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 information: (202) 691-5606 MATERIAL IS EMBARGOED 

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

Media contact: (202) 691-5902 WEDNESDAY, SEPTEMBER 7, 2005. 

PRODUCTIVITY AND COSTS 

Second Quarter 2005, revised 

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

productivity data—as measured by output per hour of all persons—for the second quarter of 

2005. The seasonally adjusted annual rates of productivity change in the second quarter were: 

0.7 percent in the business sector and 

1.8 percent in the nonfarm business sector. 

In both sectors, increases in productivity were smaller than reported on Aug. 9, as output was 

revised down and hours were revised up. (See table C.) 

 In manufacturing, the revised productivity changes in the second quarter were: 

 3.6 percent in manufacturing, 

3.3 percent in durable goods manufacturing, and 

 4.4 percent in nondurable goods manufacturing. 

 In total manufacturing, the change in productivity was revised down from a preliminary 

estimate of 4.1 percent. 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. Second-quarter measures are summarized in 

table A and appear in detail in tables 1 through 5; the differences between these measures and 

the preliminary second-quarter figures issued on Aug. 9 are shown in table C. 
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: Revised second-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 0.7 4.0 3.2 3.3 -0.8 2.6 

Nonfarm business 1.8 4.1 2.2 4.4 0.2 2.5 

Manufacturing 3.6 0.8 -2.7 8.4 4.1 4.7 

 Durable 3.3 1.5 -1.8 8.2 3.9 4.8 

 Nondurable 4.4 0.0 -4.2 8.6 4.3 4.0 

 Percent change from same quarter a year ago 

Business 2.0 4.1 2.0 6.4 3.4 4.3 

Nonfarm business 2.2 4.2 2.0 6.5 3.5 4.2 

Manufacturing 4.6 3.3 -1.3 9.1 6.0 4.3 

 Durable 5.3 4.7 -0.5 9.0 5.9 3.5 

 Nondurable 4.1 1.5 -2.5 9.2 6.1 4.9 

Business 

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

grew 0.7 percent as output increased 4.0 percent and hours worked by all persons engaged in the 

sector—employees, proprietors, and unpaid family workers— rose 3.2 percent (tables A and 1). 

The productivity increase is less than those posted for the previous five quarters; it is the smallest 

increase since a 0.3-percent rise was posted in the fourth quarter of 2003 (seasonally adjusted 

annual rates). 

 Hourly compensation in the business sector increased 3.3 percent in the second quarter of 

2005 and 4.7 percent one quarter earlier (as revised). Hourly compensation 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 0.8 percent in the 

second quarter of 2005 after growing by 2.3 percent in the first quarter of the year. 
3 

 Unit labor costs rose 2.6 percent in the second quarter of 2005. Although hourly 

compensation rose more in the first quarter 2005 than in the second quarter, the larger increase in 

labor productivity in the first quarter offset more of the increase in labor costs and unit labor 

costs in the first quarter grew more slowly, 1.7 percent, than the 2.6-percent increase in the 

second quarter. The implicit price deflator for the business sector rose 2.4 percent in the second 

quarter and 2.7 percent in the first quarter. 

Nonfarm business 

 Productivity in the nonfarm business sector grew at a 1.8 percent annual rate in the 

second quarter of 2005, reflecting increases of 4.1 percent in output and 2.2 percent in hours of 

all persons (tables A and 2). The second quarter increase was one of the smaller increases posted 

in the nonfarm business sector since the business-cycle peak in the first quarter of 2001; 

productivity growth over the period has risen at an average annual rate of 3.5 percent. 

 Hourly compensation rose 4.4 percent in the second quarter of 2005, following a 5.5 

percent advance in the first quarter. When the rise in consumer prices was taken into account, 

real hourly compensation edged up 0.2 percent in the second quarter of 2005. 

 Unit labor costs increased 2.5 percent in the second quarter of 2005, somewhat more than 

the 2.2-percent increase posted in the first quarter of the year. The implicit price deflator for 

nonfarm business output rose 2.4 percent in the second quarter of 2005 and 3.0 percent one 

quarter earlier. 

Manufacturing

 In the second quarter of 2005, productivity increased 3.6 percent in manufacturing, as 

output increased 0.8 percent and hours of all persons fell 2.7 percent (seasonally adjusted annual 

rates). In the durable goods sector, productivity grew 3.3 percent in the second quarter of 2005, 

reflecting an increase in output of 1.5 percent and a drop in hours of 1.8 percent. In nondurable 

goods, output per hour rose 4.4 percent as output was unchanged and hours declined 4.2 percent 

(tables 3, 4, and 5). Hours of all persons in the nondurable manufacturing sector have declined 

in every quarter since the third quarter of 1999. 

 The hourly compensation of all manufacturing workers increased 8.4 percent during the 

second quarter of 2005, reflecting an 8.2-percent rise in hourly compensation in durable goods 

industries and an 8.6-percent increase in the nondurable goods sector. Real hourly compensation 

in the total manufacturing sector rose 4.1 in the second quarter and 4.6 percent one quarter 

earlier. 

 Unit labor costs in manufacturing increased 4.7 percent in the second quarter of 2005, 

more than they had in the first quarter, when they rose 2.8 percent. Unit labor costs grew 4.8 

percent in durable goods and 4.0 percent in nondurable goods in the second quarter of 2005. 
4 

Nonfinancial corporations

Preliminary second quarter 2005 measures of productivity and costs were reported today 

for nonfinancial corporations (tables B and 6). Productivity increased 6.8 percent during the 

second quarter, reflecting a 9.5-percent rise in output and 2.6 percent growth in employee hours 

(seasonally adjusted annual rates). In the first quarter of 2005, output per hour rose 2.7 percent 

(as revised), reflecting increases of 3.3 percent in output and 0.5 percent in employee hours. 

Nonfinancial corporations include all corporations doing business in the United States except 

those classified as offices in the finance and insurance sector, offices of bank holding companies, 

or offices of other holding companies. 

Table B. Nonfinancial corporations: Preliminary second-quarter 2005 productivity and cost 

measures 

(Seasonally adjusted annual rates) 

Period 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator 

Percent change from preceding quarter 

2005 II 6.8 9.5 2.6 4.0 -0.1 -2.6 43.2 1.3 

Percent change from same quarter a year ago 

2005 II 6.3 8.0 1.6 6.7 3.6 0.3 14.9 0.8 

Hourly compensation rose 4.0 percent in the second quarter of 2005, following a 5.9 

percent gain in the first quarter. When the rise in consumer prices is taken into account, real 

hourly compensation was little changed in the second quarter and rose 3.5 percent one quarter 

earlier. 

 Unit labor costs for nonfinancial corporations dropped 2.6 percent in the second quarter 

after increasing by 3.1 percent in the first quarter. Unit profits grew 43.2 percent in second 

quarter, 2005, the largest one-quarter increase since a 51.0 percent rise in the fourth quarter of 

2002. The implicit price deflator for nonfinancial corporate output rose 1.3 percent in the second 

quarter of 2005. 
5 

Revised Measures 

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

business, and manufacturing sectors are compared in table C. The quarterly movements differ 

from those reported on Aug. 9 based on information then available. In the business and nonfarm 

business sectors and the manufacturing sector, productivity and output were revised down and 

hours of all persons were revised up. Hourly compensation and unit labor costs in all of these 

sectors were revised up. 

Table C. Business, nonfarm business, and manufacturing: Previous and revised productivity and 

related measures 

(Quarterly percent changes at seasonally adjusted annual rates) 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Second quarter 2005 

Business: 

 Previous ....................... 1.2 4.2 3.0 2.5 -1.6 1.4 

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

Nonfarm business: 

 Previous ....................... 2.2 4.4 2.1 3.5 -0.6 1.3 

 Revised......................... 1.8 4.1 2.2 4.4 0.2 2.5 

Manufacturing: 

 Previous ....................... 4.1 1.2 -2.8 6.6 2.3 2.3 

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

First quarter 2005 

Business: 

 Previous ....................... 2.9 4.4 1.4 6.2 3.7 3.2 

 Revised......................... 2.9 4.4 1.4 4.7 2.3 1.7 

Nonfarm business: 

 Previous ....................... 3.2 4.3 1.1 6.9 4.5 3.6 

 Revised......................... 3.2 4.3 1.1 5.5 3.1 2.2 

Manufacturing: 

 Previous ....................... 4.2 3.5 -0.7 7.1 4.7 2.8 

 Revised......................... 4.2 3.5 -0.7 7.1 4.6 2.8 

Hourly compensation growth in the first quarter also was revised to reflect new estimates 

of compensation. In the business and nonfarm business sectors, hourly compensation grew more 

slowly in the first quarter than reported in August. As a result, unit labor costs in these sectors 

now grow less than previously reported. In the manufacturing sector, hourly compensation data 

for the first quarter are similar to those reported earlier. 
6 

Revised Measures: Nonfinancial Corporations 

Data for the first quarter of 2005 were revised for the nonfinancial corporate sector. 

Productivity, output, hourly compensation, and unit labor costs grew more slowly than reported 

on August 9. 

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

(Quarterly percent hanges at seasonall adjuste annual rat s) c y d e

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator

First quarter 2005 

Previous ........... 3.6 4.1 0.5 7.3 4.8 3.5 6.2 2.2 

Revised............. 2.7 3.3 0.5 5.9 3.5 3.1 7.1 2.2 

Next release date 

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

Nov. 3, 2005. Preliminary third-quarter measures for business, nonfarm business, and 

manufacturing will be released at that time. 

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 r164.4 r122.5 r121.5 r123.6 122.3 

 II r135.5 r160.4 r118.4 r165.7 r122.2 122.3 r124.3 123.0 

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

 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 r4.7 r2.3 r1.7 r4.4 2.7 

 II r0.7 r4.0 r3.2 r3.3 r-0.8 r2.6 r2.1 r2.4 

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

 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 r6.4 r3.3 r3.6 r0.5 2.4 

 II r2.0 r4.1 2.0 r6.4 r3.4 4.3 r-1.4 r2.1 

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

 See footnotes following Table 6. Sept. 7, 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 r163.2 r121.6 r121.3 r125.0 122.7 

 II r135.1 r161.0 r119.2 r165.0 r121.7 122.1 r125.7 123.4 

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

 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 r5.5 r3.1 r2.2 r4.4 3.0 

 II r1.8 r4.1 r2.2 r4.4 r0.2 r2.5 r2.3 r2.4 

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

 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 r6.3 r3.3 r3.4 r1.2 2.6 

 II r2.2 r4.2 2.0 r6.5 r3.5 r4.2 r-0.6 r2.4 

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

 See footnotes following Table 6. Sept. 7, 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 r172.2 r128.3 102.4 

 II r169.7 r142.5 84.0 r175.8 r129.6 r103.6 

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

 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 r4.6 2.8 

 II r3.6 r0.8 r-2.7 r8.4 r4.1 r4.7 

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

 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 r4.6 r3.3 -1.3 r9.1 r6.0 r4.3 

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

 See footnotes following Table 6. Sept. 7, 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 r169.0 r125.9 86.2 

 II r197.7 r175.0 88.5 r172.4 r127.1 r87.2 

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

 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 r7.5 r5.1 r1.7 

 II r3.3 r1.5 -1.8 r8.2 r3.9 r4.8 

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

 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 r5.5 2.2 

 II r5.3 r4.7 -0.5 r9.0 r5.9 r3.5 

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

 See footnotes following Table 6. Sept. 7, 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 r131.3 r124.9 

 II r142.6 r110.2 r77.3 r179.8 r132.6 r126.1 

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

 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 r6.1 r3.7 r3.5 

 II r4.4 r0.0 r-4.2 r8.6 r4.3 r4.0 

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

 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 r7.4 r4.3 2.4 

 II r4.1 1.5 r-2.5 r9.2 r6.1 r4.9 

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

 See footnotes following Table 6. Sept. 7, 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 r143.2 r170.3 118.9 r160.3 r119.4 r111.9 r108.2 110.9 r145.6 114.0 

 II 145.6 174.3 119.7 161.8 119.4 111.2 106.6 109.9 159.2 114.3 

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

 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 r2.7 r3.3 0.5 r5.9 r3.5 r3.1 r-2.5 r1.6 r7.1 2.2 

 II 6.8 9.5 2.6 4.0 -0.1 -2.6 -5.7 -3.4 43.2 1.3 

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

 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 r5.2 r6.4 1.2 r6.6 r3.5 r1.3 r-2.9 0.2 r11.8 1.4 

 II 6.3 8.0 1.6 6.7 3.6 0.3 -4.4 -0.9 14.9 0.8 

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

 See footnotes following Table 6. September 7, 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 first 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.