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PRODUCTIVITY AND COSTS 

Third Quarter 2005, 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 2005. The preliminary seasonally-adjusted annual rates of productivity growth in the 

third quarter were: 

4.8 percent in the business sector and 

4.1 percent in the nonfarm business sector. 

Productivity increased 4.8 percent in the business sector, as output grew 4.3 percent and hours 

declined 0.4 percent. The 4.1-percent rise in nonfarm business productivity occurred as output 

rose 4.2 percent and hours rose 0.1 percent (table A). 

 The effects of Hurricanes Katrina and Rita, which struck the Gulf Coast during the third 

quarter, could not be separately identified in the productivity and costs measures. The measures 

reported in this news release reflect both these effects and ongoing trends in ouput, hours, and 

compensation. 

 In manufacturing, productivity increases in the third quarter were: 

4.5 percent in manufacturing, 

7.5 percent in durable goods manufacturing, and 

 1.7 percent in nondurable goods manufacturing. 

The third-quarter increase in manufacturing productivity followed a 3.6-percent increase in the 

second quarter of 2005. 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. 
2 

 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 7). 

Table A. Productivity and costs: Preliminary third-quarter 2005 measures 

(Seasonally adjusted annual rates) 

 Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

 Business 4.8 4.3 -0.4 4.2 -0.9 -0.6 

 Nonfarm business 4.1 4.2 0.1 3.6 -1.4 -0.5 

 Manufacturing 4.5 3.1 -1.4 2.9 -2.1 -1.6 

 Durable 7.5 7.5 0.0 2.4 -2.6 -4.7 

 Nondurable 1.7 -2.1 -3.7 3.4 -1.7 1.7 

 Percent change from same quarter a year ago 

 Business 2.9 4.1 1.1 5.8 1.9 2.8 

 Nonfarm business 3.0 4.2 1.2 5.8 1.9 2.7 

 Manufacturing 4.7 3.1 -1.5 7.2 3.3 2.5 

 Durable 6.0 5.2 -0.8 6.8 2.9 0.7 

 Nondurable 3.3 0.5 -2.7 7.8 3.9 4.4 

Business 

 From the second quarter to the third quarter of 2005, productivity in the business sector 

grew at a 4.8 percent seasonally adjusted annual rate. Output increased 4.3 percent, while hours 

of all persons engaged in the sector declined 0.4 percent. The third-quarter productivity 

increase was much faster than the 0.8-percent gain recorded in the second quarter of 2005 (as 

revised), which reflected a 4.0-percent rise in output and a 3.1-percent rise in hours. (tables B 

and 1). 

Hourly compensation in the business sector increased at an annual rate of 4.2 percent 

during the third quarter of 2005, faster than the 3.0-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, fell by 0.9 percent in the third quarter of 2005 after falling by 1.1 percent in the 

second quarter. It had increased 2.3 percent in the first quarter of the year. 
3 

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

declined 0.6 percent during the third quarter. By contrast, this measure had increased 2.2 percent 

in the second quarter. The implicit price deflator for the business sector increased 3.0 percent 

during the third quarter of 2005, following a 2.6 percent increase in the previous quarter. 

Nonfarm business 

 Productivity in the nonfarm business sector grew 4.1 percent during the third quarter of 

2005 as output grew 4.2 percent. Hours of all persons in the nonfarm business sector edged up 

0.1 percent, reflecting a 0.4-percent gain in employment and a 0.4-percent decline in average 

weekly hours at work. In the previous quarter, nonfarm business productivity increased 2.1 

percent, as output grew 4.4 percent and hours worked increased by 2.2 percent (table 2). 

 Hourly compensation increased at a 3.6 percent annual rate in the third quarter of 2005. 

When the rise in consumer prices is taken into account, real hourly compensation fell 1.4 percent 

during the July-September period. During the second quarter of 2005, real hourly compensation 

had declined 0.1 percent. 

Unit labor costs in the nonfarm business sector fell 0.5 percent during the third quarter of 

2005, after rising 1.8 percent in the second quarter. The implicit price deflator for nonfarm 

business output rose 3.3 percent in the third quarter of 2005. 

Manufacturing 

 Productivity increased 4.5 percent in manufacturing in the third quarter of 2005 as output 

grew 3.1 percent and hours of all persons fell 1.4 percent (seasonally adjusted annual rates). In 

durable goods industries, productivity and output both grew 7.5 percent in the third quarter while 

hours of all persons were unchanged. Productivity increased 1.7 percent in nondurable goods, 

where output fell 2.1 percent but hours fell faster, 3.7 percent (tables 3, 4, and 5). 

 The hourly compensation of manufacturing workers increased an average of 2.9 percent 

during the third quarter of 2005, reflecting increases of 2.4 percent in durable goods and 3.4 

percent in nondurable goods. When the increase in consumer prices is taken into account, real 

hourly compensation in total manufacturing fell 2.1 percent in the third quarter. Real hourly 

compensation had grown in the first two quarters of 2005; 3.6 percent in the second quarter (as 

revised) and 4.6 percent in the first quarter. 

 Unit labor costs in manufacturing fell 1.6 percent in the third quarter of 2005, after rising 

in each of the previous four quarters. In the durable goods sector, unit labor costs fell 4.7 

percent in the third quarter after increasing 4.0 percent one quarter earlier. In the nondurable 

goods sector, unit labor costs rose 1.7 percent in the third quarter and 4.0 percent in the second 

quarter of 2005. 
4 

Revised Measures 

 Revised and previous measures for the second quarter of 2005 for the business, nonfarm 

business, and manufacturing sectors are compared in table B. Hours data for the second quarter 

now reflect more current data on the ratio of hours worked to hours paid in private nonfarm 

businesses. 

Table B. Previous and revised productivity and related measures 

Quarterly percent change at seasonally adjusted annual rate 

In the business sector, productivity, output, and hours grew about the same as reported on 

Sept. 7, based on information then available. In the nonfarm sector, growth in productivity and 

output was revised up while the increase in hours remained the same. Productivity was 

unchanged in the manufacturing sector, reflecting offsetting small upward revisions to output 

and hours. In all three sectors, hourly compensation and unit labor costs were revised down. 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Second quarter 2005 

Business: 

 Previous ....................... 0.7 4.0 3.2 3.3 -0.8 2.6 

 Revised......................... 0.8 4.0 3.1 3.0 -1.1 2.2 

Nonfarm business: 

 Previous ....................... 1.8 4.1 2.2 4.4 0.2 2.5 

 Revised......................... 2.1 4.4 2.2 4.0 -0.1 1.8 

Manufacturing: 

 Previous ....................... 3.6 0.8 -2.7 8.4 4.1 4.7 

 Revised......................... 3.6 0.9 -2.6 7.9 3.6 4.2 
5 

Revised measures: Nonfinancial Corporations 

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

2005 also were revised to incorporate more recent information than was available on Sept. 7. 

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 2005 

Previous ........... 6.8 9.5 2.6 4.0 -0.1 -2.6 43.2 1.3 

Revised............. 6.3 9.0 2.6 3.7 -0.5 -2.4 41.7 1.4 

Productivity grew at an annual rate of 6.3 percent in second-quarter 2005, compared with 

the increase of 6.8 percent reported previously. This was the result of a downward revision in 

output growth, from 9.5 percent to 9.0 percent, as hours growth was unchanged. Unit labor costs 

fell more slowly than reported previously, as hourly compensation was revised down less than 

productivity. Unit profits increased slightly less than reported on Sept. 7. (tables C and 6). 
6 

Next release date

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

Dec. 6, 2005. It will present third-quarter measures for nonfinancial corporations and revised 

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

The index numbers and rates of change reported by BLS for productivity and costs in its news 

release and on its Internet site are rounded to one decimal place, based upon unrounded data 

using many decimal places. This rounding protocol has been practiced in order to facilitate ease 

of use and interpretation of the published data. This has meant, however, that if data users 

calculated rates of change using the published rounded index figures, their results could differ 

from the published rates of change, simply due to differences in rounding. 

In order to make the data directly used in the calculations more readily available to the public 

and to ensure greater transparency of its calculating methods, BLS, beginning with the December 

6, 2005 publication of the quarterly “Productivity and Costs” news release, will modify its 

productivity program practices. It will post on its web site productivity index numbers rounded 

to three decimal places, and, in addition, will calculate all published rates of change from those 

indexes. The change in calculation method may cause published productivity growth rates to 

change slightly—likely by no more than a tenth—from the rates that would have been calculated 

using the current method. The convention of publishing in the news release index values 

rounded to one decimal place will continue. 
7 

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 years prior to 2001. 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. 

Output: Business sector output is an annualweighted index constructed after excluding from 

gross domestic product (GDP) the following 

outputs: general government, nonprofit institutions, and private households (including owneroccupied 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 BEA. 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 annualweighted 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; 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. 

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 

 2003 I 125.6 144.6 115.2 147.8 115.5 117.7 116.4 117.2 

 II 127.9 146.4 114.5 150.3 117.3 117.5 117.2 117.4 

 III 130.5 149.8 114.8 152.0 118.0 116.4 120.3 117.9 

 IV 130.6 150.8 115.5 152.8 118.4 117.0 120.5 118.3 

 ANNUAL 128.6 147.9 115.0 150.7 117.3 117.2 118.6 117.7 

 2004 I 131.7 152.6 115.9 154.4 118.5 117.3 123.0 119.4 

 II 132.8 154.1 116.1 155.7 118.2 117.2 126.1 120.5 

 III 133.3 155.8 116.9 158.2 119.6 118.7 124.2 120.7 

 IV 134.3 157.2 117.1 162.5 121.8 121.0 122.3 121.5 

 ANNUAL 133.0 154.9 116.5 157.7 119.5 118.6 123.9 120.6 

 2005 I 135.3 158.9 117.5 164.4 122.5 121.5 123.6 122.3 

 II 135.5 160.4 118.4 r165.6 r122.1 r122.2 r124.7 r123.1 

 III 137.1 162.2 118.2 167.3 121.9 122.0 127.4 124.0 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 2.8 1.7 -1.1 5.5 1.3 2.6 0.5 1.8 

 II 7.6 4.9 -2.6 7.0 6.5 -0.6 2.8 0.6 

 III 8.4 9.9 1.3 4.5 2.3 -3.6 10.7 1.5 

 IV 0.3 2.6 2.3 2.3 1.4 2.1 0.9 1.6 

 ANNUAL 3.9 3.4 -0.5 3.9 1.6 0.0 3.7 1.4 

 2004 I 3.4 4.9 1.5 4.2 0.3 0.8 8.6 3.7 

 II 3.4 4.0 0.6 3.3 -1.0 -0.1 10.3 3.8 

 III 1.4 4.4 3.0 6.5 4.8 5.0 -5.8 0.7 

 IV 3.1 3.6 0.5 11.3 7.5 7.9 -6.0 2.4 

 ANNUAL 3.4 4.8 1.3 4.6 1.9 1.2 4.4 2.4 

 2005 I 2.9 4.4 1.4 4.7 2.3 1.7 4.4 2.7 

 II r0.8 4.0 r3.1 r3.0 r-1.1 r2.2 r3.4 r2.6 

 III 4.8 4.3 -0.4 4.2 -0.9 -0.6 9.2 3.0 

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

 Percent change from corresponding quarter of previous year 

 2003 I 2.4 2.0 -0.4 3.0 0.1 0.6 2.7 1.4 

 II 3.8 2.6 -1.1 3.6 1.4 -0.2 3.9 1.3 

 III 4.7 4.2 -0.5 4.3 2.0 -0.4 4.6 1.4 

 IV 4.7 4.7 0.0 4.8 2.9 0.1 3.7 1.4 

 ANNUAL 3.9 3.4 -0.5 3.9 1.6 0.0 3.7 1.4 

 2004 I 4.9 5.5 0.6 4.5 2.6 -0.4 5.7 1.9 

 II 3.8 5.3 1.4 3.6 0.8 -0.2 7.6 2.7 

 III 2.1 4.0 1.8 4.1 1.4 1.9 3.3 2.4 

 IV 2.8 4.2 1.4 6.3 2.8 3.4 1.5 2.6 

 ANNUAL 3.4 4.8 1.3 4.6 1.9 1.2 4.4 2.4 

 2005 I 2.7 4.1 1.3 6.4 3.3 3.6 0.5 2.4 

 II r2.1 4.1 2.0 r6.3 r3.3 r4.2 r-1.1 2.1 

 III 2.9 4.1 1.1 5.8 1.9 2.8 2.6 2.7 

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

 See footnotes following Table 6. Nov. 3, 2005 

 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 

 2003 I 124.9 144.8 115.9 147.0 114.9 117.7 118.2 117.9 

 II 126.9 146.5 115.4 149.3 116.5 117.6 118.7 118.0 

 III 129.9 150.2 115.6 151.2 117.4 116.4 121.6 118.3 

 IV 130.1 151.2 116.2 152.2 117.9 116.9 121.3 118.6 

 ANNUAL 128.0 148.2 115.8 149.9 116.7 117.1 120.0 118.2 

 2004 I 130.8 152.8 116.8 153.5 117.8 117.3 123.5 119.6 

 II 132.2 154.5 116.8 154.9 117.6 117.1 126.5 120.6 

 III 132.7 156.3 117.8 157.2 118.8 118.5 125.3 121.0 

 IV 133.5 157.7 118.2 161.0 120.7 120.7 123.7 121.8 

 ANNUAL 132.3 155.3 117.4 156.7 118.7 118.4 124.7 120.7 

 2005 I 134.5 159.4 118.5 163.2 121.6 121.3 125.0 122.7 

 II r135.3 r161.2 119.2 r164.8 r121.6 r121.9 r126.3 r123.5 

 III 136.6 162.8 119.2 166.3 121.1 121.7 129.3 124.5 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 3.1 2.0 -1.1 5.8 1.5 2.6 0.8 1.9 

 II 6.6 4.7 -1.8 6.2 5.8 -0.3 1.7 0.4 

 III 9.6 10.4 0.8 5.1 2.9 -4.1 10.2 1.0 

 IV 0.8 2.8 2.0 2.7 1.8 2.0 -1.1 0.8 

 ANNUAL 3.8 3.3 -0.5 4.0 1.6 0.2 3.2 1.3 

 2004 I 2.1 4.2 2.0 3.5 -0.5 1.3 7.4 3.6 

 II 4.5 4.6 0.1 3.7 -0.7 -0.8 10.0 3.2 

 III 1.3 4.6 3.3 6.1 4.4 4.7 -3.6 1.5 

 IV 2.5 3.9 1.4 10.2 6.4 7.6 -5.1 2.6 

 ANNUAL 3.4 4.8 1.4 4.5 1.8 1.1 3.9 2.1 

 2005 I 3.2 4.3 1.1 5.5 3.1 2.2 4.4 3.0 

 II r2.1 r4.4 2.2 r4.0 r-0.1 r1.8 r4.0 r2.7 

 III 4.1 4.2 0.1 3.6 -1.4 -0.5 9.9 3.3 

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

 Percent change from corresponding quarter of previous year 

 2003 I 2.0 1.7 -0.4 3.0 0.1 1.0 2.7 1.6 

 II 3.5 2.5 -0.9 3.5 1.3 0.1 3.2 1.2 

 III 4.8 4.2 -0.5 4.4 2.1 -0.4 4.1 1.2 

 IV 5.0 4.9 0.0 5.0 3.0 0.0 2.8 1.0 

 ANNUAL 3.8 3.3 -0.5 4.0 1.6 0.2 3.2 1.3 

 2004 I 4.7 5.5 0.7 4.4 2.5 -0.3 4.5 1.5 

 II 4.2 5.5 1.2 3.7 0.9 -0.4 6.5 2.1 

 III 2.2 4.0 1.9 4.0 1.2 1.8 3.0 2.3 

 IV 2.6 4.3 1.7 5.8 2.4 3.2 1.9 2.7 

 ANNUAL 3.4 4.8 1.4 4.5 1.8 1.1 3.9 2.1 

 2005 I 2.9 4.4 1.5 6.3 3.3 3.4 1.2 2.6 

 II r2.3 r4.3 2.0 r6.4 r3.4 r4.1 r-0.2 2.4 

 III 3.0 4.2 1.2 5.8 1.9 2.7 3.2 2.9 

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

 See footnotes following Table 6. Nov. 3, 2005 

 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 

 2003 I 151.6 131.8 86.9 156.5 122.3 103.2 

 II 152.9 130.7 85.5 159.2 124.3 104.1 

 III 156.9 132.1 84.2 161.5 125.4 102.9 

 IV 158.1 134.2 84.9 163.2 126.5 103.2 

 ANNUAL 154.8 132.2 85.4 160.1 124.6 103.4 

 2004 I 159.3 136.0 85.4 159.1 122.1 99.9 

 II 162.2 138.0 85.1 161.1 122.3 99.3 

 III 164.0 139.4 85.0 164.9 124.7 100.6 

 IV 166.5 141.0 84.7 169.3 126.9 101.7 

 ANNUAL 163.0 138.6 85.0 163.6 124.0 100.4 

 2005 I 168.2 142.3 84.6 172.2 128.3 102.4 

 II 169.7 r142.6 84.0 r175.6 r129.5 r103.4 

 III 171.6 143.7 83.7 176.8 128.8 103.0 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 5.7 -0.9 -6.3 17.9 13.1 11.5 

 II 3.3 -3.4 -6.5 6.9 6.5 3.5 

 III 11.0 4.5 -5.9 5.9 3.7 -4.5 

 IV 3.2 6.6 3.3 4.3 3.4 1.1 

 ANNUAL 5.2 0.0 -4.9 8.3 5.9 3.0 

 2004 I 3.0 5.4 2.4 -9.7 -13.1 -12.4 

 II 7.6 5.9 -1.6 5.1 0.7 -2.3 

 III 4.4 4.0 -0.3 9.8 8.0 5.2 

 IV 6.3 4.9 -1.3 11.2 7.4 4.6 

 ANNUAL 5.3 4.8 -0.4 2.2 -0.5 -2.9 

 2005 I 4.2 3.5 -0.7 7.1 4.6 2.8 

 II 3.6 r0.9 r-2.6 r7.9 r3.6 r4.2 

 III 4.5 3.1 -1.4 2.9 -2.1 -1.6 

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

 Percent change from corresponding quarter of previous year 

 2003 I 5.0 0.6 -4.2 8.2 5.2 3.1 

 II 4.4 -1.3 -5.4 7.8 5.5 3.3 

 III 5.5 -0.8 -6.0 8.4 6.0 2.7 

 IV 5.8 1.6 -3.9 8.7 6.6 2.7 

 ANNUAL 5.2 0.0 -4.9 8.3 5.9 3.0 

 2004 I 5.1 3.2 -1.8 1.6 -0.2 -3.3 

 II 6.1 5.6 -0.5 1.2 -1.6 -4.7 

 III 4.5 5.5 0.9 2.1 -0.6 -2.3 

 IV 5.3 5.1 -0.2 3.7 0.3 -1.5 

 ANNUAL 5.3 4.8 -0.4 2.2 -0.5 -2.9 

 2005 I 5.6 4.6 -1.0 8.3 5.1 2.5 

 II 4.6 3.3 r-1.2 r9.0 r5.9 r4.2 

 III 4.7 3.1 -1.5 7.2 3.3 2.5 

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

 See footnotes following Table 6. November 3, 2005 

 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 

 2003 I 172.7 155.7 90.1 154.9 121.1 89.7 

 II 174.3 154.3 88.6 157.7 123.1 90.5 

 III 180.9 157.6 87.1 160.1 124.3 88.5 

 IV 182.8 161.5 88.3 161.9 125.5 88.6 

 ANNUAL 177.6 157.3 88.5 158.6 123.5 89.3 

 2004 I 184.4 164.6 89.3 155.5 119.4 84.3 

 II 187.8 167.1 88.9 158.2 120.1 84.2 

 III 190.0 169.5 89.2 162.1 122.6 85.3 

 IV 193.4 172.1 89.0 166.0 124.4 85.8 

 ANNUAL 188.9 168.3 89.1 160.4 121.6 84.9 

 2005 I 196.1 174.3 88.9 169.0 125.9 86.2 

 II r197.8 r175.1 88.5 r172.1 r127.0 r87.0 

 III 201.4 178.3 88.5 173.2 126.2 86.0 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 5.1 -1.6 -6.4 22.2 17.2 16.3 

 II 3.7 -3.4 -6.9 7.3 6.9 3.4 

 III 16.0 8.7 -6.3 6.2 3.9 -8.5 

 IV 4.2 10.1 5.7 4.7 3.8 0.5 

 ANNUAL 6.9 1.3 -5.3 9.3 6.9 2.3 

 2004 I 3.6 8.1 4.3 -14.9 -18.1 -17.9 

 II 7.7 6.0 -1.5 6.9 2.5 -0.7 

 III 4.6 6.0 1.3 10.3 8.5 5.5 

 IV 7.5 6.3 -1.1 9.9 6.1 2.2 

 ANNUAL 6.4 7.0 0.6 1.1 -1.5 -4.9 

 2005 I 5.7 5.2 -0.5 7.5 5.1 1.7 

 II r3.5 r1.8 r-1.7 r7.6 r3.3 r4.0 

 III 7.5 7.5 0.0 2.4 -2.6 -4.7 

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

 Percent change from corresponding quarter of previous year 

 2003 I 6.7 1.7 -4.7 9.1 6.0 2.2 

 II 5.9 -0.6 -6.1 8.7 6.4 2.7 

 III 7.9 0.7 -6.7 9.6 7.3 1.6 

 IV 7.2 3.3 -3.6 9.9 7.8 2.5 

 ANNUAL 6.9 1.3 -5.3 9.3 6.9 2.3 

 2004 I 6.8 5.8 -1.0 0.4 -1.4 -6.0 

 II 7.8 8.3 0.4 0.3 -2.5 -6.9 

 III 5.0 7.6 2.4 1.3 -1.4 -3.6 

 IV 5.8 6.6 0.7 2.5 -0.9 -3.2 

 ANNUAL 6.4 7.0 0.6 1.1 -1.5 -4.9 

 2005 I 6.4 5.9 -0.5 8.7 5.5 2.2 

 II 5.3 r4.8 -0.5 r8.8 r5.7 r3.3 

 III 6.0 5.2 -0.8 6.8 2.9 0.7 

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

 See footnotes following Table 6. November 3, 2005 

 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 

 2003 I 130.2 106.9 82.1 158.0 123.5 121.4 

 II 131.1 106.0 80.9 160.5 125.3 122.4 

 III 132.6 105.9 79.8 162.7 126.3 122.6 

 IV 133.6 106.5 79.7 163.9 127.0 122.7 

 ANNUAL 131.8 106.3 80.6 161.2 125.5 122.3 

 2004 I 134.5 107.1 79.6 164.1 125.9 122.0 

 II 137.0 108.6 79.3 164.7 125.1 120.3 

 III 138.6 109.0 78.7 168.1 127.1 121.2 

 IV 140.2 109.8 78.3 173.5 130.1 123.8 

 ANNUAL 137.6 108.6 79.0 167.6 127.0 121.8 

 2005 I 141.1 110.2 78.1 176.1 131.3 124.9 

 II r142.5 r110.1 77.3 r179.7 132.6 126.1 

 III 143.1 109.6 76.5 181.2 132.0 126.6 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 6.5 0.1 -6.0 10.3 5.9 3.6 

 II 2.6 -3.5 -5.9 6.3 5.9 3.6 

 III 4.9 -0.6 -5.2 5.6 3.4 0.7 

 IV 2.8 2.4 -0.4 3.0 2.1 0.2 

 ANNUAL 2.8 -1.5 -4.2 6.4 4.0 3.5 

 2004 I 2.9 2.1 -0.8 0.5 -3.3 -2.4 

 II 7.5 5.7 -1.7 1.7 -2.6 -5.5 

 III 4.8 1.7 -3.0 8.4 6.6 3.4 

 IV 4.6 2.9 -1.7 13.7 9.7 8.6 

 ANNUAL 4.3 2.2 -2.1 3.9 1.2 -0.4 

 2005 I 2.5 1.5 -1.1 6.1 3.7 3.5 

 II r4.2 r-0.3 r-4.3 r8.3 r4.0 4.0 

 III 1.7 -2.1 -3.7 3.4 -1.7 1.7 

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

 Percent change from corresponding quarter of previous year 

 2003 I 2.6 -0.9 -3.4 6.7 3.7 4.0 

 II 2.2 -2.2 -4.3 6.4 4.1 4.1 

 III 2.3 -2.6 -4.8 6.2 3.9 3.9 

 IV 4.2 -0.4 -4.4 6.3 4.3 2.0 

 ANNUAL 2.8 -1.5 -4.2 6.4 4.0 3.5 

 2004 I 3.3 0.1 -3.1 3.8 2.0 0.5 

 II 4.5 2.4 -2.0 2.7 -0.2 -1.8 

 III 4.5 3.0 -1.5 3.3 0.6 -1.1 

 IV 5.0 3.1 -1.8 5.9 2.4 0.9 

 ANNUAL 4.3 2.2 -2.1 3.9 1.2 -0.4 

 2005 I 4.9 2.9 -1.8 7.4 4.3 2.4 

 II 4.1 r1.4 -2.5 r9.1 r6.0 r4.8 

 III 3.3 0.5 -2.7 7.8 3.9 4.4 

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

 See footnotes following Table 6. November 3, 2005 

 r=revised Source: Bureau of Labor Statistics 
13 

 Table 6. Nonfinancial corporations: 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 

 2003 I 130.4 152.3 116.8 144.6 113.0 110.9 111.4 111.0 107.8 110.7 

 II 132.7 154.3 116.3 147.0 114.8 110.8 110.5 110.7 113.7 111.0 

 III 135.1 156.9 116.2 148.9 115.6 110.2 110.9 110.4 119.9 111.3 

 IV 135.9 158.7 116.8 149.8 116.0 110.2 110.8 110.4 124.8 111.7 

 ANNUAL 133.5 155.6 116.5 147.6 114.8 110.5 110.9 110.6 116.7 111.2 

 2004 I 136.1 160.0 117.5 150.3 115.4 110.4 111.4 110.7 130.2 112.4 

 II 136.9 161.3 117.8 151.7 115.2 110.8 111.5 111.0 138.6 113.4 

 III 139.4 165.0 118.4 154.0 116.5 110.5 110.3 110.5 139.7 113.1 

 IV 142.3 169.0 118.8 158.0 118.4 111.0 108.8 110.5 143.1 113.4 

 ANNUAL 138.7 163.8 118.1 153.5 116.4 110.7 110.5 110.6 138.0 113.1 

 2005 I 143.2 170.3 118.9 160.3 119.4 111.9 108.2 110.9 145.6 114.0 

 II r145.4 r174.1 119.7 r161.7 r119.3 111.2 r106.8 r110.0 r158.8 r114.4 

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

 Percent change from previous quarter at annual rate(5) 

 2003 I 1.1 -1.8 -2.8 3.9 -0.3 2.9 6.7 3.9 -11.6 2.4 

 II 7.3 5.5 -1.7 6.9 6.4 -0.4 -3.1 -1.1 23.8 0.9 

 III 7.3 6.9 -0.3 5.2 2.9 -1.9 1.3 -1.1 23.9 1.0 

 IV 2.4 4.5 2.1 2.4 1.5 0.0 -0.3 -0.1 17.2 1.5 

 ANNUAL 4.1 2.7 -1.4 3.9 1.6 -0.2 0.1 -0.1 19.0 1.4 

 2004 I 0.8 3.4 2.6 1.5 -2.3 0.7 2.1 1.1 18.6 2.7 

 II 2.3 3.3 1.0 3.7 -0.7 1.3 0.3 1.1 28.2 3.7 

 III 7.4 9.4 1.9 6.3 4.6 -1.0 -4.2 -1.9 3.4 -1.3 

 IV 8.5 9.9 1.3 10.6 6.8 1.9 -5.2 0.0 10.0 1.1 

 ANNUAL 3.9 5.3 1.4 4.0 1.3 0.2 -0.4 0.0 18.3 1.7 

 2005 I 2.7 3.3 0.5 5.9 3.5 3.1 -2.5 1.6 7.1 2.2 

 II r6.3 r9.0 2.6 r3.7 r-0.5 r-2.4 r-4.8 r-3.1 r41.7 r1.4 

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

 Percent change from corresponding quarter of previous year 

 2003 I 3.5 2.0 -1.5 3.2 0.3 -0.3 -1.4 -0.6 25.6 1.2 

 II 3.8 2.0 -1.8 3.6 1.4 -0.1 -0.1 -0.1 20.4 1.4 

 III 4.6 3.1 -1.5 4.3 2.1 -0.3 0.8 0.0 19.6 1.6 

 IV 4.5 3.7 -0.7 4.6 2.6 0.1 1.1 0.4 12.3 1.5 

 ANNUAL 4.1 2.7 -1.4 3.9 1.6 -0.2 0.1 -0.1 19.0 1.4 

 2004 I 4.4 5.1 0.7 4.0 2.1 -0.4 0.0 -0.3 20.8 1.5 

 II 3.2 4.6 1.3 3.2 0.3 0.0 0.8 0.2 21.9 2.2 

 III 3.2 5.2 1.9 3.5 0.7 0.3 -0.6 0.0 16.5 1.6 

 IV 4.7 6.5 1.7 5.5 2.0 0.7 -1.8 0.1 14.7 1.5 

 ANNUAL 3.9 5.3 1.4 4.0 1.3 0.2 -0.4 0.0 18.3 1.7 

 2005 I 5.2 6.4 1.2 6.6 3.5 1.3 -2.9 0.2 11.8 1.4 

 II r6.2 r7.9 1.6 r6.6 3.6 r0.4 r-4.2 -0.9 r14.6 0.8 

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

 See footnotes following Table 6. November 3, 2005 

 r=revised Source: Bureau of Labor Statistics 
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 +1.4 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 2005. 

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 1978-2004 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.