Internet address: http://www.bls.gov USDL 05-308 

Technical information: (202) 691-5654 For Release: 10:00 A.M. EST 

Media contact: (202) 691-5902 Friday, February 25, 2005 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, REVISED DATA FOR 2003 

 Revised data for 2003 show that the increase in U.S. manufacturing productivity (+9.7 

percent) was the second highest among 14 economies compared, according to the U.S. 

Department of Labor's Bureau of Labor Statistics. This was below the increase recorded 

in Japan (+11 percent) and ahead of Korea (+9 percent). The United Kingdom and 

Sweden also showed productivity gains of over 5 percent, while productivity remained 

constant in Canada and declined in Italy. (See chart 1.) 

 The U.S. productivity growth in 2003, an upward revision from the preliminary 

estimate of 6.8 percent released in September 2004, continues the rapid growth of U.S. 

manufacturing productivity after 2000, at 6.9 percent per year on average. This was the 

fastest growth rate in those years among the 14 economies for which comparable data are 

available. Only in two other economies did productivity growth surpass 5 percent per 

year after 2000. (Average annual growth rates for selected measures over various time 

periods are found in tables A and B.) 

Chart 1. Percent change in

 manufacturing output per hour, 2002-2003

9.7

0.0

3.8

11.0

3.6

4.7

3.6

1.9

2.7

-1.0

1.6

6.5

5.6

9.0

-3

-1

1

3

5

7

9

11

United States

Canada

Australia

Japan

Korea

Taiwan

Belgium

Denmark

France

Germany

Italy

Norway

Sweden

United Kingdom

(Percent)
- 2 -

 Unit labor costs in manufacturing, expressed in national currency units, fell in 7 of the 

15 economies compared. The decline in unit labor costs in U.S. manufacturing (-1.1 

percent) is a revision from the preliminary estimate (+1.6 percent) released in September 

2004, and corresponds to the revised increase in productivity. Unit labor costs declined 

most in Japan (-9.2 percent), reflecting that country's strong productivity growth. 

 In 2003, the dollar decreased in value against the currencies of all the other 14 

economies compared, especially against the euro and other European currencies. This 

resulted in substantially higher unit labor costs in U.S. dollar terms for most of these 

economies. Unit labor costs in U.S. dollars declined only where the U.S. dollar's 

depreciation was slight (Taiwan) or where the reduction in unit labor costs in national 

currency units was very large (Japan). (See chart 2 and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2002-2003

-0.2

-2.6

2.6

3.5

4.2

-0.9

1.0

1.2

-0.5

-1.9

0.3

-9.2

1.4

1.4

-1.1

8.5

17.1

15.6

23.8

24.8

18.6

20.9

21.3

19.1

-1.5

5.2

-1.9

21.6

13.6

-1.1

-11 -9 -7 -5 -3 -1 1 3 5 7 9 11 13 15 17 19 21 23 25

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Belgium

Taiwan

Korea

Japan

Australia

Canada

United States

National currency basis U.S. dollar basis
- 3 -

Table A. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 2002-2003

 Output Total Hourly Unit labor costs

Country per Total Employ- Average compen- compen- National U.S. Exchange

or area hour Output hours ment hours sation sation currency dollars rate (1)

United States 9.7 4.5 - 4.8 - 4.7 - 0.1 3.3 8.5 - 1.1 - 1.1 ---

Canada 0.0 0.1 0.1 0.5 - 0.4 1.5 1.3 1.4 13.6 12.1

Australia 3.8 1.7 - 2.0 - 1.9 - 0.1 3.2 5.3 1.4 21.6 19.9

Japan 11.0 9.6 - 1.3 - 2.0 0.7 - 0.5 0.8 - 9.2 - 1.9 8.0

Korea 9.0 4.8 - 3.9 - 3.7 - 0.2 5.1 9.3 0.3 5.2 4.9

Taiwan 3.6 5.7 2.1 1.7 0.4 3.7 1.6 - 1.9 - 1.5 0.4

Belgium 4.7 0.8 - 3.7 - 3.3 - 0.4 0.3 4.1 - 0.5 19.1 19.7

Denmark 3.6 - 0.2 - 3.6 - 3.1 - 0.5 1.0 4.8 1.2 21.3 19.9

France 1.9 - 0.5 - 2.3 - 2.2 - 0.1 0.5 2.9 1.0 20.9 19.7

Germany 2.7 0.2 - 2.4 - 2.7 0.3 - 0.7 1.7 - 0.9 18.6 19.7

Italy - 1.0 - 1.4 - 0.4 0.2 - 0.6 2.8 3.2 4.2 24.8 19.7

Netherlands NA - 2.8 NA - 3.0 NA 0.6 NA 3.5 23.8 19.7

Norway 1.6 - 3.8 - 5.4 - 4.6 - 0.8 - 1.4 4.3 2.6 15.6 12.7

Sweden 6.5 2.6 - 3.6 - 2.8 - 0.9 - 0.1 3.7 - 2.6 17.1 20.3

United Kingdom 5.6 0.4 - 5.0 - 4.5 - 0.5 0.2 5.4 - 0.2 8.5 8.8

(1) Value of foreign currency relative to the U.S. dollar.

NA=Not Available

Percent change

Additional data available

 Annual indexes of these variables also are estimated for the time period 1950-2003 

and are available at the Bureau of Labor Statistics, Division of Foreign Labor Statistics 

website at address Hhttp://www.bls.gov/fls/home.htmH. Because the value-added output 

data for U.S. manufacturing industries are not available prior to 1977, the comparative 

measure of output, output per hour, and unit labor costs for the United States begin with 

1977. However, for analytical purposes, the international comparisons in this release go 

back to 1979. 

 For further information, contact the Office of Productivity and Technology by phone 

at 202-691-5654, by e-mail at Hflspr@bls.govH, or by mail at Bureau of Labor Statistics, 2 

Massachusetts Avenue, NE, Room 2150, Washington, DC 20212. 
- 4 -

 Notes about the measures 

 

The measures in this release are based on data available to BLS as of mid-January 2005. 

Revisions for 2003 and earlier years were made for several economies to incorporate data 

not available at the time of the September 2004 report. 

United States

U.S. output data in this release have been revised beginning with 1987. The data, a 

value-added measure, are produced by the BEA as part of the integrated annual GDP-byindustry and input-output (I-O) accounts. From 1987 they are now based on the 1997 

North American Industry Classification System (NAICS). Output for 2003 in the 

September 2004 report was a preliminary estimate by the BEA, using an abbreviated 

methodology and limited source data. The output measure in this release is based on 

revised data published by the BEA in December 2004, incorporating the most timely and 

highest quality source data available, including data from the 2004 annual revision of the 

national income and product accounts (NIPAs), combined within an I-O framework. 

They also incorporate the 2003 comprehensive revisions of the NIPAs. Additional 

details are available in Robert E. Yuskavage and Yvon Pho, “Gross Domestic Product by 

Industry for 1987-2000,” Survey of Current Business, November, 2004, and in the news 

release BEA News, December 20, 2004. 

The NAICS-based employment, hours, and compensation data back to 1987 are taken 

from the series published by BLS as part of the major sector productivity and cost 

measures for the United States. 

Australia

Australian data are published by fiscal years, which run from July 1 through June 30. 

The Australian Bureau of Statistics provided unpublished calendar year data for real 

value added, employment, and hours worked. For compensation, the Bureau of Labor 

Statistics estimated calendar-year series using two-year moving averages of the data for 

fiscal years. Manufacturing compensation data are not available for years prior to 1990. 

Japan

In the September 2004 report, a preliminary estimate was made of the 2003 increase in 

Japanese real manufacturing output, using the relative change in the industrial production 

index. In the present release, the change in output is based on the growth in real value 

added in manufacturing. The revision results in a large increase in Japan's productivity 

growth for 2003. 

Netherlands

Data for hours worked in manufacturing have not been released for 2003 by the 

Netherlands Central Bureau of Statistics. In this report, 2003 estimates of labor 

productivity and hourly compensation are not available for the Netherlands. 
- 5 -

Manufacturing productivity, output, and labor input

 The revised 2003 increase in U.S. manufacturing productivity (output per hour) of 9.7 

percent was half a percentage point below the corresponding 2002 increase, but well 

above the average annual gains of the period since 1979. (See table B.) The average 

productivity growth of 6.9 percent per year during 2000-2003 was greater than for any 3-

year period since 1979. Only Japan's productivity gain of 11 percent was above the U.S. 

increase in 2003. Of the 14 economies for which comparable data are available, average 

annual productivity growth over the 2000–2003 period was highest in the United States. 

Other economies with relatively high average annual productivity gains over 2000–2003 

were Korea, Taiwan, Sweden, and Japan. Productivity declined in Italy during these 

years, while Canada, Germany, and Norway recorded small increases. Productivity data 

for 2003 are not estimated for the Netherlands because hours data are not available. (See 

tables A and B.) 

 Changes in manufacturing labor productivity correspond to changes in output and in 

total hours worked. Of the 12 economies that experienced growth in labor productivity in 

2003, 9 also had increases in manufacturing output. Output increased most in Japan 

(+9.6 percent). Other economies where manufacturing output went up over 4 percent in 

2003 were Taiwan, Korea, and the United States. Among European countries, only 

Sweden recorded output growth above 1 percent, while five countries recorded declines. 

Both productivity and output went down in Italy. (See table A.) 

 Total manufacturing hours worked in 2003 declined in 12 of the 14 economies for 

which hours data are available, rising only in Taiwan (+2.1 percent) and Canada (+0.1 

percent). The 4.8 percent fall in 2003 U.S. manufacturing hours was the third largest 

decline among the economies compared, after Norway (-5.4 percent) and the United 

Kingdom (-5 percent). Italy, Japan, and Australia experienced declines in hours of 2 

percent or less. (See table A.) 

 The reductions in manufacturing hours reflect a trend in most industrial economies, as 

hours worked fell over the 1979–2003 period in 11 of the 13 economies for which hours 

data are available. Also, in all of these 11 countries, the 2003 fall was greater than the 

1979–2003 average annual decline. (See table B.) For the United States, the drop in 

hours during 2000–2003 was greater than for any 3-year period since 1950. 

 Productivity increased in 11 of the 12 countries with hours declines. This occurred 

even in France, Denmark, and Norway, where output fell, because hours declined more. 

(See table A.) 

 Total hours worked are a function of both the number of people employed and the 

average hours worked per person. In 2003, manufacturing employment fell in 12 of the 

15 economies. Employment declined most in the United States (-4.7 percent), followed 

closely by Norway and the United Kingdom. The United States also had the largest 

percent decline in employment in 2002, as well as over the entire 2000–2003 period. In 

2003, employment decreased least in Australia, and it grew in Taiwan, Canada, and Italy. 

(See tables A and B.) 
- 6 -

 In 2003, average hours worked per person fell in 11 of the 14 economies for which 

hours data are available, while going up in only Japan, Taiwan, and Germany. Average 

hours fell most in Sweden (-0.9 percent) and Norway (-0.8). In the United States average 

hours worked went down by 0.1 percent. 

 Although both factors, employment and average hours, contributed to the declines in 

total manufacturing hours in 2003, the impact of the reductions in employment was 

greater: of the 12 countries where total hours went down, the employment declines were 

relatively larger than the declines in average hours in all except Italy, where employment 

rose while average hours declined. (See table A.) 

Manufacturing hourly compensation and unit labor costs

 In 2003, the United States recorded the second largest increase in manufacturing 

hourly compensation, expressed in national currency units, among the 14 economies for 

which comparable data are available. The U.S. 8.5 percent increase trailed only Korea's 

9.3 percent growth. Hourly compensation grew in all the 14 economies, with the smallest 

increases occurring in Japan, Canada, and Taiwan. The U.S. 2003 increase in hourly 

compensation was above its average annual growth rates for 1979–2003. Since 1983, 

U.S. hourly compensation grew more only in 2000. Hourly compensation data for 2003 

are not estimated for the Netherlands because hours data are not available. (See table B.) 

 Relative changes in unit labor costs, expressed in national currency units, are directly 

proportional to relative changes in hourly compensation, and inversely proportional to 

relative changes in labor productivity. In 2003, both hourly compensation and labor 

productivity increased in most of the economies compared, so that changes in unit labor 

costs were determined by the relative magnitudes of these increases. Unit labor costs, in 

national currency units, fell in 7 of the 15 economies compared. The drop was greatest in 

Japan (-9.2 percent), reflecting that country's large increase in manufacturing 

productivity. In the United States unit labor costs declined by 1.1 percent despite the 

large increase in hourly compensation, because productivity increased even more. This 

drop in U.S. unit labor costs followed a 3.2 percent decline in 2002, and was 

approximately equal to the average annual reductions over the 2000-2003 period. In 

2003, unit labor costs increased most in Italy (+4.2 percent), a combination of a 3.2 

percent increase in hourly compensation and a 1 percent decline in productivity. (See 

tables A and B.) 

 Often exchange rate movements are the dominant influence on the relative changes in 

the unit labor costs of different economies. In 2003, the U.S. dollar depreciated against 

the currencies of all the economies compared, especially against the euro and other 

European currencies. This depreciation was at double-digit rates against the currencies of 

Canada, Australia, and all European countries except the United Kingdom. (See table A.) 

The depreciation of the U.S. dollar pushed up U.S. dollar-denominated unit labor costs in 

most of the other economies being compared. These increases were also at double-digit 

rates in all the European countries except the United Kingdom, as well as in Canada and 
- 7 -

Australia. Besides the United States, U.S. dollar-denominated unit labor costs declined 

only in Japan and Taiwan. In Japan the reduction was the result of a 9.2 percent drop in 

yen-denominated unit labor costs that was only partly offset by the 8 percent appreciation 

of the yen against the U.S. dollar. The Taiwan dollar appreciated only slightly against the 

U.S. dollar (+0.4 percent) in 2003, not enough to counter a 1.9 percent decline in local 

currency-denominated unit labor costs. For both 2002 and 2003 the dollar's depreciation 

increased unit labor costs, denominated in U.S. dollars, in most of the other economies 

compared. This effect was especially strong in 2003. (See tables A and B and chart 3.) 
8

Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Output per hour

United States 4.2 3.0 3.7 5.7 6.9 10.2 9.7

Canada 2.5 2.0 3.8 3.2 0.8 4.2 0.0

Australia 3.1 2.8 2.9 3.9 3.5 3.4 3.8

Japan 3.8 3.8 3.3 4.1 4.3 2.3 11.0

Korea NA NA 9.6 10.8 5.9 9.8 9.0

Taiwan 5.8 6.2 5.2 5.5 5.6 7.5 3.6

Belgium 3.6 4.2 3.2 2.9 3.3 4.2 4.7

Denmark 2.3 2.1 2.7 2.4 2.4 3.2 3.6

France 4.2 4.2 4.0 4.5 3.5 4.8 1.9

Germany2 2.4 2.1 3.3 2.7 1.7 2.1 2.7

Italy 1.6 2.2 2.2 1.0 -0.8 -1.7 -1.0

Netherlands NA 3.5 3.5 2.5 NA 2.2 NA

Norway 1.5 2.0 0.5 1.1 2.1 1.7 1.6

Sweden 4.4 2.5 5.7 7.1 4.7 10.4 6.5

United Kingdom 3.6 4.1 3.3 2.6 3.7 2.1 5.6

Output

United States 3.0 2.4 3.6 5.4 0.3 2.3 4.5

Canada 2.5 1.8 2.4 5.9 -0.6 2.4 0.1

Australia 1.7 1.6 0.9 2.6 2.0 4.4 1.7

Japan 2.8 4.7 0.4 2.0 1.0 -2.6 9.6

Korea 8.6 10.1 8.4 7.9 4.8 7.6 4.8

Taiwan 5.9 7.5 4.9 5.6 2.1 7.4 5.7

Belgium 1.9 2.6 0.6 2.9 0.3 0.1 0.8

Denmark 1.2 1.0 2.0 1.6 -0.4 -0.6 -0.2

France 2.0 2.0 1.1 3.5 1.1 0.9 -0.5

Germany2 0.6 1.2 -0.7 1.2 -0.3 -0.7 0.2

Italy 1.3 2.0 1.5 1.2 -1.0 -1.2 -1.4

Netherlands 1.9 2.5 1.8 2.6 -1.4 -0.8 -2.8

Norway 0.0 -0.4 1.1 1.0 -1.7 -0.7 -3.8

Sweden 3.4 1.8 3.7 7.4 2.0 5.7 2.6

United Kingdom 0.6 0.9 0.5 1.3 -1.4 -3.1 0.4

Continued on next page

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9

Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Total hours

United States -1.1 -0.6 -0.1 -0.2 -6.2 -7.1 -4.8

Canada 0.0 -0.2 -1.3 2.6 -1.4 -1.7 0.1

Australia -1.4 -1.2 -2.0 -1.2 -1.5 1.0 -2.0

Japan -1.0 0.8 -2.8 -2.0 -3.1 -4.8 -1.3

Korea NA NA -1.1 -2.6 -1.0 -2.0 -3.9

Taiwan 0.1 1.2 -0.3 0.1 -3.3 -0.1 2.1

Belgium -1.6 -1.6 -2.5 -0.1 -2.9 -4.0 -3.7

Denmark -1.1 -1.1 -0.6 -0.8 -2.7 -3.7 -3.6

France -2.1 -2.1 -2.8 -1.0 -2.3 -3.8 -2.3

Germany2 -1.8 -0.9 -3.9 -1.5 -2.0 -2.7 -2.4

Italy -0.3 -0.2 -0.7 0.1 -0.3 0.5 -0.4

Netherlands NA -1.0 -1.7 0.0 NA -2.9 NA

Norway -1.4 -2.3 0.6 -0.1 -3.7 -2.4 -5.4

Sweden -1.0 -0.7 -1.9 0.3 -2.6 -4.2 -3.6

United Kingdom -2.9 -3.1 -2.8 -1.3 -4.9 -5.1 -5.0

Employment

United States -1.2 -0.8 -0.5 -0.1 -5.5 -7.3 -4.7

Canada 0.0 -0.2 -1.5 2.4 -0.7 -1.3 0.5

Australia -1.5 -1.3 -2.3 -1.1 -1.4 1.0 -1.9

Japan -0.7 1.0 -1.6 -1.9 -3.1 -4.7 -2.0

Korea NA NA -0.8 -2.5 0.0 -1.2 -3.7

Taiwan 0.7 2.0 -0.3 0.4 -1.6 -1.8 1.7

Belgium -1.6 -1.6 -2.2 -0.7 -2.2 -4.0 -3.3

Denmark -1.0 -0.5 -1.2 -0.9 -2.6 -3.3 -3.1

France -1.4 -1.6 -2.5 -0.3 -0.9 -1.7 -2.2

Germany2 -1.3 -0.1 -4.2 -0.8 -1.5 -2.2 -2.7

Italy -0.7 -0.9 -1.6 0.1 0.3 0.8 0.2

Netherlands -0.9 -0.8 -1.6 0.2 -2.1 -2.9 -3.0

Norway -1.3 -2.2 0.3 0.1 -2.9 -1.2 -4.6

Sweden -1.4 -1.0 -3.5 0.0 -1.5 -2.7 -2.8

United Kingdom -2.7 -2.9 -2.6 -1.4 -4.5 -4.4 -4.5

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10

Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Average hours

United States 0.1 0.2 0.4 -0.2 -0.7 0.2 -0.1

Canada 0.0 0.0 0.3 0.2 -0.6 -0.4 -0.4

Australia 0.1 0.1 0.3 -0.1 0.0 0.0 -0.1

Japan -0.4 -0.2 -1.3 -0.1 0.0 0.0 0.7

Korea NA NA -0.2 -0.1 -1.1 -0.7 -0.2

Taiwan -0.6 -0.8 0.0 -0.3 -1.8 1.7 0.4

Belgium 0.0 0.0 -0.3 0.6 -0.7 0.0 -0.4

Denmark -0.2 -0.6 0.6 0.1 -0.1 -0.4 -0.5

France -0.6 -0.5 -0.3 -0.7 -1.4 -2.1 -0.1

Germany2 -0.5 -0.9 0.3 -0.6 -0.5 -0.5 0.3

Italy 0.4 0.6 0.9 0.0 -0.6 -0.3 -0.6

Netherlands NA -0.2 0.0 -0.2 NA 0.0 NA

Norway -0.2 -0.1 0.3 -0.2 -0.9 -1.2 -0.8

Sweden 0.4 0.3 1.7 0.2 -1.1 -1.6 -0.9

United Kingdom -0.2 -0.2 -0.2 0.1 -0.4 -0.7 -0.5

Total labor compensation in manufacturing3

: National currency basis

 

United States 3.8 4.9 3.4 4.4 -0.7 -0.9 3.3

Canada 4.7 6.5 2.4 5.2 1.3 1.6 1.5

Australia NA NA 3.5 3.1 3.5 4.3 3.2

Japan 2.4 5.5 0.7 -1.1 -0.4 2.0 -0.5

Korea NA NA 17.6 5.4 6.4 7.9 5.1

Taiwan 7.9 13.5 6.8 3.6 -2.2 -4.3 3.7

Belgium 2.9 4.4 1.3 2.0 1.4 -0.5 0.3

Denmark 4.4 6.8 2.3 3.0 2.0 0.9 1.0

France 3.6 6.5 1.1 1.1 1.8 1.5 0.5

Germany2 2.9 4.6 2.3 1.6 0.3 -0.6 -0.7

Italy 7.0 11.4 4.2 2.9 2.8 3.0 2.8

Netherlands 3.0 3.1 2.8 3.4 2.7 3.5 0.6

Norway 5.0 6.5 4.0 5.0 1.5 3.4 -1.4

Sweden 5.6 8.4 2.0 5.3 2.1 1.0 -0.1

United Kingdom 4.5 7.1 2.4 3.4 0.1 0.1 0.2

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11

Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Hourly compensation: National currency basis

 

United States 5.0 5.5 3.5 4.7 5.8 6.7 8.5

Canada 4.7 6.8 3.8 2.5 2.7 3.3 1.3

Australia NA NA 5.6 4.3 5.0 3.3 5.3

Japan 3.4 4.6 3.6 1.0 2.9 7.1 0.8

Korea NA NA 18.9 8.1 7.5 10.1 9.3

Taiwan 7.8 12.1 7.1 3.4 1.2 -4.2 1.6

Belgium 4.6 6.1 3.9 2.0 4.4 3.6 4.1

Denmark 5.6 7.9 2.9 3.8 4.8 4.9 4.8

France 5.8 8.8 4.0 2.2 4.2 5.4 2.9

Germany2 4.8 5.6 6.4 3.1 2.3 2.2 1.7

Italy 7.3 11.7 4.9 2.8 3.1 2.4 3.2

Netherlands NA 4.1 4.5 3.3 NA 6.5 NA

Norway 6.6 9.0 3.4 5.2 5.4 6.0 4.3

Sweden 6.7 9.1 4.0 5.1 4.8 5.5 3.7

United Kingdom 7.6 10.6 5.4 4.8 5.3 5.5 5.4

Unit labor costs3

: National currency basis

United States 0.7 2.5 -0.2 -0.9 -1.0 -3.2 -1.1

Canada 2.2 4.7 0.0 -0.6 2.0 -0.8 1.4

Australia NA NA 2.6 0.4 1.5 -0.1 1.4

Japan -0.4 0.8 0.3 -3.0 -1.4 4.7 -9.2

Korea NA NA 8.5 -2.4 1.5 0.3 0.3

Taiwan 1.9 5.5 1.9 -1.9 -4.2 -10.9 -1.9

Belgium 0.9 1.8 0.7 -0.9 1.1 -0.6 -0.5

Denmark 3.2 5.7 0.2 1.4 2.4 1.6 1.2

France 1.6 4.4 -0.1 -2.2 0.7 0.6 1.0

Germany2 2.3 3.3 3.1 0.4 0.6 0.1 -0.9

Italy 5.6 9.3 2.6 1.8 3.9 4.2 4.2

Netherlands 1.2 0.6 1.0 0.8 4.2 4.3 3.5

Norway 5.0 6.9 2.9 4.0 3.2 4.2 2.6

Sweden 2.2 6.5 -1.6 -1.9 0.0 -4.5 -2.6

United Kingdom 3.8 6.2 2.0 2.1 1.5 3.3 -0.2

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Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Unit labor costs3

: U.S. dollar basis

United States 0.7 2.5 -0.2 -0.9 -1.0 -3.2 -1.1

Canada 1.5 4.7 -3.2 -2.2 4.0 -2.2 13.6

Australia NA NA 1.5 -4.3 5.4 5.1 21.6

Japan 2.3 4.6 9.4 -5.7 -3.8 1.6 -1.9

Korea NA NA 6.7 -9.5 -0.3 3.7 5.2

Taiwan 2.1 8.4 2.2 -5.1 -7.2 -12.7 -1.5

Belgium 0.1 0.6 3.3 -8.4 8.2 5.0 19.1

Denmark 2.2 4.1 2.3 -5.8 9.7 7.3 21.3

France 0.3 2.1 1.7 -8.9 7.8 6.2 20.9

Germany2 2.6 4.5 5.6 -7.2 7.7 5.7 18.6

Italy 2.5 5.7 -3.5 -3.2 11.2 10.0 24.8

Netherlands 1.3 1.5 3.6 -6.9 11.5 10.1 23.8

Norway 3.5 4.9 2.6 -2.7 11.0 17.4 15.6

Sweden -0.5 3.4 -5.2 -6.7 4.4 1.6 17.1

United Kingdom 2.7 4.5 -0.5 1.3 4.1 7.8 8.5

Exchange rates4

United States -- -- -- -- -- -- --

Canada -0.7 0.0 -3.2 -1.6 2.0 -1.4 12.1

Australia -2.2 -3.2 -1.1 -4.7 3.9 5.2 19.9

Japan 2.7 3.8 9.1 -2.7 -2.4 -2.9 8.0

Korea -3.7 -3.4 -1.7 -7.3 -1.7 3.3 4.9

Taiwan 0.2 2.7 0.3 -3.3 -3.1 -2.1 0.4

Belgium -0.8 -1.2 2.5 -7.6 7.0 5.6 19.7

Denmark -0.9 -1.5 2.0 -7.1 7.2 5.7 19.9

France -1.3 -2.2 1.8 -6.8 7.0 5.6 19.7

Germany2 0.2 1.1 2.5 -7.5 7.0 5.6 19.7

Italy -3.0 -3.3 -6.0 -4.9 7.0 5.6 19.7

Netherlands 0.1 0.9 2.6 -7.6 7.0 5.6 19.7

Norway -1.4 -1.9 -0.3 -6.4 7.6 12.7 12.7

Sweden -2.6 -2.9 -3.7 -4.9 4.3 6.4 20.3

United Kingdom -1.1 -1.6 -2.4 -0.8 2.5 4.4 8.8

r = revised NA = not available

1

Rates of change based on the compound 3Adjusted for employment taxes and 

 rate method. government subsidies to estimate the 

actual cost to employers. 

2

Data for years before 1991 pertain to the

 former West Germany. 4

Value of foreign currency relative to 

the U.S. dollar.

r r r r r r

r

r r r r

r

r r r r r r r

r

r r

r r r r r

r r r

r r r r r r
13

Trade-weighted unit labor costs

BLS constructs indexes of U.S. unit labor cost trends relative to a trade-weighted 

average of unit labor cost trends in the other economies to take account of differences in 

the relative importance of foreign economies to U.S. trade in manufactured goods. 

Relative trade-weighted unit labor cost indexes are calculated on both a national currency 

and a U.S. dollar basis. In this release, the relative U.S. trade-weighted indexes are 

estimated against 12 economies for which comparable data are available over this period; 

the indexes underlying this chart are shown in table C. 

Chart 3 begins in 1979, a year in which U.S. manufacturing output reached a business 

cycle peak. 

Chart 3. U.S. manufacturing unit labor 

costs relative to 12 competitors(1), 1979-2003

65

75

85

95

105

115

125

1979

1980

1981

1982

1983

1984

19851986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

(1979 = 100)

U.S. dollar 

basis

National 

currency 

basis

(1) Data for Australia and Korea are not available for 1979. 

These two countries have been omitted from this chart.

In the chart, the solid line indicates that U.S. unit labor costs rose faster than 

"competitors" costs from 1979 to 1986 on a U.S. dollar basis. In most years from 1986 to 

1995, U.S. costs either rose at a slower rate than the "competitors" costs or fell at a faster 

rate. From 1996 to 1998, however, the strength of the U.S. dollar caused relative U.S. 

unit labor costs to rise. After a dip in 1999, the index of relative U.S. unit labor costs 

rose in 2000 and 2001, only to dip again after 2001 with a weakening of the U.S. dollar. 
14

Table C. U.S. manufacturing unit labor 

costs relative to 12 competitors(1), 1979-2003

Unit Labor Costs Unit Labor Costs

National Currency Basis U.S. Dollar Basis

Year Own Competitors' Own Competitors'

Index Index Ratio Index Index Ratio

1979 100.0 100.0 100.0 100.0 100.0 100.0

1980 111.4 110.3 101.0 111.4 110.0 101.2

1981 116.5 119.0 97.9 116.5 109.4 106.5

1982 124.2 126.7 98.0 124.2 105.5 117.7

1983 121.6 128.8 94.4 121.6 104.3 116.6

1984 121.0 130.0 93.1 121.0 99.3 121.9

1985 123.4 130.7 94.4 123.4 96.9 127.3

1986 128.9 136.2 94.7 128.9 122.9 104.8

1987 122.8 138.6 88.6 122.8 142.0 86.5

1988 123.9 138.5 89.4 123.9 152.8 81.1

1989 126.7 141.5 89.6 126.7 150.8 84.1

1990 130.6 147.3 88.7 130.6 163.1 80.1

1991 134.0 152.9 87.6 134.0 172.4 77.7

1992 135.0 156.3 86.4 135.0 180.4 74.8

1993 134.0 156.9 85.4 134.0 176.7 75.8

1994 131.4 154.3 85.1 131.4 176.7 74.4

1995 129.1 153.8 84.0 129.1 186.1 69.4

1996 126.4 154.9 81.6 126.4 177.9 71.0

1997 124.5 152.5 81.6 124.5 162.7 76.5

1998 123.1 154.0 79.9 123.1 155.6 79.1

1999 121.8 151.3 80.6 121.8 157.6 77.3

2000 123.1 145.9 84.4 123.1 147.7 83.4

2001 124.7 149.8 83.3 124.7 141.8 88.0

2002 120.8 151.4 79.7 120.8 144.3 83.7

2003 119.4 147.6 80.9 119.4 157.4 75.9

(1) Data for Australia and Korea are not available for 1979.

 These two countries have been omitted from this table.
15

Technical Notes

The comparisons in this release make use of data made available to BLS as of midJanuary 2005 by the statistical agencies of the individual countries. 

Labor productivity is defined as real output per hour worked. Although the labor 

productivity measure presented in this release relates output to the hours worked of 

persons employed in manufacturing, it does not measure the specific contributions of 

labor as a single factor of production. Rather, it reflects the joint effects of many 

influences, including new technology, capital investment, capacity utilization, energy use, 

and managerial skills, as well as the skills and efforts of the workforce. 

Unit labor costs are defined as the cost of labor input required to produce one unit of 

output. They are computed as compensation in nominal terms divided by real output. 

The Bureau of Labor Statistics constructs trends of manufacturing labor productivity, 

hourly compensation costs, and unit labor costs from three basic aggregate measures – 

output, total labor hours, and total compensation. The hours and compensation measures 

refer to employees (wage and salary earners) in Belgium and Taiwan. For all other 

economies, the measures refer to all employed persons, including employees, selfemployed persons, and unpaid family workers. For all of the economies, the term “hours” 

refers to hours worked. 

In general, the measures relate to total manufacturing as defined by the International 

Standard Industrial Classification (ISIC). However, the measures for France include parts 

of mining. From 1987 forward, data for the United States are in accordance with the 

North American Industrial Classification System (NAICS 97). Prior to that, they are in 

accordance with the Standard Industrial Classifications (SIC 87, 1987-1997; SIC 72, 

1950-1986). Canadian output and compensation data from 1961, and employment and 

hours data from 1997, are in accordance with the NAICS 97. For prior years they are 

based on the Canadian SIC 80. 

For most countries, the data for the most recent years are based on the United Nations 

System of National Accounts 1993 (SNA 93) or its sub-system, the European System of 

Integrated National Accounts (ESA 95). For other countries and for earlier years, data 

were compiled according to previously used systems. 

To obtain historical time series, BLS may link together data series which were 

compiled according to different accounting systems by the countries' statistical agencies. 

Output. For most countries, the output measures are real value added in 

manufacturing from national accounts. However, output for Japan prior to 1970 and for 

the Netherlands prior to 1960 are indexes of industrial production. The manufacturing 

value added measures for the United Kingdom are essentially identical to their indexes of 

industrial production. 

The output measure for manufacturing in the United States is the chain-weighted 

index of real gross product originating (deflated value added), introduced by the Bureau 

of Economic Analysis (BEA) of the U.S. Department of Commerce in August 1996. 

Because these value added output data for U.S. manufacturing industries are not available 

for years prior to 1977, the comparative U.S. measures of output, output per hour, and 
16

unit labor costs begin with 1977. For more information on the U.S. measure, see 

“Improved Estimates of Gross Product by Industry for 1947-98,” Survey of Current 

Business, June 2000, pp. 24-38 and “Gross Domestic Product by Industry for 1987-

2000,” Survey of Current Business, November 2004, pp. 33-53. 

The U.S. output series used for international comparisons differs from the 

manufacturing output series that BLS publishes as part of its major sector productivity 

and costs measures for the United States. While both series are based on annuallychanging price weights, the international comparisons program uses a value added output 

concept, while the major sector series is on a sectoral output basis and begins with 1949. 

Sectoral output is gross output less intrasector sales and transfers. The U.S. major sector 

productivity and costs measures can be found at Hhttp://www.bls.gov/lpc/home.htmH. For 

information on sectoral output, see “Measurement of productivity growth in U.S. 

manufacturing,” Monthly Labor Review, July 1995, pp. 13-28. 

Value added measures have been used for the international comparisons series 

because the data are more readily available from the countries' national accounts, whereas 

sectoral output would require a complex estimation procedure. Also, although BLS has 

determined that sectoral output is the correct concept for U.S. measures of productivity, 

there are other considerations that may make value added a better concept for 

international comparisons of labor productivity, such as differences among countries in 

the extent of vertical integration of industries. 

Estimation of manufacturing real output using moving price weights, as 

recommended by SNA 93, is becoming prevalent. However, many earlier time periods 

within the historical real output series have been estimated using fixed price weights, 

with the weights updated periodically (for example, every 5 or 10 years). 

Measures of real output also may differ among countries because of different 

approaches to estimating the prices of high-technology products like computers and, in 

general, of products that undergo rapid quality change. 

Labor Input. For the United States, the hours worked data are taken from the BLS major 

sector productivity program. The aggregate hours worked series used for France (from 

1970 forward), Canada, Denmark, Norway, and Sweden are series published with the 

national accounts. For the former West Germany after 1959 and Germany from 1991, 

BLS uses a measure of aggregate hours worked that was developed by a research institute 

of the German Ministry of Labor for use with the national accounts employment figures. 

For the United Kingdom from 1992, an annual index of total manufacturing hours is 

used. For all other countries, the U.K. before 1992, and the former West Germany before 

1959, BLS constructs its own estimates of aggregate hours, using employment figures 

published with the national accounts, or other comprehensive employment series, and 

estimates of average annual hours worked. The Italian hours worked series is based on 

estimates by the Bank of Italy. 

Compensation (Labor Cost). The compensation measures are from national accounts 

data and are in nominal terms. Compensation includes employer expenditures for legally 

required insurance programs and contractual and private benefit plans, in addition to all 

payments made in cash or in kind directly to employees. When data for the self-employed 
17

are not available, total compensation is estimated by assuming the same average 

compensation for the self-employed as for employees. 

Labor cost is defined as compensation plus employment taxes minus employment 

subsidies, i.e. the cost to employers of hiring labor. For most countries, labor cost is the 

same as compensation. However, for Australia, Canada, France, and Sweden, 

compensation is increased to account for important taxes on payroll or employment. For 

the United Kingdom, compensation is reduced between 1967 and 1991 to account for 

subsidies. 

Data for Germany. German data prior to 1991 pertain to the former West Germany. 

The data series are linked in 1991. 

Data for Australia. Australian data are published by fiscal years, which run from July 

1 through June 30. The Australian Bureau of Statistics provides unpublished calendaryear data for real value added, employment, and hours worked. For compensation, the 

Bureau of Labor Statistics estimates calendar-year series using two-year moving averages 

of the data for fiscal years. Manufacturing compensation data are not available for years 

prior to 1990. 

Current Indicators. The measures for recent years may be based on current indicators 

of output (such as industrial production indexes), employment, average hours, and hourly 

compensation until national accounts and other statistics, normally used for the long-term 

measures, become available. 

Trade-Weighted Measures. The trade weights for Canada, Japan, and the European 

countries were obtained by re-scaling a series of weights, developed by the International 

Monetary Fund, based on average trade flows over the 1989-91 period. These weights are 

based on aggregate trade data for total manufacturing and take account of both bilateral 

trade and the relative importance of "third country" markets. The 1989-91 weights do not 

include Taiwan. BLS developed weights for Taiwan by using data from an earlier study 

from the International Monetary Fund and other sources. The weight used for Germany is 

based on the trade weight of the former West Germany. 

The following weights were used for the entire period for which trade-weighted unit 

labor cost measures are produced: 

Country Weight Country Weight 

 

 Canada 25.31 Germany 11.61 

 Japan 30.57 Italy 4.60 

 Taiwan 5.79 Netherlands 2.25 

 Belgium 2.14 Norway 0.48 

 Denmark 0.48 Sweden 1.89 

 France 5.90 United Kingdom 8.99 

Level Comparisons. The BLS measures are limited to trend comparisons. BLS does 

not prepare level comparisons of manufacturing productivity and unit labor costs because 

of data limitations and technical problems in comparing the levels of manufacturing 

output among countries. Each country measures manufacturing output in its own 
18

currency units. To compare outputs among countries, a common unit of measure is 

needed. Market exchange rates are not suitable as a basis for comparing output levels. 

What is needed are purchasing power parities, which are the number of foreign currency 

units required to buy goods and services equivalent to what can be bought with one unit 

of U.S. currency. 

Purchasing power parities are available for total gross domestic product (GDP) from 

the Organization for Economic Cooperation and Development (OECD). However, these 

parities are derived for expenditures made by consumers, business, and government for 

goods and services – not for value added by industry. Therefore, they do not provide 

purchasing power parities by industry. The parities developed for total GDP are not 

suitable for each component industry, such as manufacturing. 

European exchange rates. On Jan. 1, 1999, 11 European countries joined the 

European Monetary Union (EMU). Greece joined on Jan. 1, 2001. The euro, the official 

currency of the EMU, was established at fixed conversion rates to the previous national 

currencies of EMU members. Data on manufacturing value added and labor 

compensation for euro-area countries are now reported in euros. And exchange rates 

between the previous national currencies of euro-area countries and the U.S. dollar are no 

longer reported; only the exchange rate between the euro and the U.S. dollar is available. 

In order to maintain historical continuity of data series, data for euro-area countries 

for years before 1999 have been converted to euros by applying the fixed euro/national 

currency conversion rates. For countries and years where output, compensation, and 

exchange rates are converted from national currency units into euros, the following fixed 

conversion rates are used: 

 

1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire 

 6.55957 French francs 2.20371 Netherlands guilders 

 1.95583 German marks 

 

The currency exchange rates cited in this publication are annual averages of daily 

buying rates in New York City.