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 information: (202) 691-5606 MATERIAL IS EMBARGOED 

Current data: (202) 691-5200 UNTIL 8:30 A.M. EST, 

Media contact: (202) 691-5902 THURSDAY, NOVEMBER 2, 2006 

PRODUCTIVITY AND COSTS 

Third Quarter 2006, preliminary 

 The Bureau of Labor Statistics of the U.S. Department of Labor today reported 

preliminary productivity data—as measured by output per hour of all persons—for the third 

quarter of 2006. The preliminary seasonally-adjusted annual rates of productivity growth in the 

third quarter were: 

0.1 percent in the business sector and 

0.0 percent in the nonfarm business sector. 

Productivity increased 0.1 percent in the business sector, as both output and hours grew 1.4 

percent (seasonally adjusted annual rates). Nonfarm business productivity remained unchanged 

as output and hours both increased 1.6 percent (table A). 

In manufacturing, productivity increases in the third quarter were: 

5.9 percent in manufacturing, 

8.6 percent in durable goods manufacturing, and 

 2.0 percent in nondurable goods manufacturing. 

The 5.9-percent increase in manufacturing productivity reflected increases of 8.6 percent in 

durable goods manufacturing and 2.0 percent in the nondurable goods sector. Output and hours 

in manufacturing, which includes about 13 percent of U.S. business sector employment, tend to 

vary more from quarter to quarter than data for the aggregate business and nonfarm business 

sectors. Third-quarter measures are summarized in table A and appear in detail in tables 1 

through 5. 

 The data sources and methods used in the preparation of the manufacturing series differ 

from those used in preparing the business and nonfarm business series, and these measures are 

not directly comparable. Output measures for business and nonfarm business are based on 

measures of gross domestic product prepared by the Bureau of Economic Analysis of the U.S. 

Department of Commerce. Quarterly output measures for manufacturing reflect indexes of 

industrial production independently prepared by the Board of Governors of the Federal Reserve 

System. See Technical Notes for further information on data sources (page 6). 
2 

Table A. Productivity and costs: Preliminary third-quarter 2006 measures 

(Seasonally adjusted annual rates) 

 Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

 Business 0.1 1.4 1.4 4.0 1.0 4.0 

 Nonfarm business 0.0 1.6 1.6 3.7 0.7 3.8 

 Manufacturing 5.9 4.2 -1.6 2.9 -0.1 -2.9 

 Durable 8.6 5.3 -3.0 4.8 1.8 -3.5 

 Nondurable 2.0 3.0 0.9 -0.6 -3.4 -2.5 

 Percent change from same quarter a year ago 

 Business 1.5 3.2 1.7 6.7 3.3 5.2 

 Nonfarm business 1.3 3.2 1.8 6.7 3.2 5.3 

 Manufacturing 4.3 6.1 1.8 5.1 1.7 0.8 

 Durable 6.4 8.2 1.7 6.1 2.7 -0.4 

 Nondurable 1.5 3.5 2.0 3.2 -0.1 1.7 

Business 

 From the second quarter to the third quarter of 2006 productivity in the business sector 

grew at a 0.1 percent seasonally adjusted annual rate. Both output and hours of all persons 

engaged in the sector increased at the same 1.4 percent annual rate. The third-quarter 

productivity increase was slower than the 1.1-percent gain recorded in the second quarter of 

2006 (as revised), which reflected a 2.7-percent rise in output and a 1.7-percent increase in 

hours. (tables B and 1). 

Hourly compensation in the business sector increased at an annual rate of 4.0 percent 

during the third quarter of 2006, slower than the 6.4-percent rise one quarter earlier (as revised). 

This measure includes wages and salaries, supplements, employer contributions to employee 

benefit plans, and taxes. Real hourly compensation, which takes into account changes in 

consumer prices, rose by 1.0 percent in the third quarter of 2006 and 1.3 percent in the second 

quarter. 

Unit labor costs, which reflect changes in both hourly compensation and productivity, 

rose 4.0 percent during the third quarter of 2006. This measure had increased 5.3 percent in the 

second quarter. The implicit price deflator for business sector output increased 1.3 percent 

during the third quarter of 2006, following a 3.1 percent increase in the previous quarter. 
3 

Nonfarm business 

 Productivity in the nonfarm business sector remained unchanged during the third quarter 

of 2006. Output grew at a 1.6 percent annual rate. Hours of all persons in the nonfarm business 

sector also increased 1.6 percent, reflecting 0.8-percent gains in both employment and average 

weekly hours at work. In the second quarter, nonfarm business productivity increased 1.2 

percent, as output grew 2.7 percent and hours worked rose by 1.5 percent (table 2). 

Hourly compensation increased at a 3.7 percent annual rate in the third quarter of 2006. 

When the rise in consumer prices is taken into account, real hourly compensation rose 0.7 

percent during the July-September period. During the second quarter of 2006, real hourly 

compensation had increased 1.6 percent. 

Unit labor costs in the nonfarm business sector grew 3.8 percent during the third quarter 

of 2006, after rising 5.4 percent in the second quarter. The implicit price deflator for nonfarm 

business output rose 1.0 percent in the third quarter of 2006. 

Manufacturing 

 Productivity increased 5.9 percent in manufacturing in the third quarter of 2006, as 

output grew 4.2 percent and hours of all persons fell 1.6 percent (seasonally adjusted annual 

rates). This was the largest quarterly gain in productivity since the third quarter of 2003, when 

output per hour increased 8.6 percent. In durable goods industries, productivity grew 8.6 percent 

in the third quarter as output grew 5.3 percent and hours of all persons fell 3.0 percent. 

Productivity increased 2.0 percent in nondurable goods, reflecting increases in output and hours 

of 3.0 percent and 0.9 percent, respectively (tables 3, 4, and 5). 

 The hourly compensation of manufacturing workers increased 2.9 percent during the 

third quarter of 2006, as a 4.8-percent gain in the durable goods subsector was partially offset by 

a 0.6 percent decline in nondurable goods industries. Hourly compensation in total 

manufacturing had increased 4.0 percent in the second quarter. When the increase in consumer 

prices is taken into account, real hourly compensation declined 0.1 percent in the third quarter. 

 Unit labor costs in manufacturing fell 2.9 percent in the third quarter of 2006, reflecting 

declines of 3.5 percent in durable goods industries and 2.5 percent in nondurable goods 

industries. These costs had increased 1.2 percent in the previous quarter. 
4 

Revised Measures 

 Revised and previous measures for the second quarter of 2006 for the business, nonfarm 

business, and manufacturing sectors are compared in table B. In both the business and nonfarm 

business sectors, productivity was revised down along with output, as hours increased at the 

same rate reported Sept. 6. Unit labor costs increased more in both sectors during the second 

quarter than previously reported. 

Table B. Previous and revised productivity and related measures 

Quarterly percent change at seasonally adjusted annual rate 

 In the manufacturing sector, productivity was revised up slightly due to a small 

downward revision to hours, as the increase in output was not revised. Hours worked during the 

second quarter in all sectors now reflect more current data on the ratio of hours worked to hours 

paid in private nonfarm businesses. 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Second quarter 2006 

Business: 

 Previous ....................... 1.5 3.2 1.7 6.3 1.3 4.8 

 Revised......................... 1.1 2.7 1.7 6.4 1.3 5.3 

Nonfarm business: 

 Previous ....................... 1.6 3.1 1.5 6.6 1.6 4.9 

 Revised......................... 1.2 2.7 1.5 6.6 1.6 5.4 

Manufacturing: 

 Previous ....................... 2.6 5.1 2.4 4.0 -0.9 1.3 

 Revised......................... 2.7 5.1 2.3 4.0 -0.9 1.2 
5 

Revised measures: Nonfinancial Corporations 

Productivity and cost measures for nonfinancial corporations for the second quarter of 

2006 also were revised to incorporate more recent information than was available on Sept. 6. 

Table C. Nonfinancial corporations: Previous and revised productivity and cost measures 

Quarterly percent c anges at easonally adjusted annual rate h s s

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator

Second quarter 2006 

Previous ........... 2.2 3.8 1.6 6.5 1.4 4.2 -1.2 2.8 

Revised............. 0.2 1.8 1.6 6.5 1.5 6.4 -15.3 2.9 

Productivity rose 0.2 percent in the second quarter of 2006, compared with the 

preliminary estimate of a 2.2 percent increase. This was the result of a downward revision in 

output growth, from 3.8 percent to 1.8 percent. Hours growth was unchanged. Unit labor costs 

increased faster than previously reported, as productivity was revised down and hourly 

compensation was not revised. Unit profits fell more than reported on Sept. 6. (tables C and 6). 

Next release date

The next release of Productivity and Costs is scheduled for 8:30 AM EST, Tuesday, 

Dec. 5, 2006. It will present third-quarter measures for nonfinancial corporations and revised 

third-quarter measures for business, nonfarm business, and manufacturing. 
6 

TECHNICAL NOTES 

Labor Hours: Hours data for the labor productivity and cost measures include hours for all 

persons working in the sector—wage and salary workers, the self-employed and unpaid family 

workers. The primary source of hours and employment data is the BLS Current Employment 

Statistics (CES) program, which provides monthly survey data on the number of jobs held by 

wage and salary workers in nonfarm establishments. The CES also provides average weekly 

paid hours of production and nonsupervisory workers in these establishments. Weekly paid 

hours are adjusted to hours at work using data from the National Compensation Survey (NCS). 

The BLS Hours at Work survey, conducted for this purpose, was used for earlier years. The 

Office of Productivity and Technology estimates average weekly hours at work for 

nonproduction and supervisory workers using information from the Current Population Survey 

(CPS), the CES, and the NCS. 

Data from the CPS are used for farm labor, nonfarm proprietors, and nonfarm unpaid 

family workers. Estimates of labor input for government enterprises are derived from the CPS, 

the CES, and the National Income and Product Accounts (NIPA) prepared by the Bureau of 

Economic Analysis (BEA) of the Department of Commerce. 

The CES measures jobs, counting a person who is employed by two or more 

establishments at each place of employment. In contrast, the CPS features measures of 

employment that count each person only once and classify each person according to his or her 

primary job; hours worked at all jobs by that person accrue to his or her primary job. However, 

the CPS also collects more detailed information on employment and hours worked at primary 

jobs and all other jobs, separately. The BLS productivity measures use the more detailed 

information on employment and hours to assign all hours worked to the correct industrial sector 

and avoid duplicating hours data from the CES. 

Output: Business sector output is an annual-weighted index constructed after excluding from 

gross domestic product (GDP) the following outputs: general government, nonprofit institutions, 

and private households (including owner-occupied housing). Corresponding exclusions also are 

made in labor inputs. Business output accounted for about 78 percent of the value of GDP in 

2000. Nonfarm business, which also excludes farming, accounted for about 77 percent of GDP in 

2000. 

Annual indexes for manufacturing and its durable and nondurable goods components are 

constructed by deflating current-dollar industry value of production data from the U.S. Bureau of 

the Census with deflators from the BLS. These deflators are based on data from the BLS 

producer price program and other sources. The industry shipments are aggregated using annual 

weights, and intrasector transactions are removed. Quarterly manufacturing output measures are 

based on the index of industrial production prepared monthly by the Board of Governors of the 

Federal Reserve System, adjusted to be consistent with annual indexes of manufacturing sector 

output prepared by BLS. Durables include the following 3-digit NAICS industries: wood 

product manufacturing; nonmetallic mineral product manufacturing; primary metal manufacturing; fabricated metal product manufacturing; machinery manufacturing; computer and electronic product manufacturing; electrical equipment and appliance manufacturing; transportation 

equipment manufacturing; furniture and related product manufacturing; and miscellaneous 

manufacturing. Nondurables include: food manufacturing; beverage and tobacco product 

manufacturing; textile mills; textile product mills; apparel manufacturing; leather and allied 

product manufacturing; paper manufacturing; printing and related support activities; petroleum 

and coal products manufacturing; chemical manufacturing; and plastics and rubber products 

manufacturing. 

Nonfinancial corporate output is an annual-weighted index calculated on the basis of the 

costs incurred and the incomes earned from production. The output measure excludes the 

following outputs from GDP: general government; nonprofit institutions; private households; 
7 

unincorporated business; and those corporations classified as offices of bank holding companies, 

offices of other holding companies, or offices in the finance and insurance sector. Nonfinancial 

corporations accounted for about 54 percent of the value of GDP in 2000. 

Productivity: These productivity measures describe the relationship between real output 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 

at work 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 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 and effort of the work force. 

Labor Compensation: Estimates of labor compensation by major sector, required for measures 

of hourly compensation and unit labor costs, are based primarily on employee compensation data 

from the NIPA, prepared by the BEA. The compensation of employees in general government, 

nonprofit institutions and private households are subtracted from compensation of domestic 

employees to derive employee compensation for the business sector. The labor compensation of 

proprietors cannot be explicitly identified and must be estimated. This is done by assuming that 

proprietors have the same hourly compensation as employees in the same sector. The quarterly 

labor productivity and cost measures do not contain estimates of compensation for unpaid family 

workers. 

Unit Labor Costs: The measures of unit labor costs in this release describe the relationship 

between compensation per hour and productivity, or real output per hour, and can be used as an 

indicator of inflationary pressure on producers. Increases in hourly compensation increase unit 

labor costs; labor productivity increases offset compensation increases and lower unit labor 

costs. 

Presentation of the data: The quarterly data in this release are presented in three ways; as 

index number series where 1992=100, as percent changes from the corresponding quarter of the 

previous year, and as percent changes from the previous quarter presented at a compound annual 

rate. Annual data are presented both as index number series and percent changes from the 

previous year. 

 The index numbers and rates of change reported in the productivity and costs news 

release are rounded to one decimal place. All percent changes in this release and on the BLS 

web site are calculated using index numbers to three decimal places. These index numbers are 

available at the BLS web site, http://www.bls.gov/data/home.htm, or by contacting the BLS 

Division of Major Sector Productivity. (Telephone 202-691-5606 or email 

DPRWEB@BLS.GOV) 

Information in this release will be made available to sensory-impaired individuals upon 

request. Voice phone: 202-691-5606; Federal Relay Service number: 1-800-877-8339.
8 

 Table 1. Business sector: Productivity, hourly compensation, unit labor costs, 

 and prices, seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit 

 and hour of of all tion per tion per labor labor pay- price 

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) 

 --------------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 131.4 151.7 115.5 154.4 118.5 117.5 122.9 119.5 

 II 132.8 153.5 115.6 155.8 118.3 117.3 126.2 120.6 

 III 133.0 154.8 116.4 157.5 119.1 118.5 125.5 121.1 

 IV 133.5 155.8 116.7 160.1 120.0 119.9 125.8 122.1 

 ANNUAL 132.7 154.0 116.1 157.0 119.0 118.3 125.1 120.8 

 2005 I 134.5 157.4 117.0 161.6 120.4 120.1 127.9 123.0 

 II 134.9 159.0 117.9 162.0 119.5 120.0 130.0 123.7 

 III 136.6 160.9 117.8 165.2 120.3 121.0 131.1 124.7 

 IV 136.7 161.7 118.3 166.5 120.3 121.8 132.3 125.7 

 ANNUAL 135.7 159.8 117.7 163.8 120.2 120.7 130.3 124.3 

 2006 I 138.2 164.3 118.9 171.9 123.6 124.4 130.2 126.6 

 II r138.6 r165.4 r119.4 r174.6 r124.0 r126.0 r130.1 r127.5 

 III 138.6 166.0 119.8 176.3 124.3 127.2 129.1 127.9 

 --------------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I 3.2 4.5 1.2 2.1 -1.5 -1.1 11.8 3.6 

 II 4.5 4.8 0.3 3.5 -0.5 -0.9 11.1 3.6 

 III 0.5 3.4 2.9 4.7 2.5 4.1 -2.0 1.7 

 IV 1.6 2.6 1.0 6.7 3.0 5.0 0.9 3.4 

 ANNUAL 3.1 4.4 1.3 3.8 1.1 0.7 5.8 2.6 

 2005 I 3.1 4.2 1.0 3.9 1.5 0.7 6.7 3.0 

 II 1.2 4.1 2.9 0.8 -2.9 -0.4 6.6 2.3 

 III 5.0 4.9 -0.1 8.3 2.7 3.2 3.6 3.3 

 IV 0.2 1.8 1.6 3.1 -0.2 2.9 3.6 3.2 

 ANNUAL 2.3 3.7 1.4 4.4 1.0 2.1 4.2 2.9 

 2006 I 4.5 6.7 2.1 13.6 11.3 8.7 -6.2 2.7 

 II r1.1 r2.7 1.7 r6.4 1.3 r5.3 r-0.4 3.1 

 III 0.1 1.4 1.4 4.0 1.0 4.0 -3.0 1.3 

 --------------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 4.5 5.1 0.6 4.3 2.4 -0.1 5.5 1.9 

 II 3.8 5.2 1.3 3.3 0.5 -0.5 8.1 2.7 

 III 1.7 3.5 1.7 3.3 0.6 1.6 4.5 2.7 

 IV 2.5 3.8 1.3 4.2 0.9 1.7 5.3 3.1 

 ANNUAL 3.1 4.4 1.3 3.8 1.1 0.7 5.8 2.6 

 2005 I 2.4 3.8 1.3 4.7 1.6 2.2 4.1 2.9 

 II 1.6 3.6 1.9 4.0 1.0 2.3 3.0 2.6 

 III 2.7 3.9 1.2 4.9 1.1 2.1 4.4 3.0 

 IV 2.4 3.7 1.3 4.0 0.3 1.6 5.1 3.0 

 ANNUAL 2.3 3.7 1.4 4.4 1.0 2.1 4.2 2.9 

 2006 I 2.7 4.4 1.6 6.4 2.6 3.6 1.8 2.9 

 II r2.7 r4.0 1.3 7.8 3.7 r5.0 r0.1 3.1 

 III 1.5 3.2 1.7 6.7 3.3 5.2 -1.6 2.5 

 --------------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor Statistics 
9 

 Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor costs, 

 and prices, seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit 

 and hour of of all tion per tion per labor labor pay- price 

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) 

 --------------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 130.5 151.9 116.4 153.4 117.8 117.6 123.6 119.8 

 II 132.2 153.9 116.4 154.8 117.6 117.2 126.8 120.7 

 III 132.2 155.1 117.3 156.6 118.3 118.4 126.6 121.4 

 IV 132.4 156.0 117.8 158.7 118.9 119.9 127.0 122.5 

 ANNUAL 131.8 154.2 117.0 155.9 118.2 118.3 126.0 121.1 

 2005 I 133.5 157.6 118.0 160.4 119.5 120.1 129.4 123.5 

 II 134.3 159.4 118.6 161.0 118.9 119.9 131.8 124.3 

 III 135.8 161.3 118.8 164.1 119.5 120.9 133.1 125.3 

 IV 135.8 162.0 119.3 165.3 119.4 121.7 134.3 126.4 

 ANNUAL 134.9 160.0 118.7 162.7 119.3 120.7 132.2 124.9 

 2006 I 137.2 164.6 120.0 170.6 122.6 124.4 132.2 127.3 

 II r137.6 r165.7 r120.4 r173.4 r123.1 r126.0 r132.3 r128.3 

 III 137.6 166.3 120.9 175.0 123.3 127.2 131.1 128.6 

 --------------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I 1.9 3.6 1.7 1.3 -2.2 -0.5 10.8 3.6 

 II 5.1 5.2 0.1 3.7 -0.4 -1.4 10.6 3.1 

 III 0.2 3.2 3.0 4.5 2.3 4.3 -0.6 2.4 

 IV 0.4 2.4 2.0 5.6 2.0 5.1 1.3 3.7 

 ANNUAL 3.0 4.3 1.3 3.6 0.9 0.7 5.4 2.4 

 2005 I 3.6 4.2 0.6 4.3 1.9 0.7 7.7 3.3 

 II 2.3 4.4 2.1 1.6 -2.0 -0.7 7.8 2.5 

 III 4.4 4.9 0.4 7.8 2.2 3.3 3.9 3.5 

 IV -0.1 1.8 1.8 2.9 -0.4 3.0 3.7 3.3 

 ANNUAL 2.3 3.8 1.5 4.4 1.0 2.0 4.9 3.1 

 2006 I 4.3 6.7 2.3 13.7 11.3 9.0 -6.2 2.9 

 II r1.2 r2.7 1.5 6.6 1.6 r5.4 r0.2 3.4 

 III 0.0 1.6 1.6 3.7 0.7 3.8 -3.5 1.0 

 --------------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 4.3 5.1 0.7 4.2 2.3 -0.1 4.5 1.6 

 II 4.1 5.3 1.2 3.4 0.6 -0.7 7.3 2.3 

 III 1.6 3.4 1.7 3.2 0.4 1.5 4.2 2.5 

 IV 1.9 3.6 1.7 3.8 0.4 1.8 5.4 3.2 

 ANNUAL 3.0 4.3 1.3 3.6 0.9 0.7 5.4 2.4 

 2005 I 2.3 3.8 1.4 4.5 1.5 2.2 4.7 3.1 

 II 1.6 3.6 1.9 4.0 1.0 2.3 4.0 3.0 

 III 2.7 4.0 1.3 4.8 1.0 2.1 5.1 3.3 

 IV 2.5 3.8 1.2 4.1 0.4 1.6 5.7 3.2 

 ANNUAL 2.3 3.8 1.5 4.4 1.0 2.0 4.9 3.1 

 2006 I 2.7 4.4 1.7 6.4 2.6 3.6 2.2 3.0 

 II r2.4 r4.0 1.5 7.7 3.6 r5.1 r0.3 3.3 

 III 1.3 3.2 1.8 6.7 3.2 5.3 -1.5 2.6 

 --------------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor Statistics 
10 

 Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

 -------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 161.8 138.1 85.4 157.5 120.8 97.3 

 II 163.3 138.9 85.0 159.8 121.4 97.8 

 III 164.0 139.3 84.9 163.0 123.2 99.4 

 IV 166.1 140.3 84.4 165.5 124.0 99.6 

 ANNUAL 163.8 139.1 84.9 161.4 122.3 98.5 

 2005 I 168.1 141.7 84.3 166.1 123.7 98.8 

 II 169.7 142.2 83.8 167.8 123.8 98.9 

 III 171.2 143.1 83.6 170.7 124.3 99.7 

 IV 173.2 146.3 84.5 170.9 123.4 98.7 

 ANNUAL 170.5 143.3 84.0 168.8 123.8 99.0 

 2006 I 174.8 148.4 84.9 176.3 126.7 100.9 

 II r176.0 150.3 r85.4 r178.0 r126.4 r101.2 

 III 178.5 151.9 85.1 179.3 126.4 100.4 

 -------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I -2.1 0.1 2.2 -10.6 -13.7 -8.7 

 II 3.9 2.2 -1.6 5.9 1.8 2.0 

 III 1.7 1.2 -0.4 8.3 6.0 6.5 

 IV 5.2 2.8 -2.3 6.3 2.7 1.0 

 ANNUAL 1.9 1.3 -0.5 2.0 -0.7 0.1 

 2005 I 4.8 4.2 -0.5 1.5 -0.8 -3.2 

 II 3.9 1.2 -2.5 4.0 0.3 0.2 

 III 3.7 2.6 -1.0 7.1 1.5 3.2 

 IV 4.7 9.4 4.6 0.5 -2.7 -4.0 

 ANNUAL 4.1 3.0 -1.1 4.6 1.2 0.5 

 2006 I 3.7 5.8 2.0 13.3 11.0 9.3 

 II r2.7 5.1 r2.3 4.0 -0.9 r1.2 

 III 5.9 4.2 -1.6 2.9 -0.1 -2.9 

 -------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 2.4 0.6 -1.8 1.9 0.0 -0.5 

 II 2.3 1.7 -0.6 1.6 -1.1 -0.7 

 III 0.6 1.5 0.9 2.3 -0.4 1.7 

 IV 2.1 1.6 -0.6 2.2 -1.1 0.0 

 ANNUAL 1.9 1.3 -0.5 2.0 -0.7 0.1 

 2005 I 3.9 2.6 -1.2 5.5 2.4 1.5 

 II 3.9 2.4 -1.5 5.0 2.0 1.1 

 III 4.4 2.7 -1.6 4.7 0.9 0.3 

 IV 4.3 4.3 0.1 3.2 -0.5 -1.0 

 ANNUAL 4.1 3.0 -1.1 4.6 1.2 0.5 

 2006 I 4.0 4.7 0.7 6.1 2.4 2.1 

 II 3.7 5.7 r1.9 6.1 2.1 r2.3 

 III 4.3 6.1 1.8 5.1 1.7 0.8 

 -------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor Statistics 
11 

 Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

 -------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 184.0 164.2 89.2 153.6 117.9 83.5 

 II 185.0 164.6 89.0 156.4 118.9 84.6 

 III 185.5 165.7 89.3 159.8 120.8 86.1 

 IV 188.2 167.3 88.9 161.7 121.2 85.9 

 ANNUAL 185.7 165.4 89.1 157.9 119.7 85.0 

 2005 I 191.3 170.1 88.9 161.7 120.5 84.5 

 II 193.2 171.1 88.6 162.8 120.2 84.3 

 III 196.3 174.0 88.7 165.8 120.8 84.5 

 IV 201.0 180.3 89.7 165.8 119.8 82.5 

 ANNUAL 195.4 173.9 89.0 164.1 120.3 83.9 

 2006 I 202.9 182.6 90.0 172.1 123.6 84.8 

 II r204.6 r186.0 r90.9 173.8 123.4 r84.9 

 III 208.9 188.4 90.2 175.9 124.0 84.2 

 -------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I -3.9 0.1 4.2 -16.1 -19.0 -12.7 

 II 2.1 0.8 -1.2 7.5 3.3 5.3 

 III 1.1 2.7 1.5 8.9 6.6 7.6 

 IV 6.0 4.0 -1.9 5.0 1.4 -1.0 

 ANNUAL 1.1 1.8 0.6 0.7 -1.9 -0.4 

 2005 I 6.6 6.8 0.1 0.0 -2.3 -6.3 

 II 4.0 2.6 -1.4 2.8 -1.0 -1.2 

 III 6.5 7.0 0.4 7.5 1.9 0.9 

 IV 9.9 15.2 4.8 0.0 -3.2 -9.0 

 ANNUAL 5.3 5.1 -0.1 3.9 0.5 -1.3 

 2006 I 3.8 5.3 1.4 15.9 13.5 11.6 

 II r3.6 r7.5 r3.8 4.2 -0.7 r0.6 

 III 8.6 5.3 -3.0 4.8 1.8 -3.5 

 -------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 2.2 1.3 -1.0 0.4 -1.4 -1.8 

 II 1.8 2.2 0.4 0.5 -2.3 -1.3 

 III -0.7 1.8 2.5 1.2 -1.5 1.9 

 IV 1.3 1.9 0.6 0.8 -2.5 -0.5 

 ANNUAL 1.1 1.8 0.6 0.7 -1.9 -0.4 

 2005 I 3.9 3.5 -0.4 5.3 2.2 1.3 

 II 4.4 4.0 -0.4 4.1 1.1 -0.3 

 III 5.8 5.1 -0.7 3.8 0.0 -1.9 

 IV 6.8 7.8 1.0 2.5 -1.2 -4.0 

 ANNUAL 5.3 5.1 -0.1 3.9 0.5 -1.3 

 2006 I 6.0 7.4 1.3 6.4 2.6 0.3 

 II r5.9 8.7 2.6 6.8 2.7 r0.8 

 III 6.4 8.2 1.7 6.1 2.7 -0.4 

 -------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor Statistics 
12 

 Table 5. Nondurable manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

 -------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 139.4 110.9 79.6 163.0 125.1 116.9 

 II 141.6 112.0 79.1 164.2 124.8 116.0 

 III 142.7 111.9 78.4 166.9 126.2 117.0 

 IV 144.2 112.2 77.8 170.5 127.8 118.2 

 ANNUAL 142.0 111.8 78.7 166.1 125.9 117.0 

 2005 I 145.2 112.5 77.5 172.3 128.4 118.7 

 II 146.7 112.4 76.6 175.0 129.1 119.3 

 III 147.0 111.6 75.9 177.5 129.3 120.8 

 IV 146.3 112.2 76.7 178.1 128.7 121.8 

 ANNUAL 146.3 112.2 76.7 175.7 128.9 120.1 

 2006 I 147.4 114.0 77.3 181.9 130.7 123.4 

 II r148.4 r114.6 77.3 r183.4 r130.2 r123.6 

 III 149.1 115.5 77.4 183.1 129.1 122.8 

 -------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I 1.2 0.1 -1.1 0.3 -3.2 -0.8 

 II 6.5 4.0 -2.3 3.1 -0.9 -3.2 

 III 3.2 -0.6 -3.6 6.8 4.5 3.5 

 IV 4.4 1.4 -2.8 8.8 5.1 4.3 

 ANNUAL 3.3 0.8 -2.4 4.2 1.5 0.9 

 2005 I 2.7 0.9 -1.7 4.3 1.9 1.5 

 II 4.2 -0.4 -4.4 6.3 2.5 2.0 

 III 0.7 -2.8 -3.5 5.9 0.4 5.2 

 IV -1.9 2.3 4.2 1.4 -1.9 3.3 

 ANNUAL 3.0 0.4 -2.6 5.8 2.3 2.6 

 2006 I 3.2 6.4 3.1 8.8 6.5 5.4 

 II r2.5 r2.3 -0.2 3.4 -1.5 r0.8 

 III 2.0 3.0 0.9 -0.6 -3.4 -2.5 

 -------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 2.9 -0.3 -3.1 4.6 2.7 1.6 

 II 3.4 1.2 -2.2 3.6 0.8 0.2 

 III 3.0 1.2 -1.7 4.0 1.2 0.9 

 IV 3.8 1.2 -2.5 4.7 1.3 0.9 

 ANNUAL 3.3 0.8 -2.4 4.2 1.5 0.9 

 2005 I 4.2 1.4 -2.6 5.7 2.6 1.5 

 II 3.6 0.3 -3.2 6.5 3.5 2.8 

 III 3.0 -0.3 -3.1 6.3 2.5 3.2 

 IV 1.4 0.0 -1.4 4.5 0.7 3.0 

 ANNUAL 3.0 0.4 -2.6 5.8 2.3 2.6 

 2006 I 1.5 1.3 -0.2 5.6 1.8 4.0 

 II 1.1 r2.0 0.9 4.8 0.8 3.7 

 III 1.5 3.5 2.0 3.2 -0.1 1.7 

 -------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor Statistics 
13 

 Table 6. Nonfinancial corporate sector: Productivity, hourly compensation, unit labor costs, unit profits, 

 and prices, seasonally adjusted 

 

 Output Hourly Real Unit Total Unit Implicit 

 Year per all- compen- hourly Unit non- unit pro- price 

 and employee Employee sation compen- labor labor costs fits deflator 

 quarter hour Output hours (1) sation(2) costs costs(6) (7) (8) (4) 

 ---------------------------------------------------------------------------------------------------------- 

 Indexes 1992=100 

 2004 I 137.6 159.6 116.1 151.8 116.5 110.4 109.1 110.0 131.2 111.9 

 II 138.6 161.1 116.2 153.2 116.4 110.5 109.3 110.2 139.2 112.8 

 III 140.5 164.0 116.8 155.0 117.1 110.3 109.2 110.0 142.3 112.9 

 IV 141.0 165.3 117.2 157.1 117.7 111.4 109.3 110.8 142.4 113.7 

 ANNUAL 139.4 162.5 116.6 154.3 116.9 110.7 109.2 110.3 138.8 112.8 

 2005 I 142.8 167.5 117.4 158.6 118.2 111.1 110.3 110.9 148.5 114.2 

 II 144.5 170.6 118.1 159.3 117.6 110.2 110.2 110.2 159.0 114.6 

 III 145.6 172.3 118.3 162.4 118.3 111.6 112.6 111.9 149.9 115.3 

 IV 146.7 174.7 119.1 163.6 118.2 111.5 110.5 111.3 159.6 115.6 

 ANNUAL 144.9 171.3 118.2 161.0 118.1 111.1 110.9 111.1 154.3 114.9 

 2006 I 150.6 180.1 119.6 168.5 121.1 111.9 108.3 110.9 172.9 116.5 

 II r150.7 r180.9 r120.1 r171.2 r121.5 r113.6 r109.6 r112.5 r165.9 r117.3 

 ---------------------------------------------------------------------------------------------------------- 

 Percent change from previous quarter at annual rate(5) 

 2004 I 2.9 5.6 2.7 -0.5 -3.9 -3.3 -3.6 -3.4 53.5 1.2 

 II 3.1 3.6 0.5 3.7 -0.3 0.6 1.1 0.7 27.1 3.3 

 III 5.5 7.6 2.0 4.7 2.5 -0.8 -0.5 -0.7 9.2 0.4 

 IV 1.6 3.2 1.5 5.6 2.0 4.0 0.3 3.0 0.2 2.7 

 ANNUAL 3.7 5.1 1.3 3.2 0.5 -0.4 -1.8 -0.8 26.2 1.6 

 2005 I 5.0 5.5 0.5 4.0 1.6 -1.0 3.6 0.2 18.1 2.1 

 II 4.9 7.4 2.4 1.6 -2.1 -3.2 -0.1 -2.4 31.5 1.2 

 III 3.0 4.1 1.0 8.2 2.6 5.0 9.1 6.1 -21.0 2.4 

 IV 3.2 5.8 2.6 3.0 -0.3 -0.1 -7.4 -2.1 28.5 1.1 

 ANNUAL 3.9 5.4 1.4 4.4 1.0 0.4 1.5 0.7 11.1 1.9 

 2006 I 11.1 13.0 1.7 12.4 10.1 1.2 -7.7 -1.2 37.9 3.1 

 II r0.2 r1.8 1.6 6.5 r1.5 r6.4 r4.8 r5.9 r-15.3 r2.9 

 ---------------------------------------------------------------------------------------------------------- 

 Percent change from corresponding quarter of previous year 

 2004 I 4.3 4.9 0.6 3.8 2.0 -0.4 -3.3 -1.2 27.3 1.2 

 II 3.7 5.0 1.2 2.9 0.1 -0.8 -1.6 -1.0 31.5 1.8 

 III 3.5 5.3 1.8 2.8 0.0 -0.7 -1.5 -0.9 26.1 1.5 

 IV 3.3 5.0 1.7 3.4 0.0 0.1 -0.7 -0.1 20.9 1.9 

 ANNUAL 3.7 5.1 1.3 3.2 0.5 -0.4 -1.8 -0.8 26.2 1.6 

 2005 I 3.8 5.0 1.1 4.5 1.5 0.7 1.1 0.8 13.2 2.1 

 II 4.3 5.9 1.6 4.0 1.0 -0.3 0.8 0.0 14.2 1.6 

 III 3.6 5.0 1.4 4.8 1.0 1.1 3.1 1.7 5.3 2.1 

 IV 4.0 5.7 1.6 4.2 0.4 0.1 1.1 0.4 12.0 1.7 

 ANNUAL 3.9 5.4 1.4 4.4 1.0 0.4 1.5 0.7 11.1 1.9 

 2006 I 5.5 7.5 1.9 6.2 2.5 0.7 -1.8 0.0 16.5 1.9 

 II r4.3 r6.1 1.7 7.5 3.4 r3.1 r-0.6 r2.1 r4.3 r2.4 

 ---------------------------------------------------------------------------------------------------------- 

 See footnotes following Table 6. November 2, 2006 

 r=revised Source: Bureau of Labor 

Statisticsplace tables here.”
14 

SOURCES: Output data are from the Bureau of Economic Analysis and the Census Bureau of 

the U.S. Department of Commerce; the Bureau of Labor Statistics, U.S. Department of Labor; 

and the Federal Reserve Board. Compensation and hours data are from the Bureau of Labor 

Statistics and the Bureau of Economic Analysis. 

RELIABILITY: Productivity and cost measures are regularly revised as more complete 

information becomes available. The measures are first published within 40 days of the close of 

the reference period; revisions appear 30 days later, and second revisions after an additional 60 

days. In the business sector, the third publication (second revision) of a quarterly index of 

output per hour of all persons has differed from the initial value by between –1.4 and +1.3 index 

points approximately 95 percent of the time. This interval is based on the performance of this 

measure between the fourth quarter of 1995 and the second quarter of 2006. 

Footnotes, Tables 1-6

(1) Wages and salaries of employees plus employers' contributions for social insurance and 

private benefit plans. Except for nonfinancial corporations, where there are no selfemployed, data also include an estimate of wages, salaries, and supplemental payments 

for the self-employed. 

(2) The change for recent quarters is based on the Consumer Price Index for all urban consumers 

(CPI-U). The trend from 1978-2005 is based on the Consumer Price Index research 

series (CPI-U-RS). 

(3) Unit nonlabor payments include profits, consumption of fixed capital, taxes on production 

and imports less subsidies, net interest and miscellaneous payments, business current 

transfer payments, rental income of persons, and the current surplus of government 

enterprises. 

(4) Current dollar output divided by the output index. 

(5) Quarterly changes: Percent change compounded at annual rate from the original data rather 

than index numbers. Annual changes: Percent change between annual average levels. 

(6) Unit nonlabor costs include consumption of fixed capital, taxes on production and imports 

less subsidies, net interest and miscellaneous payments, and business current transfer 

payments. 

(7) Total unit costs are the sum of unit labor and nonlabor costs. 

(8) Unit profits include corporate profits before tax with inventory valuation and capital 

consumption adjustments.