Internet address: http://www.bls.gov USDL 05-1990 

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

Media contact: (202) 691-5902 Thursday, October 27, 2005 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, 2004 

Among fourteen countries under comparison, seven, including the United States, had 

manufacturing productivity gains of over 4.5 percent in 2004, according to the U.S. 

Department of Labor’s Bureau of Labor Statistics. Korea registered the largest gain 

(+12.1 percent), followed by Sweden (+9.3 percent). Manufacturing productivity 

increased in all of the compared economies except Italy and Australia. (See chart 1.) 

U.S. productivity growth in manufacturing in 2004 was 4.7 percent, about half the 

increase of 2003, and less than the average yearly increases over the last decade. It was 

greater, however, than the average annual growth rate since 1979. Six of the other 13 

economies for which comparisons are available also had productivity growth in 2004 that 

exceeded their annual average increases over the 1979-2004 period. (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, 2003-2004

4.7

2.9

-0.5

6.9

4.7

3.2

0.9

3.5

4.6

-0.6

2.1

9.3

5.0

12.1

-2

0

2

4

6

8

10

12

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 11 of 

the 13 economies for which data were available. Five economies posted greater declines 

than the United States (-2.4 percent). Unit labor costs declined most in Sweden (-6.4 

percent), reflecting that country's strong productivity growth. 

In 2004, the dollar decreased in value against the currencies of all the other 14 

economies compared, although generally less than in 2003. The decline was particularly 

large against the Australian dollar and the British pound. As a result of the dollar's 

devaluation, besides the United States, only Taiwan showed a decline in dollardenominated unit labor costs. (See chart 2 and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2003-2004

-1.4

-6.4

-0.2

-1.4

3.2

-3.8

-1.0

3.4

-3.2

-0.9

-6.0

-3.0

-2.4

10.5

2.9

4.9

8.3

13.4

5.7

8.8

13.6

-0.2

3.2

0.8

4.4

-2.4

-10 -8 -6 -4 -2 0 2 4 6 8 10 12 14

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Taiwan

Korea

Japan

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, 2003-2004

 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 4.7 4.3 - 0.4 - 1.2 0.8 1.8 2.2 - 2.4 - 2.4 ---

Canada 2.9 3.8 0.8 - 1.0 1.8 0.7 - 0.1 - 3.0 4.4 7.6

Australia - 0.5 0.0 0.5 0.6 - 0.1 NA NA NA NA 12.9

Japan 6.9 5.5 - 1.3 - 2.4 1.1 - 0.8 0.5 - 6.0 0.8 7.2

Korea 12.1 11.4 - 0.6 0.5 - 1.1 10.4 11.1 - 0.9 3.2 4.1

Taiwan 4.7 9.4 4.5 3.2 1.3 5.9 1.3 - 3.2 - 0.2 3.1

Belgium 3.2 2.3 - 0.9 - 3.2 2.4 NA NA NA NA 9.9

Denmark 0.9 - 2.8 - 3.6 - 3.0 - 0.6 0.6 4.4 3.4 13.6 9.8

France 3.5 1.0 - 2.4 - 2.4 0.0 0.0 2.5 - 1.0 8.8 9.9

Germany 4.6 4.6 0.0 - 1.5 1.5 0.6 0.6 - 3.8 5.7 9.9

Italy - 0.6 0.0 0.5 - 0.3 0.9 3.2 2.6 3.2 13.4 9.9

Netherlands NA 1.2 NA - 4.0 NA - 0.2 NA - 1.4 8.3 9.9

Norway 2.1 1.8 - 0.3 - 3.0 2.8 1.6 1.9 - 0.2 4.9 5.1

Sweden 9.3 9.4 0.1 - 1.9 2.0 2.4 2.3 - 6.4 2.9 9.9

United Kingdom 5.0 1.8 - 3.0 - 3.7 0.7 0.3 3.5 - 1.4 10.5 12.1

(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 1950-2004 

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

website at address http://www.bls.gov/fls/home.htm. 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 flspr@bls.gov, 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-August 2005. 

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

not available at the time of the February 2005 report. 

United States

The U.S. output series in this release is a value-added measure produced by the Bureau of 

Economic Analysis (BEA) as part of the integrated annual GDP-by-industry and inputoutput (I-O) accounts. From 1987 they are based on the 1997 North American Industry 

Classification System (NAICS). Output for 2004 is an advance estimate by the BEA, 

incorporating summary source data from the final estimate of fourth-quarter GDP from 

the national income and product accounts. Additional details are available in Erich H. 

Strassner and Thomas F. Howells III, “Annual Industry Accounts: Advance Estimates for 

2004,” Survey of Current Business, May 2005. 

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 for fiscal year 2005, needed for 

estimating calendar year 2004, are not yet available. Such data also are not available for 

years prior to 1990. 

Belgium

Data for compensation in manufacturing for 2004 are not available in this report. 

Netherlands

Data for hours worked in manufacturing have not been released for 2004. Consequently, 

2004 estimates of labor productivity and hourly compensation are not available for this 

report. 
- 5 -

Manufacturing productivity, output, and labor input

The growth in labor productivity (output per hour) in U.S. manufacturing was 4.7 

percent in 2004. While this growth rate remained below the U.S. average annual gains in 

recent periods, it exceeded the gains of the period since 1979. (See table B.) In 2004, 8 

of the 14 economies compared posted manufacturing productivity gains between 2.1 and 

5.0 percent. 

From 2000 to 2004, of the 14 economies for which comparable data are available, 

only Korea posted higher average annual manufacturing productivity growth than the 

United States. Other economies with relatively high average annual productivity gains 

over 2000–2004 were Sweden, Taiwan, and Japan. Manufacturing productivity declined 

in Italy during these years, while Canada and Denmark recorded the smallest increase. 

Productivity data for 2004 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. U.S. output growth was only slightly lower in 2004 than in 2003. 

Nonetheless, the 2004 productivity increase was only half of the 2003 increase, a 

reflection of the slower decline of hours worked. U.S. manufacturing productivity and 

output increased in every period shown in table B. Productivity increased more rapidly 

than output, as aggregate hours declined throughout the period. A similar pattern 

emerged for most of the other economies compared. (See table B.) 

Of the 12 economies that experienced growth in manufacturing labor productivity in 

2004, 11 also had increases in manufacturing output. Output increased most in Korea 

(+11.4 percent). Other economies where manufacturing output increased by more than 4 

percent in 2004 were the United States, Sweden, Taiwan, Japan, and Germany. Only 

Denmark showed a decline in output. (See table A.) 

Manufacturing hours declined by 0.4 percent in the United States in 2004, continuing 

a downward trend in hours during the period since 1979. In fact, the U.S. hours decline 

reflects a trend in most industrial economies, as hours worked fell over the 1979–2004 

period in 11 of the 13 economies for which hours data are available over that period. 

Nevertheless, hours worked in 2004 rose in five economies and remained constant in one. 

Taiwan experienced the largest increase (+4.5 percent). (See table B.) The U.S. decline 

was smaller than those in 6 other economies. 

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

average hours worked per person. In 2004, manufacturing employment fell in 12 of the 

15 economies. With the exception of Italy, European employment declines in 2004 

accelerated compared to the average annual declines of the last 25 years. By contrast, the 

2004 U.S. decline (-1.2 percent) was the same as the average annual decline since 1979. 

In 2004, employment increased most in Taiwan (+3.2), and also grew in Australia and 

Korea. (See tables A and B.) 
- 6 -

In 2004, average hours worked per person in manufacturing increased in 10 of the 14 

economies for which hours data are available, while remaining constant in France and 

decreasing in only Korea, Denmark, and Australia. Average hours increased most in 

Norway (2.8 percent) and Belgium (2.4 percent). In the United States, average hours 

worked rose by 0.8 percent. 

Of the eight countries to experience aggregate hour declines, only in Korea did these 

declines occur because average hours declined more than employment increased. 

Generally, aggregate hours declined because employment declined more than average 

hours increased. (See table A.) 

Manufacturing hourly compensation and unit labor costs

In 2004, manufacturing hourly compensation, expressed in national currency units, 

increased in 11 of the 12 economies for which comparable data are available. Only 

Canada’s hourly compensation declined. Korea had the largest growth rate (+11.1 

percent). Most of the increases (six economies) were between 1.3 and 2.6 percent. The 

U.S. hourly compensation increase (+2.2 percent) was less than half its average annual 

growth rate for 1979–2004. Hourly compensation data for 2004 are not estimated for 

Australia, Belgium, and the Netherlands, because either compensation or hours data are 

not available. (See table B.) 

Relative changes in manufacturing 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 2004, both hourly compensation 

and labor productivity increased in 10 of the economies compared, so that the changes in 

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

labor costs, in national currency units, fell in 11 of the 13 economies compared. The 

drop was greatest in Sweden (-6.4 percent) and Japan (-6.0 percent), reflecting both 

countries' large increases in manufacturing productivity. 

In the United States manufacturing unit labor costs declined by 2.4 percent as 

productivity gains outstripped hourly compensation gains. This drop in U.S. unit labor 

costs followed a 1.4 percent decline in 2003, and was almost twice the average annual 

reductions over the 2000-2004 period. In 2004, unit labor costs increased only in 

Denmark (+3.4 percent) and Italy (+3.2 percent). (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 2004, the U.S. dollar depreciated against 

the currencies of all the economies compared. However, the 2004 depreciation of the 

U.S. dollar was smaller than in 2003 for all currencies except the British pound and 

Taiwan dollar. In 2003 the U.S. dollar experienced double-digit depreciation against 6 of 

the 10 currencies compared, as opposed to only 2 currencies in 2004 – the Australian 

dollar and the British pound. (See tables A and B.) 
- 7 -

The depreciation of the U.S. dollar contributed to the increase in U.S. dollardenominated manufacturing unit labor costs in most of the other economies being 

compared. However, compared with 2003, the increases in 2004 held at single-digit rates 

in all economies except for Denmark, Italy, and the United Kingdom. Besides the United 

States, U.S. dollar-denominated unit labor costs declined only in Taiwan. The Taiwan 

dollar did not appreciate against the U.S. dollar (+3.1 percent) enough to counter a 3.2 

percent decline in local currency-denominated unit labor costs. The depreciation of the 

U.S. dollar in 2003 and 2004 was the main contributing factor to the increase in unit labor 

costs, denominated in U.S. dollars, in most of the economies compared. (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, 1979-2004

Average annual rates of change1

Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004

or area

Output per hour

United States 4.2 3.0 3.7 5.7 6.4 9.9 4.7

Canada 2.6 2.0 3.8 3.2 1.8 2.3 2.9

Australia 3.0 2.8 2.9 3.9 2.5 3.8 -0.5

Japan 4.0 3.8 3.3 4.1 5.0 11.0 6.9

Korea NA NA 9.6 10.8 6.9 7.0 12.1

Taiwan 5.7 6.2 5.2 5.5 5.4 3.6 4.7

Belgium 3.6 4.2 3.2 2.9 3.3 4.7 3.2

Denmark 2.2 2.1 2.7 1.8 2.0 5.0 0.9

France 4.2 4.2 4.6 5.1 2.5 0.3 3.5

Germany2 2.7 2.1 2.9 3.7 2.8 2.5 4.6

Italy 1.5 2.2 2.2 1.0 -0.7 -0.9 -0.6

Netherlands NA 3.5 3.5 2.5 NA 4.9 NA

Norway 1.6 2.0 0.5 1.1 2.3 1.4 2.1

Sweden 4.6 2.5 5.7 7.1 5.8 6.5 9.3

United Kingdom 3.5 3.8 3.3 2.6 3.9 4.9 5.0

Output

United States 3.0 2.3 3.6 5.4 1.3 4.5 4.3

Canada 2.5 1.8 2.4 5.9 0.5 0.4 3.8

Australia 1.6 1.6 0.9 2.6 1.5 1.7 0.0

Japan 2.9 4.7 0.4 2.0 2.1 9.6 5.5

Korea 8.8 10.1 8.4 7.9 6.6 5.5 11.4

Taiwan 6.0 7.5 4.9 5.6 3.9 5.7 9.4

Belgium 2.0 2.6 0.6 2.9 0.8 0.8 2.3

Denmark 1.0 1.0 2.1 1.7 -1.1 -0.4 -2.8

France 2.0 2.0 1.7 3.9 0.3 -0.6 1.0

Germany2 0.9 1.2 -1.0 2.2 1.1 -0.2 4.6

Italy 1.3 2.0 1.5 1.2 -0.8 -1.3 0.0

Netherlands 1.9 2.5 1.8 2.6 -0.3 -1.6 1.2

Norway 0.1 -0.4 1.1 1.0 -0.7 -4.1 1.8

Sweden 3.6 1.8 3.7 7.4 3.8 2.6 9.4

United Kingdom 0.6 0.9 0.5 1.3 -0.7 0.1 1.8

Continued on next page

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
- 9 -

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

Manufacturing, 15 countries or areas, 1979-2004

Average annual rates of change1

Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004

or area

Total hours

United States -1.1 -0.6 -0.1 -0.2 -4.8 -4.9 -0.4

Canada 0.0 -0.2 -1.3 2.6 -1.3 -1.9 0.8

Australia -1.3 -1.2 -2.0 -1.2 -1.0 -2.0 0.5

Japan -1.1 0.8 -2.8 -2.0 -2.7 -1.3 -1.3

Korea NA NA -1.1 -2.6 -0.3 -1.3 -0.6

Taiwan 0.3 1.2 -0.3 0.1 -1.4 2.1 4.5

Belgium -1.6 -1.6 -2.5 -0.1 -2.4 -3.7 -0.9

Denmark -1.1 -1.1 -0.7 -0.1 -3.0 -5.2 -3.6

France -2.1 -2.1 -2.8 -1.1 -2.2 -0.8 -2.4

Germany2 -1.7 -0.9 -3.8 -1.4 -1.6 -2.6 0.0

Italy -0.2 -0.2 -0.7 0.1 -0.1 -0.5 0.5

Netherlands NA -1.0 -1.7 0.0 NA -6.3 NA

Norway -1.4 -2.3 0.6 -0.1 -3.0 -5.4 -0.3

Sweden -0.9 -0.7 -1.9 0.3 -1.9 -3.6 0.1

United Kingdom -2.8 -2.8 -2.8 -1.3 -4.4 -4.6 -3.0

Employment

United States -1.2 -0.8 -0.5 -0.1 -4.5 -4.8 -1.2

Canada -0.1 -0.2 -1.5 2.4 -1.3 -1.4 -1.0

Australia -1.4 -1.3 -2.3 -1.1 -0.9 -1.9 0.6

Japan -0.7 1.0 -1.6 -1.9 -3.0 -2.2 -2.4

Korea NA NA -0.8 -2.5 0.8 -1.2 0.5

Taiwan 0.8 2.0 -0.3 0.4 -0.4 1.7 3.2

Belgium -1.6 -1.6 -2.2 -0.7 -2.4 -3.3 -3.2

Denmark -1.1 -0.5 -1.2 -1.2 -2.5 -4.7 -3.0

France -1.5 -1.6 -2.5 -0.3 -1.1 -0.6 -2.4

Germany2 -1.3 -0.1 -4.2 -0.8 -1.5 -2.6 -1.5

Italy -0.7 -0.9 -1.6 0.1 0.2 0.2 -0.3

Netherlands -1.0 -0.8 -1.6 0.2 -2.5 -3.2 -4.0

Norway -1.4 -2.2 0.3 0.1 -3.1 -4.7 -3.0

Sweden -1.4 -1.0 -3.5 0.0 -1.6 -2.8 -1.9

United Kingdom -2.6 -2.6 -2.6 -1.4 -4.4 -4.8 -3.7

Continued on next page

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
- 10 -

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

Manufacturing, 15 countries or areas, 1979-2004

Average annual rates of change1

Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004

or area

Average hours

United States 0.1 0.2 0.4 -0.2 -0.3 -0.1 0.8

Canada 0.1 0.0 0.3 0.2 0.0 -0.5 1.8

Australia 0.1 0.1 0.3 -0.1 0.0 -0.1 -0.1

Japan -0.3 -0.2 -1.3 -0.1 0.3 0.9 1.1

Korea NA NA -0.2 -0.1 -1.0 -0.1 -1.1

Taiwan -0.6 -0.8 0.0 -0.3 -1.0 0.4 1.3

Belgium 0.1 0.0 -0.3 0.6 0.1 -0.4 2.4

Denmark 0.0 -0.6 0.6 1.1 -0.5 -0.5 -0.6

France -0.6 -0.5 -0.3 -0.8 -1.0 -0.2 0.0

Germany2 -0.4 -0.9 0.4 -0.6 -0.1 0.0 1.5

Italy 0.4 0.6 0.9 0.0 -0.3 -0.7 0.9

Netherlands NA -0.2 0.0 -0.2 NA -3.1 NA

Norway 0.0 -0.1 0.3 -0.2 0.1 -0.8 2.8

Sweden 0.5 0.3 1.7 0.2 -0.3 -0.9 2.0

United Kingdom -0.1 -0.2 -0.2 0.1 0.0 0.2 0.7

Total labor compensation in manufacturing3

: National currency basis

 

United States 3.7 4.9 3.4 4.4 0.0 3.0 1.8

Canada 4.6 6.5 2.4 5.2 1.2 1.4 0.7

Australia NA NA 3.5 3.1 NA 3.2 NA

Japan 1.9 5.5 0.7 -1.1 -2.2 -0.6 -0.8

Korea 14.2 19.6 17.6 5.4 7.0 3.5 10.4

Taiwan 7.8 13.5 6.8 3.6 -0.3 3.7 5.9

Belgium NA 4.4 1.3 2.0 NA 0.3 NA

Denmark 4.2 6.8 2.3 2.8 1.5 -0.4 0.6

France 3.5 6.5 1.1 1.1 1.5 3.1 0.0

Germany2 2.9 4.6 2.4 1.6 0.4 -0.5 0.6

Italy 6.8 11.4 4.2 2.9 2.9 2.7 3.2

Netherlands 2.9 3.1 2.8 3.4 1.8 0.6 -0.2

Norway 4.8 6.5 4.0 5.0 1.2 -1.4 1.6

Sweden 5.5 8.4 2.0 5.3 2.1 -0.3 2.4

United Kingdom 4.3 7.1 2.4 3.4 0.1 0.2 0.3

Continued on next page

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r
- 11 -

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

Manufacturing, 15 countries or areas, 1979-2004

Average annual rates of change1

Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004

or area

Hourly compensation: National currency basis

 

United States 4.9 5.5 3.5 4.7 5.0 8.3 2.2

Canada 4.6 6.8 3.8 2.5 2.5 3.4 -0.1

Australia NA NA 5.6 4.3 NA 5.3 NA

Japan 3.0 4.6 3.6 1.0 0.5 0.7 0.5

Korea NA NA 18.9 8.1 7.3 5.0 11.1

Taiwan 7.5 12.1 7.1 3.4 1.2 1.6 1.3

Belgium NA 6.1 3.9 2.0 NA 4.1 NA

Denmark 5.4 7.9 2.9 2.9 4.7 5.0 4.4

France 5.7 8.8 4.0 2.2 3.7 4.0 2.5

Germany2 4.7 5.6 6.4 3.1 2.1 2.2 0.6

Italy 7.1 11.7 4.9 2.8 3.0 3.2 2.6

Netherlands NA 4.1 4.5 3.3 NA 7.3 NA

Norway 6.3 9.0 3.4 5.2 4.3 4.3 1.9

Sweden 6.5 9.1 4.0 5.1 4.1 3.5 2.3

United Kingdom 7.2 10.2 5.4 4.7 4.7 5.1 3.5

Unit labor costs3

: National currency basis

United States 0.6 2.5 -0.2 -0.9 -1.3 -1.4 -2.4

Canada 2.0 4.7 0.0 -0.6 0.7 1.0 -3.0

Australia NA NA 2.6 0.4 NA 1.4 NA

Japan -0.9 0.8 0.3 -3.0 -4.2 -9.3 -6.0

Korea 5.0 8.6 8.5 -2.4 0.3 -1.9 -0.9

Taiwan 1.7 5.5 1.9 -1.9 -4.0 -1.9 -3.2

Belgium NA 1.8 0.7 -0.9 NA -0.5 NA

Denmark 3.1 5.7 0.2 1.1 2.6 0.0 3.4

France 1.4 4.4 -0.6 -2.7 1.1 3.7 -1.0

Germany2 1.9 3.3 3.4 -0.5 -0.7 -0.4 -3.8

Italy 5.5 9.3 2.6 1.8 3.7 4.1 3.2

Netherlands 0.9 0.6 1.0 0.8 2.1 2.3 -1.4

Norway 4.7 6.9 2.9 4.0 2.0 2.8 -0.2

Sweden 1.8 6.5 -1.6 -1.9 -1.6 -2.8 -6.4

United Kingdom 3.6 6.2 2.0 2.0 0.7 0.1 -1.4

Continued on next page

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
- 12 -

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

Manufacturing, 15 countries or areas, 1979-2004

Average annual rates of change1

Country 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004

or area

Unit labor costs3

: U.S. dollar basis

United States 0.6 2.5 -0.2 -0.9 -1.3 -1.4 -2.4

Canada 1.6 4.7 -3.2 -2.2 4.1 13.3 4.4

Australia NA NA 1.5 -4.3 NA 21.7 NA

Japan 1.9 4.6 9.4 -5.7 -4.3 -2.1 0.8

Korea 1.4 4.9 6.7 -9.5 0.0 2.9 3.2

Taiwan 2.0 8.4 2.2 -5.1 -5.5 -1.5 -0.2

Belgium NA 0.6 3.3 -8.4 NA 19.2 NA

Denmark 2.6 4.1 2.2 -6.1 10.7 19.9 13.6

France 0.6 2.1 1.2 -9.4 9.0 24.2 8.8

Germany2 2.5 4.5 5.9 -8.0 7.0 19.3 5.7

Italy 2.9 5.7 -3.5 -3.2 11.7 24.6 13.4

Netherlands 1.5 1.5 3.6 -6.9 10.0 22.4 8.3

Norway 3.5 4.9 2.6 -2.7 9.0 15.9 4.9

Sweden -0.4 3.4 -5.2 -6.7 4.0 17.0 2.9

United Kingdom 3.0 4.5 -0.5 1.2 5.6 8.9 10.5

Exchange rates4

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

Canada -0.4 0.0 -3.2 -1.6 3.4 12.1 7.6

Australia -1.7 -3.2 -1.1 -4.7 6.1 20.0 12.9

Japan 2.8 3.8 9.1 -2.7 -0.1 8.0 7.2

Korea -3.4 -3.4 -1.7 -7.3 -0.3 4.9 4.1

Taiwan 0.3 2.7 0.3 -3.3 -1.6 0.4 3.1

Belgium5 -0.4 -1.2 2.5 -7.6 7.7 19.7 9.9

Denmark -0.5 -1.5 2.0 -7.1 7.8 19.9 9.8

France5 -0.9 -2.2 1.8 -6.8 7.7 19.7 9.9

Germany2,5 0.6 1.1 2.5 -7.5 7.7 19.7 9.9

Italy5 -2.5 -3.3 -6.0 -4.9 7.7 19.7 9.9

Netherlands5 0.5 0.9 2.6 -7.6 7.7 19.7 9.9

Norway -1.1 -1.9 -0.3 -6.4 6.9 12.8 5.1

Sweden -2.1 -2.9 -3.7 -4.9 5.7 20.4 9.9

United Kingdom -0.6 -1.6 -2.4 -0.8 4.9 8.8 12.1

r = revised NA = not available

1

Rates of change based on the 3Adjusted for employment taxes and 5Euro area.

 compound rate method. government subsidies to estimate

 the actual cost to employers. 

2

Data for years before 1991 pertain 4Value of foreign currency relative to 

 to the former West Germany. 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
- 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 the period 

of comparison; the indexes underlying this chart are shown in table C. The trade weights 

used in this release represent a change from previous releases. (See Technical Notes.) 

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(1) competitors, 1979-2004

65

75

85

95

105

115

125

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

(1979 = 100)

U.S. dollar 

basis

National 

currency basis

(1) Australia and Belgium have been omitted because data for 1979 or 2004 are not available.

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

"competitors" costs from 1979 to 1985 on a U.S. dollar basis. In most years from 1986 to 

1996, U.S. costs either rose at a slower rate than the "competitors" costs or fell at a faster 

rate. From 1997 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(1) competitors, 1979-2004

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 111.9 112.2 99.7 111.9 110.6 101.2

1981 117.1 122.4 95.6 117.1 111.0 105.5

1982 125.3 132.2 94.7 125.3 110.5 113.3

1983 121.9 134.5 90.6 121.9 109.1 111.7

1984 121.8 135.1 90.2 121.8 103.2 118.1

1985 124.0 136.6 90.8 124.0 100.5 123.5

1986 129.0 142.4 90.6 129.0 119.8 107.7

1987 123.0 145.8 84.4 123.0 136.7 90.0

1988 124.1 148.1 83.8 124.1 149.4 83.1

1989 127.0 152.0 83.6 127.0 151.7 83.7

1990 130.8 159.3 82.2 130.8 164.7 79.5

1991 134.2 166.8 80.5 134.2 174.0 77.1

1992 135.2 170.5 79.3 135.2 178.5 75.8

1993 134.3 171.0 78.5 134.3 171.3 78.4

1994 131.7 168.3 78.2 131.7 168.3 78.2

1995 129.4 170.0 76.1 129.4 177.4 72.9

1996 126.6 172.9 73.2 126.6 174.2 72.7

1997 124.7 169.3 73.7 124.7 159.4 78.3

1998 123.3 170.5 72.3 123.3 148.3 83.1

1999 122.1 166.4 73.4 122.1 148.5 82.2

2000 123.4 161.5 76.4 123.4 140.5 87.8

2001 125.0 166.4 75.1 125.0 135.9 92.0

2002 121.7 165.4 73.6 121.7 136.2 89.4

2003 119.9 163.4 73.4 119.9 150.4 79.8

2004 117.1 158.5 73.9 117.1 157.4 74.4

(1) Australia and Belgium have been omitted because data for 1979 or 2004

 are not available.
- 15 -

Technical Notes

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

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 (Output: SIC 72; Labor Input and 

Compensation: SIC 87). Canadian output, employment, and hours data are in accordance 

with NAICS 97 beginning in 1997 while compensation data are also in accordance with 

NAICS 97 starting in 1961. 

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 national 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 http://www.bls.gov/lpc/home.htm. 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. 

Data for Recent Years. 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 used to calculate the relative unit labor 

cost indexes of the United States and the other economies are based on the relative dollar 

value of U.S. trade in manufactured commodities (exports plus imports) with each 

country or area in 2004. The trade data are compiled by the U.S. Census Bureau. This 

represents a change from previous releases, where the trade weights were based on a 

series of weights developed by the International Monetary Fund, and on trade flows over 

the 1989–91 period. 

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

labor cost measures are produced: 

Country Weight Country Weight 

Canada 37.53 Germany 10.54 

Japan 17.58 Italy 3.75 

Korea 7.01 Netherlands 3.41 

Taiwan 5.45 Norway 0.42 

Denmark 0.57 Sweden 1.55 

France 4.99 United Kingdom 7.20 

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 

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. 
- 18 -

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. 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.