Internet address: http://www.bls.gov/lpc/ USDL 06-2039 

Historical, technical TRANSMISSION OF THIS 

 information: (202) 691-5606 MATERIAL IS EMBARGOED 

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

Media contact: (202) 691-5902 TUESDAY, DECEMBER 5, 2006. 

PRODUCTIVITY AND COSTS 

Third Quarter 2006, 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 third quarter of 2006. 

The seasonally adjusted annual rates of productivity growth in the third quarter were: 

 0.4 percent in the business sector and 

0.2 percent in the nonfarm business sector. 

In both sectors, changes in productivity are higher than the preliminary estimates published 

November 2, as output was revised up more than hours (See table C). 

 In manufacturing, revised productivity increases in the third quarter were: 

6.7 percent in manufacturing, 

9.0 percent in durable goods manufacturing, and 

 3.1 percent in nondurable goods manufacturing. 

Productivity growth in the manufacturing sector was revised up, reflecting an upward 

revision to output and no change to the previously-reported decrease in hours (table C). 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 8). 
2 

Table A. Productivity and costs: Revised 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 0.4 2.2 1.8 2.9 -0.1 2.5 

Nonfarm business 0.2 2.3 2.1 2.6 -0.4 2.3 

Manufacturing 6.7 5.1 -1.6 2.4 -0.5 -4.1 

 Durable 9.0 5.9 -2.9 4.1 1.1 -4.5 

 Nondurable 3.1 3.9 0.8 -0.5 -3.4 -3.5 

 Percent change from same quarter a year ago 

Business 1.5 3.4 1.8 4.4 1.1 2.8 

Nonfarm business 1.4 3.3 1.9 4.3 1.0 2.9 

Manufacturing 4.5 6.3 1.8 2.4 -0.9 -2.0 

 Durable 6.6 8.4 1.7 3.3 0.0 -3.0 

 Nondurable 1.7 3.7 2.0 0.6 -2.7 -1.1 

Business 

Business sector productivity grew at an annual rate of 0.4 percent during the third quarter 

of 2006, as output increased 2.2 percent and hours of all persons engaged in the sector rose 1.8 

percent (tables A and 1). When the third quarter of 2006 is compared to the third quarter of 

2005, labor productivity rose 1.5 percent. This is the smallest four-quarter increase since a 

similar rise in the second quarter of 1997. In the second quarter of 2006, output per hour 

increased 1.1 percent. 

 Hourly compensation in the business sector increased 2.9 percent during the third quarter 

of 2006, following a decline of 1.4 percent in the second quarter (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, edged down 0.1 percent in the third quarter and fell 6.1 percent in the second 

quarter. 

 Unit labor costs rose 2.5 percent in the third quarter of 2006, after having fallen 2.5 

percent in the previous quarter. The implicit price deflator for the business sector, which reflects 

changes both in unit labor costs and in unit nonlabor payments, rose 1.1 percent in the third 

quarter of 2006. 
3 

Nonfarm business 

 Output per hour of all persons in the nonfarm business sector rose 0.2 percent during the 

third quarter of 2006, reflecting increases in output and hours of 2.3 percent and 2.1 percent, 

respectively (tables A and 2). The 1.4-percent increase from the third quarter of 2005 to the third 

quarter of 2006 was the smallest four-quarter gain in nonfarm business productivity since the 

second quarter of 1997 (1.3 percent). In the second quarter of 2006, productivity in nonfarm 

businesses had increased 1.2 percent as output grew 2.7 percent and hours increased 1.5 percent. 

 Hourly compensation grew 2.6 percent in the third quarter of 2006, following the 1.2 

percent decline in the second quarter (as revised). When the rise in consumer prices is taken into 

account, real hourly compensation declined 0.4 percent in the third quarter of 2006 and fell 5.9 

percent one quarter earlier. 

Unit labor costs rose 2.3 percent in the third quarter, in contrast to the previous quarter, 

when they dropped 2.4 percent. The implicit price deflator for nonfarm business was revised to 

0.7 percent in the third quarter of 2006. 

Manufacturing 

 Productivity increased 6.7 percent in manufacturing in the third quarter of 2006, as output 

increased 5.1 percent and hours of all persons decreased 1.6 percent (seasonally adjusted annual 

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

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

increased 9.0 percent in the third quarter of 2006, as an increase of 5.9 percent in output 

combined with a decrease of 2.9 percent in hours. Productivity grew more slowly in the 

nondurable goods industries, 3.1 percent, reflecting increases of 3.9 percent in output and 0.8 

percent in hours (tables 3, 4, and 5). 

 The average hourly compensation of all manufacturing workers rose 2.4 percent in the 

third quarter of 2006. Hourly compensation was revised down substantially in the second 

quarter, from the 4.0-percent increase reported previously to a 5.8-percent decrease. In durable 

goods industries, hourly compensation increased 4.1 percent in the third quarter, compared with 

a 0.5 percent decline in nondurable goods manufacturing. When the increase in consumer prices 

is taken into account, real hourly compensation for all manufacturing workers declined 0.5 

percent in the third quarter of 2006. 

 Unit labor costs in manufacturing fell 4.1 percent in the third quarter of 2006 and 8.3 

percent in the previous quarter, as revised. Unit labor costs declined 4.5 percent in durable 

goods industries and 3.5 percent in nondurable goods manufacturing during the third quarter. 
4 

Nonfinancial Corporations 

Third-quarter 2006 measures of productivity and costs also were released for 

nonfinancial corporations (tables B and 6). Output per all-employee hour grew at a 5.6 percent 

annual rate; a reversal from the 4.3-percent decline reported in the previous quarter (as revised). 

Output increased 7.3 percent in the third quarter, and hours of all employees rose 1.6 percent 

(seasonally adjusted annual rates). The nonfinancial corporate sector includes all corporations 

doing business in the United States, except those classified as depository institutions, 

nondepository institutions, security and commodity brokers, insurance carriers, regulated 

investment offices, small business investment offices, and real estate investment trusts. 

Table B. Nonfinancial corporations: Third-quarter 2006 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 

2006 III 5.6 7.3 1.6 2.8 -0.1 -2.7 27.6 0.2 

Percent change from same quarter a year ago 

2006 III 3.8 5.7 1.9 4.3 0.9 0.5 19.0 1.8 

Hourly compensation in nonfinancial corporations increased 2.8 percent in the third 

quarter following a second-quarter decline of 0.7 percent, as revised. When the rise in consumer 

prices is taken into account, real hourly compensation fell 0.1 percent in the third quarter and 5.4 

percent in the second quarter. 

Unit labor costs for the sector declined 2.7 percent in third-quarter 2006 after increasing 

3.7 percent one quarter earlier. Unit nonlabor costs also fell in the third quarter, by 5.3 percent. 

Unit profits increased at a 27.6 percent annual rate in the third quarter. As a result of these 

movements, the implicit price deflator for the output of nonfinancial corporations—which 

reflects a weighted average of these three measures—edged up 0.2 percent. 
5 

Revised Measures 

Current and previous measures for the second and third quarters of 2006 for the business, 

nonfarm business, and manufacturing sectors are compared in table C. In the third quarter, 

productivity in the business and nonfarm business sectors was revised up slightly as output was 

revised up by more than hours. In manufacturing, productivity was also revised up, by 0.8 

percentage point, reflecting a similar upward revision in output, as hours declined at the same 

1.6-percent rate reported Nov. 2. Increases in hourly compensation were revised down in all 

three sectors, and the combination of faster productivity growth and slower hourly compensation 

growth lead to significant downward revisions to unit labor costs. 

Table C. Previous and revised productivity and related measures: 

Quarterly percent change at seasonally adjusted annual rate 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Third quarter 2006 

Business: 

 Previous........................ 0.1 1.4 1.4 4.0 1.0 4.0 

 Revised......................... 0.4 2.2 1.8 2.9 -0.1 2.5 

Nonfarm business: 

 Previous........................ 0.0 1.6 1.6 3.7 0.7 3.8 

 Revised......................... 0.2 2.3 2.1 2.6 -0.4 2.3 

Manufacturing: 

 Previous........................ 5.9 4.2 -1.6 2.9 -0.1 -2.9 

 Revised......................... 6.7 5.1 -1.6 2.4 -0.5 -4.1 

Second quarter 2006 

Business: 

 Previous........................ 1.1 2.7 1.7 6.4 1.3 5.3 

 Revised......................... 1.1 2.7 1.7 -1.4 -6.1 -2.5 

Nonfarm business: 

 Previous........................ 1.2 2.7 1.5 6.6 1.6 5.4 

 Revised......................... 1.2 2.7 1.5 -1.2 -5.9 -2.4 

Manufacturing: 

 Previous........................ 2.7 5.1 2.3 4.0 -0.9 1.2 

 Revised......................... 2.7 5.1 2.3 -5.8 -10.3 -8.3 
6 

The second-quarter 2006 measures of hourly compensation, real hourly compensation, 

and unit labor costs were revised to reflect new information on employee compensation reported 

by the Bureau of Economic Analysis of the U.S. Department of Commerce on Nov. 29. In both 

the business and nonfarm business sectors, hourly compensation growth was revised down by 

7.8 percent, and moderate declines have replaced sizable increases. Because productivity was 

not revised, the hourly compensation revisions caused corresponding downward revisions to unit 

labor costs, which now decline rather than increase in the second quarter. 

In the manufacturing sector there was an even larger downward revision to hourly 

compensation growth, from positive 4.0 percent to negative 5.8 percent. As a result, 

manufacturing unit labor costs, which had been reported as rising at a 1.2 percent annual rate, 

actually fell 8.3 percent in the second quarter. 

Revised measures: Nonfinancial corporations 

 Measures for the nonfinancial corporate sector also were revised to reflect updated 

information on output and employee compensation during the second quarter of 2006 (table D). 

Productivity was revised down along with output, as hours grew at the same rate reported Nov 2. 

Hourly compensation was revised down from a 6.5-percent gain to 0.7-percent decline in the 

second quarter. Because hourly compensation was revised down more than productivity, the 

increase in unit labor costs also was revised down, from 6.4 percent to 3.7 percent. 

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

Quarterly percent c anges at e h s asonally adjusted annual rates 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator

Second quarter 2006 

Previous 0.2 1.8 1.6 6.5 1.5 6.4 -15.3 2.9 

Revised -4.3 -2.7 1.6 -0.7 -5.4 3.7 -11.4 2.9 

Next release date 

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

Wednesday, February 7, 2007. Preliminary fourth-quarter and annual 2006 measures for the 

business, nonfarm business, and manufacturing sectors will be released at that time. 
7 

 Scheduled release dates for productivity and costs measures for major sectors of the U.S. 

economy in 2007 are: 

Reference period 2007 release date

2006:

Fourth quarter, Annual February 7 

Fourth quarter, Annual (revised) March 6 

2007:

First quarter May 3 

First quarter (revised) June 6 

Second quarter August 7 

Second quarter (revised) September 6 

Third quarter November 7 

Third quarter (revised) December 5 

 These dates are based on presently available schedules for the release of underlying 

source data in 2007. Each issue of Productivity and Costs contains a "Next release date"

paragraph that readers should use to confirm the dates above. 
8 

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; 
9 

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.
10 

 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 138.6 165.4 119.4 r171.3 r121.6 r123.6 r134.1 127.5 

 III r138.7 r166.3 r119.9 r172.5 r121.6 r124.4 r133.7 r127.9 

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

 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 1.1 2.7 1.7 r-1.4 r-6.1 r-2.5 r12.4 3.1 

 III r0.4 r2.2 r1.8 r2.9 r-0.1 r2.5 r-1.2 r1.1 

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

 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 2.7 4.0 1.3 r5.8 r1.7 r3.0 r3.2 3.1 

 III 1.5 r3.4 r1.8 r4.4 r1.1 r2.8 r1.9 2.5 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
11 

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 137.6 165.7 120.4 r170.1 r120.8 r123.6 r136.4 128.3 

 III r137.7 r166.6 r121.1 r171.2 r120.7 r124.4 r135.8 r128.6 

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

 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 1.2 2.7 1.5 r-1.2 r-5.9 r-2.4 r13.3 3.4 

 III r0.2 r2.3 r2.1 r2.6 r-0.4 r2.3 r-1.8 r0.7 

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

 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 2.4 4.0 1.5 r5.6 r1.6 r3.1 r3.4 3.3 

 III r1.4 r3.3 r1.9 r4.3 r1.0 r2.9 r2.0 2.6 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
12 

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 176.0 150.3 85.4 r173.7 r123.3 r98.7 

 III r178.9 r152.2 r85.1 r174.7 r123.1 r97.7 

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

 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 2.7 5.1 2.3 r-5.8 r-10.3 r-8.3 

 III r6.7 r5.1 -1.6 r2.4 r-0.5 r-4.1 

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

 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 1.9 r3.5 r-0.4 r-0.2 

 III r4.5 r6.3 1.8 r2.4 r-0.9 r-2.0 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
13 

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 204.6 186.0 90.9 r169.6 r120.4 r82.9 

 III r209.1 r188.6 r90.2 r171.3 r120.8 r81.9 

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

 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 3.6 7.5 3.8 r-5.5 r-10.0 r-8.7 

 III r9.0 r5.9 r-2.9 r4.1 r1.1 r-4.5 

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

 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 5.9 8.7 2.6 r4.2 r0.2 r-1.7 

 III r6.6 r8.4 1.7 r3.3 r0.0 r-3.0 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
14 

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 148.4 114.6 77.3 r178.7 r126.9 r120.5 

 III r149.5 r115.7 r77.4 r178.5 r125.8 r119.4 

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

 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 2.5 2.3 -0.2 r-6.7 r-11.1 r-9.0 

 III r3.1 r3.9 r0.8 r-0.5 -3.4 r-3.5 

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

 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 2.0 0.9 r2.2 r-1.7 r1.0 

 III r1.7 r3.7 2.0 r0.6 r-2.7 r-1.1 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
15 

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 r149.0 r178.9 120.1 r168.2 r119.4 r112.9 r110.8 r112.3 r167.8 117.3 

 III 151.1 182.1 120.5 169.4 119.4 112.1 109.3 111.4 178.3 117.4 

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

 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 r-4.3 r-2.7 1.6 r-0.7 r-5.4 r3.7 r9.6 r5.3 r-11.4 2.9 

 III 5.6 7.3 1.6 2.8 -0.1 -2.7 -5.3 -3.4 27.6 0.2 

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

 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 r3.1 r4.9 1.7 r5.6 r1.6 r2.4 r0.5 r1.9 r5.5 2.4 

 III 3.8 5.7 1.9 4.3 0.9 0.5 -3.0 -0.4 19.0 1.8 

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

See footnotes following Table 6. December 5, 2006 

r=revised Source: Bureau of Labor Statistics 
16 

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 self-employed, 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.