.2
103.6

105.8
105.7
107.0
106.1
106.1

111.5
113.0
11$.0
116.7
114.1

103.9
103.5
103.9
104.0
103.9

105.4
106.9
107.5
110.0
107.5

n.a.
n.a.
n.a.
n.a.
n.a.

n.a.

n •.a.
n.a.

n.a.
n.a.
n.a.
n.a.
n.a.

iii