Full text of Productivity and Costs : Third Quarter 1985

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APR 2 8 vee

DtruoifORY LIBRARY

News

Bureau of Labor Statistics

United States
Department
of Labor
Washington, D.C. 20212

Historical, technical
information: (202) 523-9261
Current data:
(202) 523-1221 or 1208
Media contact: (202) 523-1913

USDL 85-457
For Release: 10:00 AM EST
Monday, October 28, 1985

PROPOCTIVITy AND POSTS

Third Quarter 1985
The Bureau of Labor Statistics of the U.S. Department of Labor today
reported preliminary productivity statistics—as measured by output per hour of
all persons—-for the third quarter of 1985.
The seasonally adjusted annual
rates of increase in major sectors of the econcmy from the second to the third
quarter of 1985 were:
3.0
1.2
2.4
2.7
2.0

percent
percent
percent
percent
percent

in the business sector,
in the naifarm business sector,
in manufacturing,
in durable goods manufacturing, and
in nondurable goods manufacturing.

Third-quarter measures are summarized in table A and appear in detail in
tables 1 through 6.
Business
Productivity increased at a 3.0 percent seasonally adjusted annual rate in
the third quarter of 1985 in the business sector, as output grew 3.3 percent
and hours of all persons increased 0.3 percent (table 1). During the second
quarter, productivity had increased 1.5 percent as output and hours rose 2.7
percent and 1.2 percent, respectively. The slower rate of growth in hours in
the third quarter reflected a continued slowing in enployment growth and a
further decline in the length of the average work week.
Hourly compensation increased at a 5.6 percent annual rate in the third
quarter, compared with a 3.3 percent rise during the second quarter. This
measure includes the cost to employers of wages and salaries, supplements,
payments to employee-benefit plans, and taxes. Real hourly condensation, which
also takes into account changes in the Consumer Price Index for All Urban
Consumers (CPI-U), increased 3.1 percent in the third quarter, conpared with a
0.9 percent decline during the second period. Unit labor costs, which reflect
changes in productivity and hourly condensation, increased at a 2.6 percent
annual rate during the third quarter, compared with a 1.7 percent gain in the
second quarter.




Property of University of Mo. at St. Louis

-2Table A.
rates

Productivity and costs: Percent change at seasonally adjusted annual

Sector

Productivity

Output

Hours

Hourly
compensation

Real
hourly
compensation

Unit
labor
costs

3.1
1.4
0.5
1.5
-1.0

2.6
2.7
0.5
1.2
-0.6

1.1
0.6
1.2
1.7
0.4

3.6
3.6
2.4
2.*»
1.4

PRELIMINARY

Second quarter to third quarter 1985
Business
Nonfarm business
Manufacturing
Durable
Nondurable

3.0
1.2
2.4
2.7
2.0

3.3
3.2
2.3
1.8
3.0

0.3
2.0
-0.1
-0.9
1.0

5.6
3.9
2.9
3.9
1.4

Third quarter 1984 to third quarter 1985
Business
Nonfarm business
Manufacturing
Durable
Nondurable

0.9
0.4
2.2
2.1
2.3

2.7
2.7
1.3
1.0
1.7

1.8
2.3
-0.9
-1.1
-0.6

4.5
4.0
4.6
5.1
3.8

Nonfarm business
Productivity in the nonfam business sector increased at a 1.2
annual rate in the third quarter, as output rose 3.2 percent and hours of all
persons engaged in the sector rose 2.0 percent. During the second quarter,
same increase in productivity reflected slower growth in both output and
hours (table 2). Although output growth was similar in business and nonfantt
business, differences in hours growth resulted in a larger business
productivity gain as farm hours declined sharply.
Hourly compensation increased at a 3.9 percent annual rate in the third
quarter, and unit labor costs—compensation per unit of output—rose 2.7
percent. Real hourly compensation increased 1.4 percent in the third quarter
in the nonfarm business sector.
Manufacturing
In manufacturing, output per hour of all persons increased
at a 2.4
percent annual rate during the third quarter, as output rose 2.3 percent and
hours of all persons declined 0.1 percent. During the second quarter, productivity increased at a 6.8 percent annual rate; output rose 2.0 percent while
hours dropped 4.5 percent (table 3).




—3"*

Hourly compensation increased at a 2.9 percent annual rate, compared with a 4.8
percent gain during the second quarter. Unit labor costs increased 0.5 percent, compared
with a 1.9 percent decline in the second quarter (seasonally adjusted annual rates).
Real hourly compensation increased 0.5 percent in the third quarter for persons engaged
in manufacturing.
Although productivity increased faster among durable goods producersf output and
hours were both weaker than among nondurable goods manufacturers (tables 4 and 5).
Nonfinancial corporations; revised second quarter measures
Productivity in nonfinaneial corporations declined 0.3 percent in the second
quarter, according to revised measures announced today. This sector includes all
corporations doing business.in the United States, except banks, finance and insurance
agencies, and stock and oawnodity brokersf Output rose 1.9 percent while hours of all
employees increased 2.2 percent (seasonally adjusted annual rates). These changes are
based on the most complete naasures of output, compensation, and labor irput available?
table B compares them with the results reported on August 27, based on preliminary
information.

Table B. Preliminary and revised prooductivity and related measures for nonfinancial
corporations, second quarter 1985
Percent change fron previous quarter at annual rate
(Seasonally adjusted)

Item

Productivity

Preliminary
Revised




-0.3
-0.3

Output
1.8
1*9

Hours
2.1
2.2

Hourly
compensation
2.9
3.0

Real
hourly
conqpensation
-1.2
-1.2

Unit
labor
costs
3.2
3.3

Unit
nonlabor
costs

Unit
profits

4.1
4.3

-2.7
-3.9

-4TBCHNICAL NOTES

Business sector output is equal to gross national product, less the
rest-of-the-world sector, general government, output of paid employees of
private households and nonprofit institutions, rental value of owner-occupied
dwellings, and the statistical discrepancy in computing 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 by sunning series prepared for the
durable and nondurable goods sectors.
The durable sector includes the following 2-digit SIC industries: Primary
metals? fabricated metal products? nonelectrical machinery? ^electrical
machinery? transportation equipment? instruments? lumber and lumber products?
furniture and fixtures? stone, clay, and glass products? and miscellaneous
manufactures.
The nondurable sector includes the following 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, foods, and tobacco products.
Manufacturing output has accounted for about 24 percent of gross national
produefe-in recent years.
\
Nonfinancia^ corporate output is-'equal 'toMgross»' h&tlbn&t product ,1 less thfe
rest-of-th^world sector, general government, unincorporated business, output
of paid^eitployees of private households and nonfprofit institutions, rental
value of owner-occupied dwellings, the output of corporations engaged in
banking, finance, stock and commodity trading, and credit and insurance
agencies, and the statistical discrepancy in computing 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 fron 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 contributions of labor, capital, or any other factor of production. Rather, they
reflect the joint effects of many influences, including changes in technology?
capital investment? level of output? utilization of capacity, energy, and
materials? the organization of production? managerial skill? and the
characteristics ami effort of the work force.




Table 1. 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

Gompensation per
hour(1)

Real
conpensation per
hour (2)

Unit
labor
cost

Unit nonlabor payments(3)

Implicit
price
deflator(4)

Indexes 1977-100
1984

1985

I
II
III
IV

105.7
107.0
107.2
108*0

117.8
121.0
121.5
123.0

111.4
113.0
113.4
113.9

166.7
167.5
169.3
171.1

98.6 '
98.2
98.3
98.5

157.7
156.5
158.0
158.4

151.6
157.2
158.5
160.2

155.6
156.7
158.1
159,0

ANNUAL

107,0

120.8

112.9

168.6

98.4

157.6

157.0

157.4

106.9
107.3
108. 1p

123.0
123.8r
124,9p

115.0
115.4r
115.5p

173.1
174.5
176.9p

98.9
98.6
99. 4p

161.9
162.6r
163.6p

159.1
159.9r
161 .2p

160.9
161.7
162.8p

I
II
III

Percent change from previous quarter at annual rate(5)
1984

1985

I
II
III
IV

4.0
4.9
0.6
3.1

1.1.4
. 11.2
1.8
5.0'

7.2
6.0
1.2
1.8

6.2
1.9
4.4
4.4

0.8
-1.8
0.7
0.8

2.1
-2.9
3.7
1.2

7.0
15.4
3.4
4.3

3.7
2.9
3.6
2.2

ANNUAL

3.2

8.8

5.4

4.2

0.0

1.0

7.9

3.2

-3.9
1.5r

0.0
2.7r
3.3p

4.1
1.2r
0.3p

4.8
3.3
5.6p

1.4
-0.9
3.1p

9.1
1.7r
2.6p

-2.6
2.1r
3.2p

5.0
1.8r
2.8p

I
II
III

3^?P__

Percent ellange fron corresponding quarter of previous year
1984

1985

I
II
III
IV

3*5
3.3
2.7
3.2

10.2
9.9
8.0
7.3

6.5
6.4
5.1
4.0

4.1
4.0
4.6
4.2

-0.4
-0.3
0.4
0.1

0.6
0.7
1.9
1.0

8.4
8.7
7.1
7.4

3.0
3.3
3.6
3.1

ANNUAL

3.2

8.8

5.4

4.2

0.0

1.0

7.9

3.2

1.1
0.3
0.9p

4.4
2.4r
2.7p

3.2
2.1r
1.8p

3.8
4.2
4.5p

0.3
0.5
1.1p

2.7
3.9
3.6p

4.9
1.8
1.7p

3.4
3.2
2.9p

I
II
III

See footnotes following table 6.
r-revtsed
p-preliroinary




October 28, 1985
Source: Bureau of Labor Statistics

-6-

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
hour(1)

Real
compensation per
hour (2)

Unit
labor
cost

Unit nonlabor payments (3)

Implicit
price
deflator(4)

Indexes 1977-100

1984

1985

I
II
III
IV

105.2
106.6
106.3
106.9

118.0
121.0
121.3
122.7

112.3
113.6
114.1
114.8

166.5
168.0
169.5
171.0

98.4
98.4
98.4
98.5

158.3
157.6
159.5
160.0

152.2
156.8
158.0
160.3

156.3
157.3
159.0
160.1

ANNUAL

106.2

120.7

113.6

168.7

98.4

158.8

156.9

158.2

106.0
106.3
106. 7p

122.8
123.6r
124.5p

115.8
116.2
116.8p

173.1
174.6r
176. 2p

98.9
98.7
99, Op

163.3
164.1r
165. 2p

160.3
161 .8r
163.7p

162.3
163.4
164.7P

I
II
III

Percent change from previous quarter at annual rate (5)

1984

1985

I
II
III
W

2.9
5.5
-1.1
2.2

10.3
10.6
0.7
4.7

7.2
4.8
1.8
2.4

6.1
3.7
3.6
3.7

0.7
0.0
-0.1
0.1

3.1
-1.7
4.7
1.4

2.3
12.5
3.1
5.9

2.8
2.8
4.2
2.9

ANNUAL

2.7

8.5

5.7

4.1

-0.1

1.4

6.7

3.1

-3.1
1.2r
1.2p

0.5
2.5r
3.2p

3.7
1.3r
2.0p

5.0
3.4r
3.9p

1.7
-0.8
1.4p

8.4
2.1r
2.7p

0.1
3.7r
4.9p

5.5
2.7r
3.4p

I
II
III

Percent change from corresponding quarter of previous year

1984

1985

I
II
III
IV

3.5
2.9
2.1
2.4

10.6
9.7
7.6
6.5

6.9
6.6
5.4
4.0

4.0
4.0
4.4
4.3

-0.5
-0.3
0.2
0.2

0.4
1.1
2.3
1.9

8.3
7.1
5,7
5.9

2.9
3.0
3.4
3.2

ANNUAL

2.7

8.5

5.7

4.1

-0.1

1.4

6.7

3.1

I
II
III

0.8
-0.2r
0.4p

4.0
2.1r
2.7p

3.2
2.3
2.3p

4.0
3.9
4.0p

3.1
4.1r
3.6p

5.3
3.2
3.6p

3.8
3.8
3.6p

See footnotes following table 6.
r=revised
p*preliminary




0.4
0.2
0.6p

October 28, 1985
Source: Bureau of Labor Statistics

-7-

Table 3. Itomfacturing sector: Productivity, hourly compensation, and unit labor cost,
seasonally adjusted
Year and
quarter

Output per
hour
of all persons

Hours
of all
persons

Output
(6)

Compensation per
hour(1)

Real
compensation per
hour(2)

Unit
labor
cost

Indexes 1977=100
1984

1985

I
II
III
IV

114.2
114.8
116.7
116.5

113.0
1 14.9
1 16.7
1 16.7

ANNUAL

115.6

1 15.3

116.7
118.6r
119.3p

1 17.0
1 17. 6r
1 18.2p

I
II
III

98.9
100.1
100.0
100.2
99.8
100.3
99.1
99. 1p

167.1
168.3
169.9
172.1

98.8
98.6
98.7
99.1

146.3
146.6
145.5
147.7

169.4

98.8

146.5

174.4
176.5
177.8p

99.6
99.7
99. 9p

149.5
148. 8r
149. Op

Percent change from previous quarter at annual rate(5)
1984

1985

I
II
III
IV

5.5
2.2
6.8
-0.6

14.8
6.9
6.5
0.0

8.8
4.6
-0.2
0.7

6.2
2.9
3.7
5.2

- 0.8
-0.8
0.1
1.6

0.6
0.7
-2.8
5.9

ANNUAL

3.5

10.5

6.7

3.6

-0.6

0.1

0.4
-4.5
-0.1p

5.6
4.8
2.9p

I
II
III

.

0.4
6.8r
2.4p

0.9
2. Or

2<3p

2.2
0.6
0.5p

5.1
-1.9r
0.5p

Percent change from corresponding quarter of previous year
1984

1985

I
II
III
IV

3.8
3.6
3.3
3.4

13.9
12.2
9.3
7.0

9.7
8.3
5.8
3.4

2.7
3.3
3.9
4.5

-1.7
-1.0
-0.3
0.4

-1.0
-0.3
0.6
1.0

ANNUAL

3.5

10.5

6.7

3.6

-0.6

0.1

1.4
-0.9
-0.9p

4.4
4.8
4.6p

I
II
III

2.1
3.3r
2.2p

See footnotes followirg table 6.
r=revised
p=preliminary




3.5
2.3r
1.3p

0.8
1.1
1.2p

2.2
1.5r
2.4p

October 28, 1985
Source: Bureau of Labor Statistics

-8-

Table 4. Durable manufacturing sector: Productivity, hourly compensation,
seasonally adjusted
Year and
quarter

Output per
hour
of all persons

Output
(6)

Hours
of all
persons

Compensation per
hour(1)

unit labor cost,
Real
compensation per
hour(2)

Unit
labor
cost

Indexes 1977-100
1984

1985

I
II
III
IV

115.3
116.1
118.3
117.7

114.1
116.6
119.4
119.5

98.9
100.4
101.0
101.5

165.8
167.0
168.1
170.1

98.1
97.8
97,6
v7.9

143.8
143.8
142.1
144.4

ANNUAL

116.9

117.4

100.4

167.7

97.9

143,5

118.2
120. Or
120.8p

119.8
120. 1r
120.6p

101.4
100.1r
99. 8p

172.9
175.0
176.7p

98.7
98.9
99. 3p

146.3
145.8r
146. 3p

I
II
III

Percent change from previous quarter at annual rate(5)
1984

1985

I
II
III
IV

8.4
2.8
7.6
-1.8

20.3
9.2
9.9
0.3

10.9
6.2
2.1
2.1

6.1
2.8
2.6
4.9

0.8
-0.9
-1.0
1.3

-2.2
0.0
-4.6
6.8

ANNUAL

4.8

14.4

9.1

3.2

-1.0

-1.6

-0.4
-5.2
-0.9p

6.9
4.9
3.9p

I
II
III

1.5
6.2r
2.7p

1.2
0.7r
1.8p

3.5
0.7
1.Sp

5.3
-1.3r
1.2p

Percent~9uSige~ft'CiB corresponding quarter of previous year
1984

1985

I
II
III
IV

5.5
5.1
4.6
4.2

18.5
16.7
13.4
9.7

12.3
11.1
8.4
5.3

2.2
2.9
3.4
4.1

-2.2
-1.4
-0.8
0.0

-3.1
-2,0
-1.2
-0.1

ANNUAL

4.8

14.4

9.1

3.2

-1.0

-1.6

2.5
-0.4
-1.1p

4.3
4.8
5.1p

I
II
III

2.5
3.3r
2. 1p

See footnotes followir^g table 6.
r-revised
p-preliroinary




5.0
2.9r
1.0p

0.7
1.1
1.7p

1.8
1.4r
-2.9p

October 28, 1985
Source: Bureau of Labor Statistics

Table 5. Nondurable tnanufacturing 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

Oompensation per
hour(1)

Real
compensation per
hour(2)

Unit
labor
cost

Indexes 1977-100
1984

1985

I
II
III
IV

112.5
112.9
114.4
114.7

111.4
112.3
112.8
112.7

99.0
99.5
98.6
98.2

169.5
170.6^
172.7
175.1

100.2
100.0
100.3
100.8

150.6
151.2
151.1
152J

ANNUAL

113.6

112.3

98.9

171.9

100.3

151.4

114.3
116.5r
117.0p

112.8
113.9r
114.7p

98.7
97.8
98 .Op

176.6
178.6r
179.3p

100.8
101.0
100.7p

153.4r
153.2p

I
II
III

154.5

Percent change from previous quarter at annual rate(5)
1984

1985

I
II
III
IV

1.3
1.2
5.4
1.1

7.1
3.6
1.5
-0.4

5.8
2.4
-3.7
-1.5

5.8
2.7
5.1
5.5

0.5
-1.0
1.4
1.9

-0.3

ANNUAL

1.5

4.9

3.3

3.8

-0.4

2.3

-1.3
7.8r
2.0p

0.4
3.9r
3.0p

1.7
-3.6
U OP

3.5
4.8
1.4p

0.2
0.6

I
II
III

.,_

-1.0p

4.5
1.5
4.3

4.9

-2.8r
-0.6p

Percent change from corresponding quarter of previous year
1984

1985

I
II
III
IV

1.3
1.3
1.3
2.2

7.5
5.9
3.4
2.9

6.1
4.5
2.1
0.7

3.0
3.3
4.3
4.8

-1.4
-1.0
0.1
0.7

1.7
2.0
2.9
2.5

ANNUAL

1.5

4.9

3.3

3.8

-0.4

2.3

1,6
3.2r
2.3p

1.3
1.4r
1.7p

-0.3
-1.8
-0.6p

4.2
4.7
3.8p

0.6
1.0

2.6

I
II
III

See footnotes following table 6.
r**revised
p-preHininary




0.4p

1.5r
"1.4p

October 28, 1985
Source: Bureau of Labor Statistics

-10-

Table 6. Nonfinancial corporations: Productivity, hourly compensation, unit labor cost, unit profits,
'and prices, seasonally adjusted
Year
and
quarter

Output
per allemployee
hour

Output

Employee Hourly
Real
hours compensa- hourly
tion
compen(1)
sation(2)

Unit
labor
cost

Unit
nonlabor
cost(7)

Total
unit
cost
(8)

Unit
profits
(9)

Implicit
price
deflator
(4)

Indexes 1977=100

1984

1985

I
II
III
IV

108.1
108.9
108.2
108.8

120.2
123.1
123.1
124.7

111.2
113.1
113.8
114.6

164.8
165.8
167.1
168.7

97.5
97.2
97.1
97.1

152.5
152.3
154.5
155.0

162.0
162.8
165.9
166.4

155.0
155.0
157.5
158.0

143.2
151.1
145.3
150.7

153.6
154.6
156.1
157.1

ANNUAL

108.5

122.8

113.2

166.6

97.2

153.6

164.3

156.4

147.6

155.4

I
II

108.1
108.1

124.9
125.5

115.5
116.1

170.3
171.6

97.3
97.0

157.5
158.8

168.1
169.8

160.2
161.6

150.4
148. 9r

159.1
160.2

Percent change from previous quarter at annual rate(5)

1984

1985

1984

1985

I
II
III
IV

11.6

5.9
1.2

0.6
0.2
6.5
1.2

23.4
23.8
-14.5
16.0

2.7
2.6
3.9
2.7

-0.8

1.1

-0.4

0.7

25.9

3.0

0.6

6.6

4.0

5.9
3.5

-1.0
-3.9r

2.7r

-3.0
-1.4

-1.1
-0.1

0.9
1.9

2.0
2.1

54.8
35.2
14.7
10.9

2.8
2.9
3.2
3.0

0.7

25.9

3.0

5.0

3.6
3.6

2.0

-1.3
-0.4

-0.4

2.5

5.7
2.4
3.2
3.7

0.2

ANNUAL

2.3

9.0

6.6

3.5

I
II

-2.5
-0.3

0.6

3.3

3.9

I
II
III
IV

4.0
2.9
0.9
1.6

11.8
10.5

ANNUAL
I
II

-0.7

-2.5

-3.2
2.0
8.0
1.1

7.7
6.8
2.8
2.6

0.4

9.8
0.2
5.2

3.6
2.8

3. Or

-1.2

3.6
3.3
3.3
3.8

-0.9
-1.0
-0.9
-0.3

-0.4

7.4
6.6

7.5
7.5
6.4
5.0

2.3

9.0

6.6

3.5

-0.8

1.1

-0.4

0.0

3.9

3.9

3.3
3.5

-0.2
-0.2

3.3
4.2

3.8
4.3

1.9r

4.3r

^JtJ*
Percent change from corresponding quarter of previous year

2.<£I

See footnotes following table 6.
r^=revised
p=preliminary




3.3r

2.7

0.4
2.4
2.2

3.4

4.3r

-1.5r

5.1

October 28, 1985
Source: Bureau of Labor Statistics

Footnotes, Tables 1-6
SOURCE; Output data from Bureau of Economic Analysis, U.S. Department of
Commerce, and the Federal Reserve Board. Compensation and hours data fron the
Bureau of Labor Statistics, U.S. Department of Labor, and the Bureau of
Economic Analysis.
RELIABILITY: Based on data covering the period from the first quarter of 1976
to the second quarter of 1984, the probability is 0.95 that the interval
between -1.8 and 2.0 index points contains the revision of the index of
productivity in the business sector from the first to the third quarterly
publication of the estimate.
(1)

Wages and salaries of the employees plus employers' contributions for
social insurance and private benefit plans. Except for nonfinancial corporations, where 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) Nonlabor payments include
income, and indirect taxes.

profits,

depreciation,

interest,

rental

(4) Current dollar gross product divided by constant dollar gross product.
(5) Quarterly changes: percent change compounded at annual rate frcm the
original data rather than index numbers. Annual changes: percent charge
between annual average levels.
(6) Quarterly measures adjusted to annual estimates of output (gross product originating) from the Bureau of Economic Analysis, U.S. Department
of Commerce.
(7) Unit nonlabor cost includes depreciation, interest, and indirect taxes.
(8) Total unit cost is the sum of labor and nonlabor costs.
(9) Unit profits include corporate profit and inventory valuation adjustment.