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PRODUCTIVITY AND COSTS

Third Quarter 2002

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 2002. 

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

5.4 percent in the business sector, and

5.1 percent in the nonfarm business sector.

In both sectors, upward revisions to productivity were primarily due to increases in output larger 

than originally reported. 

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

5.5 percent in manufacturing,

8.8 percent in durable goods manufacturing, and

1.3 percent in nondurable goods manufacturing.

Manufacturing productivity rose less than reported on November 7. This reflects both a 

small downward revision to output and a small upward revision to hours. Output and hours in 

manufacturing, which includes about 16 percent of U.S. business sector employment, tend to 

vary more from quarter to quarter than data for the more 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 7).
2

Table A. Productivity and costs: Revised third-quarter 2002 measures

(Seasonally adjusted annual rates)

Sector

Productivity Output Hours

Hourly 

compensation

Real 

hourly 

compensation

Unit 

labor 

costs

Percent change from preceding quarter

Business 5.4 5.2 -0.2 5.3 3.4 -0.1

Nonfarm business 5.1 5.1 0.0 4.9 3.0 -0.2

Manufacturing 5.5 3.2 -2.2 4.4 2.5 -1.0

 Durable 8.8 4.9 -3.5 4.3 2.3 -4.2

 Nondurable 1.3 1.2 -0.1 4.9 3.0 3.5

Percent change from same quarter a year ago

Business 5.8 3.8 -1.9 3.5 1.9 -2.2

Nonfarm business 5.6 3.8 -1.8 3.3 1.7 -2.2

Manufacturing 5.8 0.8 -4.7 3.6 2.0 -2.1

 Durable 7.5 1.3 -5.8 3.7 2.1 -3.5

 Nondurable 3.4 0.2 -3.1 3.6 2.0 0.1

Business

From second quarter to third quarter of 2002, business sector productivity rose at an 

annual rate of 5.4 percent, as output increased 5.2 percent and hours of all persons engaged in the 

sector dropped 0.2 percent (table 1). The decline in hours reflects an underlying increase in 

employment (0.4 percent) and a decline in average weekly hours (-0.6 percent). Average weekly 

hours worked by all persons in the sector also declined in the second quarter of 2002, by 0.3 

percent, and dropped in ten of the last eleven quarters.

Hourly compensation increased 5.3 percent during the third quarter of 2002, up from the 

4.2-percent rise in the previous quarter. 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, rose 3.4 percent in the third 

quarter of 2002. 

Unit labor costs edged down 0.1 percent last quarter and have fallen in four of the last five

quarters. The implicit price deflator for the business sector, which reflects changes both in unit 

labor costs and in unit nonlabor payments, increased at a 0.4 percent annual rate in the third 

quarter of 2002, somewhat less than the 0.7-percent increase in the second quarter of 2002. 

Nonfarm business

Output per hour of all persons in the nonfarm business sector increased 5.1 percent 

during the third quarter of 2002 (table 2). Output rose 5.1 percent while hours of all persons 
3

were unchanged. As in the larger business sector, employment rose (0.6 percent) while average 

weekly hours fell (0.6 percent). The third quarter productivity increase was higher than the 1.7-

percent rise in the second quarter but lower than the increase registered in the first quarter of the 

year, 8.6 percent. 

Hourly compensation grew at a 4.9 percent annual rate in the third quarter of 2002, up 

from the 3.9 percent increase in the previous quarter. When the rise in consumer prices is taken 

into account, real hourly compensation rose at a 3.0 percent annual rate in the third quarter of 

2002. 

Unit labor costs fell 0.2 percent in the third quarter, following a 2.2 percent increase one 

quarter earlier. The implicit price deflator for nonfarm business rose 0.1 percent in the third 

quarter of 2002.

Manufacturing

Productivity increased 5.5 percent in manufacturing in the third quarter of 2002, as output 

increased 3.2 percent and hours of all persons fell 2.2 percent (seasonally adjusted annual rates). 

In durable goods industries, productivity grew 8.8 percent as output rose 4.9 percent and hours 

dropped 3.5 percent. Productivity grew much more slowly in the nondurable goods industries, 

1.3 percent, reflecting an output increase of 1.2 percent and a slight decline in hours, 0.1 percent 

(tables 3, 4, and 5).

Hourly compensation of all manufacturing workers rose 4.4 percent during the third 

quarter of 2002. In durable goods manufacturing, hourly compensation rose 4.3 percent during 

the third quarter. The increase in nondurable goods manufacturing was 4.9 percent. When the 

increase in consumer prices is taken into account, real hourly compensation for all manufacturing 

workers rose 2.5 percent in the third quarter.

Unit labor costs in manufacturing fell 1.0 percent in the third quarter, continuing a series 

of quarterly declines in these costs that began in the third quarter of 2001. Unit labor costs 

dropped 4.2 percent in durable goods manufacturing and rose 3.5 percent in nondurable goods 

manufacturing.

Nonfinancial Corporations 

Third-quarter 2002 measures of productivity and costs also were released for 

nonfinancial corporations (tables B and 6). Output per all-employee hour grew at a 5.7 percent 

annual rate, similar to the 5.8 percent increase in the previous quarter. Output increased 4.3 

percent in the third quarter, and hours of all employees fell 1.3 percent (seasonally adjusted 

annual rates). This decrease in employee hours is the eighth consecutive drop in this sector. 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.
4

Table B. Nonfinancial corporations: Third-quarter 2002 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

2002 III 5.7 4.3 -1.3 5.7 3.7 0.0 -10.4 -0.6

Percent change from same quarter a year ago

2002 III 6.7 4.5 -2.0 4.0 2.4 -2.5 7.2 -1.3

Hourly compensation in nonfinancial corporations increased 5.7 percent in the third 

quarter, more rapidly than in the second quarter when it rose 4.4 percent. When the rise in 

consumer prices is taken into account, real hourly compensation increased 3.7 percent in the

third quarter and 1.0 percent in the second quarter. 

Unit labor costs for the sector were unchanged in the third quarter. Unit nonlabor costs 

rose 1.1 percent and unit profits fell 10.4 percent in the third quarter of 2002. 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—dropped 0.6 percent. The implicit price 

deflator also fell in the previous three quarters.

Revised Measures

Current and previous measures for the third quarter of 2002 for the business, nonfarm 

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

business sectors, increases in productivity and output are larger than those reported on Nov. 7, 

based on the information available at that time. Unit labor cost measures for these sectors are 

correspondingly lower and now show small declines. In manufacturing, rates of growth in 

output and productivity were revised down in the third quarter. Unit labor costs were revised up

due to the downward output revision but still show a decline in the quarter.
5

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 2001

Business:

 Previous........................ 4.3 4.1 -0.1 5.2 3.2 0.9

 Current ......................... 5.4 5.2 -0.2 5.3 3.4 -0.1

Nonfarm business:

 Previous........................ 4.0 4.1 0.1 4.8 2.9 0.8

 Current ......................... 5.1 5.1 0.0 4.9 3.0 -0.2

Manufacturing:

 Previous........................ 5.9 3.4 -2.4 4.5 2.6 -1.3

 Current ......................... 5.5 3.2 -2.2 4.4 2.5 -1.0

On Nov. 26, the Bureau of Economic Analysis, U.S. Department of Commerce, revised the 

price indexes used to calculate real output of nonfinancial corporations back to the first quarter 

of 1999. The appendix table shows revised 1999 measures for output, productivity, and unit 

costs.

Next release date

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

February 6, 2003. Preliminary fourth-quarter and annual 2002 measures will be released at that 

time. Quarterly output measures for the manufacturing sector will be revised back to 1949 to 

incorporate the historical revisions and rebasing of the Indexes of Industrial Production prepared 

and published by the Board of Governors of the Federal Reserve System, scheduled to be 

released on Dec. 5.

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

economy in 2003 are:

Reference period 2003 release date

2002:

Fourth quarter, Annual February 6

Fourth quarter, Annual (revised) March 6

2003:

First quarter May 1

First quarter (revised) June 4

Second quarter August 7

Second quarter (revised) September 4

Third quarter November 6

Third quarter (revised) December 3
6

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

source data in 2003. Each issue of Productivity and Costs contains a "Next release date"

paragraph that readers should use to confirm the dates above.

Upcoming change to productivity and cost data

The Bureau of Labor Statistics discontinued the Hours at Work Survey (HWS), used to 

adjust the paid hours of wage and salary employees to their hours at the workplace, following the 

2000 survey. The survey will be replaced with a comparable set of measures derived from 

information on scheduled hours of work and paid leave collected from employers participating in 

the National Compensation Survey.

The new ratios of hours worked to hours paid will be incorporated into the measures of 

employee hours beginning with the release of the second quarter 2003 data on August 7. These 

ratios will be adjusted to levels from the HWS and will cover the period following 2000.
7

TECHNICAL NOTES

Labor Hours: Hours data for the labor productivity 

and cost measures include hours for all persons

working in the sector—wage and salary workers, 

the self-employed, and unpaid family workers. The 

primary source of hours and employment data is the 

BLS Current Employment Statistics (CES)

program, which provides monthly survey data on

the number of jobs held by wage and salary

workers in nonfarm establishments. The CES also 

provides average weekly paid hours of production

and nonsupervisory workers in these

establishments. The Office of Productivity and

Technology estimates average weekly paid hours of 

nonproduction and supervisory workers. Weekly 

paid hours are adjusted to hours at work using the 

BLS Hours at Work survey, conducted for this

purpose. 

Data from the BLS Current Population

Survey (CPS) are used for farm labor; in the

nonfarm sector, the National Income and Product 

Accounts (NIPA) prepared by the Bureau of

Economic Analysis (BEA) of the Department of

Commerce and the CPS are used to measure labor 

input for government enterprises, proprietors, and

unpaid family workers. 

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

gross domestic product (GDP) the following

outputs: General government, nonprofit institutions, 

paid employees of private households, and the

rental value of owner-occupied dwellings.

Corresponding exclusions also are made in labor 

inputs. Business output accounted for about 77

percent of the value of GDP in 1996. Nonfarm

business, which also excludes farming, accounted 

for about 76 percent of GDP in 1996.

Annual indexes for manufacturing and its 

durable and nondurable goods components are

constructed by deflating current-dollar industry

value of production data from the U.S. Bureau of 

the Census with deflators from the BEA. These 

deflators are based on data from the BLS producer 

price program and other sources. The industry

shipments are aggregated using annual weights, and 

intrasector transactions are removed. Quarterly

manufacturing output measures are based on the

index of industrial production prepared monthly by 

the Board of Governors of the Federal Reserve

System adjusted to be consistent with annual

indexes of manufacturing sector output prepared by 

BLS. Durables include the following 2-digit SIC 

industries: Primary metal industries; fabricated

metal products; nonelectrical machinery; industrial 

and commercial machinery and computer

equipment; electronic and other electrical

equipment; transportation equipment; instruments; 

lumber and lumber products; furniture and fixtures; 

stone, clay, and glass and concrete products; and 

miscellaneous manufactures. Nondurables include: 

Food and kindred products, tobacco products,

textile mill products, apparel products, paper and

allied products, printing and publishing, chemicals 

and chemical products, petroleum refining and

related industries, rubber and plastic products, and 

leather and leather products. 

Nonfinancial corporate output is an annualweighted index calculated on the basis of the costs 

incurred and the incomes earned from production. 

The output measure excludes the following outputs 

from GDP: general government; nonprofit

institutions; employees of private households; the 

rental value of owner-occupied dwellings;

unincorporated business; and those corporations

which are depository institutions, nondepository

institutions, security and commodity brokers,

insurance carriers, regulated investment offices,

small business investment offices, and real estate 

investment trusts. Nonfinancial corporations

accounted for about 53 percent of the value of GDP 

in 1996.

Productivity: These productivity measures

describe the relationship between real output and

the labor time involved in its production. They

show the changes from period to period in the

amount of goods and services produced per hour. 

Although these measures relate output to hours at 

work of all persons engaged in a sector, they do not 

measure the specific contribution of labor, capital, 

or any other factor of production. Rather, they

reflect the joint effects of many influences,

including changes in technology; capital

investment; level of output; utilization of capacity, 

energy, and materials; the organization of

production; managerial skill; and the characteristics 

and effort of the work force.

Information in this release will be made

available to sensory-impaired individuals upon

request. Voice phone: 202-691-5200; Federal Relay 

Service number: 1-800-877-8339.
8

 Table 1. Business sector: Productivity, hourly compensation, unit labor costs,

 and prices, seasonally adjusted

 Real

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit

 and hour of of all tion per tion per labor labor pay- price

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4)

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

 Indexes 1992=100

 2000 I 115.3 138.4 120.1 131.4 110.5 114.0 110.7 112.8

 II 117.2 140.3 119.7 132.4 110.5 113.0 114.1 113.4

 III 117.3 140.4 119.7 135.0 111.7 115.1 111.2 113.7

 IV 117.9 140.7 119.4 136.3 111.9 115.6 112.0 114.3

 ANNUAL 116.9 140.0 119.7 133.8 111.2 114.4 112.0 113.5

 2001 I 117.5 140.4 119.5 137.3 111.8 116.9 112.3 115.2

 II 117.4 139.4 118.7 137.5 111.0 117.1 113.6 115.8

 III 117.9 139.1 117.9 137.8 111.1 116.8 115.5 116.4

 IV 120.1 140.3 116.8 138.3 111.6 115.1 117.2 115.9

 ANNUAL 118.2 139.8 118.2 137.7 111.4 116.5 114.7 115.8

 2002 I 122.5 142.3 116.1 139.3 112.0 113.7 119.9 116.0

 II 123.1 142.5 115.8 140.8 112.2 114.4 119.3 116.2

 III r124.7 r144.3 115.7 r142.6 r113.2 r114.3 r119.7 r116.3

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

 Percent change from previous quarter at annual rate(5)

 2000 I 0.3 2.2 1.9 14.7 10.3 14.4 -15.1 2.4

 II 6.7 5.4 -1.2 3.0 0.0 -3.5 12.9 2.2

 III 0.4 0.4 0.0 8.3 4.6 7.8 -9.6 1.1

 IV 2.1 0.9 -1.2 3.7 0.7 1.6 2.6 1.9

 ANNUAL 3.0 4.1 1.0 6.8 3.4 3.7 -1.7 1.7

 2001 I -1.5 -1.0 0.4 3.1 -0.6 4.7 1.1 3.4

 II -0.2 -2.8 -2.6 0.5 -2.6 0.7 4.9 2.2

 III 1.8 -0.9 -2.6 0.9 0.2 -0.9 6.8 1.8

 IV 7.6 3.5 -3.9 1.4 1.7 -5.8 6.1 -1.6

 ANNUAL 1.1 -0.2 -1.3 2.9 0.2 1.8 2.4 2.0

 2002 I 8.3 5.9 -2.2 3.0 1.6 -4.9 9.6 0.3

 II 1.8 0.6 -1.2 4.2 0.8 2.4 -2.0 0.7

 III r5.4 r5.2 r-0.2 r5.3 r3.4 r-0.1 r1.3 r0.4

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

 Percent change from corresponding quarter of previous year

 2000 I 2.3 4.6 2.3 5.9 2.5 3.5 -2.0 1.4

 II 4.1 5.4 1.3 6.5 3.1 2.3 0.8 1.7

 III 3.3 4.1 0.7 7.7 4.1 4.3 -2.5 1.7

 IV 2.4 2.2 -0.1 7.3 3.8 4.9 -2.9 1.9

 ANNUAL 3.0 4.1 1.0 6.8 3.4 3.7 -1.7 1.7

 2001 I 1.9 1.4 -0.5 4.5 1.2 2.6 1.4 2.2

 II 0.2 -0.7 -0.9 3.9 0.5 3.6 -0.4 2.1

 III 0.5 -1.0 -1.5 2.0 -0.6 1.5 3.8 2.3

 IV 1.9 -0.3 -2.2 1.5 -0.3 -0.4 4.7 1.4

 ANNUAL 1.1 -0.2 -1.3 2.9 0.2 1.8 2.4 2.0

 2002 I 4.3 1.4 -2.8 1.4 0.2 -2.8 6.8 0.7

 II 4.8 2.3 -2.5 2.4 1.1 -2.4 5.0 0.3

 III r5.8 r3.8 -1.9 r3.5 r1.9 r-2.2 r3.6 0.0

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
9

 Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor costs,

 and prices, seasonally adjusted

 Real

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit

 and hour of of all tion per tion per labor labor pay- price

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4)

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

 Indexes 1992=100

 2000 I 114.7 138.7 120.9 130.8 110.0 114.0 112.3 113.4

 II 116.4 140.5 120.7 131.5 109.8 113.0 115.6 113.9

 III 116.6 140.6 120.6 134.3 111.1 115.2 112.8 114.3

 IV 117.1 141.0 120.4 135.3 111.2 115.6 113.4 114.8

 ANNUAL 116.2 140.2 120.6 133.0 110.6 114.4 113.5 114.1

 2001 I 116.7 140.7 120.6 136.3 110.9 116.8 113.8 115.7

 II 116.6 139.7 119.8 136.3 110.1 116.9 115.3 116.3

 III 117.2 139.4 118.9 136.7 110.2 116.6 117.2 116.8

 IV 119.3 140.4 117.7 137.2 110.7 115.0 119.2 116.5

 ANNUAL 117.5 140.1 119.2 136.6 110.5 116.3 116.4 116.3

 2002 I 121.8 142.5 117.0 138.2 111.1 113.4 121.7 116.4

 II 122.3 142.9 116.8 139.5 111.2 114.0 121.7 116.8

 III r123.8 r144.7 116.8 r141.2 112.0 r114.0 r121.9 116.9

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

 Percent change from previous quarter at annual rate(5)

 2000 I 0.2 1.9 1.7 15.2 10.7 14.9 -15.3 2.7

 II 6.0 5.4 -0.6 2.2 -0.7 -3.6 12.2 1.9

 III 0.6 0.2 -0.4 8.7 4.9 8.0 -9.1 1.4

 IV 1.7 1.1 -0.6 3.1 0.2 1.4 2.1 1.6

 ANNUAL 2.9 4.0 1.0 7.0 3.5 3.9 -1.7 1.8

 2001 I -1.5 -0.9 0.5 2.8 -0.9 4.3 1.5 3.3

 II -0.1 -2.7 -2.6 0.1 -2.9 0.3 5.1 2.0

 III 2.1 -0.8 -2.9 1.0 0.3 -1.1 6.8 1.7

 IV 7.3 2.9 -4.1 1.5 1.8 -5.4 6.9 -1.0

 ANNUAL 1.1 -0.1 -1.2 2.7 -0.1 1.6 2.5 1.9

 2002 I 8.6 6.2 -2.2 2.9 1.4 -5.3 8.8 -0.2

 II 1.7 0.9 -0.7 3.9 0.5 2.2 0.1 1.4

 III r5.1 r5.1 r0.0 r4.9 r3.0 r-0.2 r0.4 r0.1

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

 Percent change from corresponding quarter of previous year

 2000 I 2.3 4.5 2.1 6.2 2.8 3.7 -1.8 1.7

 II 4.0 5.4 1.3 6.6 3.2 2.5 0.7 1.8

 III 3.3 3.9 0.6 7.9 4.3 4.5 -2.6 1.8

 IV 2.1 2.2 0.0 7.2 3.7 4.9 -3.1 1.9

 ANNUAL 2.9 4.0 1.0 7.0 3.5 3.9 -1.7 1.8

 2001 I 1.7 1.4 -0.3 4.2 0.9 2.4 1.4 2.1

 II 0.2 -0.6 -0.8 3.6 0.3 3.5 -0.3 2.1

 III 0.5 -0.8 -1.4 1.8 -0.8 1.2 3.9 2.2

 IV 1.9 -0.4 -2.3 1.4 -0.4 -0.5 5.1 1.5

 ANNUAL 1.1 -0.1 -1.2 2.7 -0.1 1.6 2.5 1.9

 2002 I 4.4 1.3 -2.9 1.4 0.1 -2.9 6.9 0.6

 II 4.9 2.3 -2.5 2.3 1.0 -2.4 5.6 0.5

 III r5.6 r3.8 r-1.8 3.3 1.7 r-2.2 r4.0 0.1

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
10

 Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor costs,

 seasonally adjusted

 Real

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor

 quarter all persons Output persons hour (1) hour (2) costs

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

 Indexes 1992=100

 2000 I 133.6 138.3 103.5 131.4 110.5 98.4

 II 134.9 139.8 103.6 129.3 107.9 95.9

 III 135.4 139.3 102.9 132.2 109.4 97.7

 IV 135.9 137.6 101.3 131.5 108.0 96.7

 ANNUAL 134.9 138.7 102.8 131.1 109.0 97.2

 2001 I 135.4 135.1 99.8 132.0 107.4 97.5

 II 135.4 133.0 98.2 133.0 107.4 98.2

 III 136.4 131.3 96.3 133.3 107.5 97.8

 IV 137.6 129.2 93.9 134.3 108.3 97.6

 ANNUAL 136.2 132.1 97.1 133.1 107.7 97.8

 2002 I 140.9 130.2 92.4 135.6 109.0 96.2

 II 142.3 131.3 92.3 136.6 108.9 96.0

 III r144.2 r132.3 r91.8 138.1 109.6 r95.8

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

 Percent change from previous quarter at annual rate(5)

 2000 I 4.5 2.7 -1.7 25.3 20.5 19.9

 II 3.8 4.4 0.5 -6.3 -9.0 -9.7

 III 1.6 -1.3 -2.8 9.5 5.8 7.8

 IV 1.6 -4.8 -6.3 -2.3 -5.1 -3.8

 ANNUAL 4.1 2.5 -1.5 7.4 3.9 3.2

 2001 I -1.5 -7.1 -5.6 1.6 -2.1 3.1

 II 0.0 -6.2 -6.2 3.1 -0.1 3.1

 III 2.9 -4.9 -7.6 1.0 0.3 -1.9

 IV 3.8 -6.3 -9.7 2.9 3.2 -0.9

 ANNUAL 0.9 -4.8 -5.6 1.5 -1.2 0.6

 2002 I 9.7 3.0 -6.1 3.8 2.4 -5.3

 II 4.2 3.5 -0.7 3.2 -0.2 -1.0

 III r5.5 r3.2 r-2.2 r4.4 r2.5 r-1.0

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

 Percent change from corresponding quarter of previous year

 2000 I 4.4 3.6 -0.8 8.9 5.5 4.3

 II 4.7 3.8 -0.8 6.9 3.5 2.1

 III 4.3 2.6 -1.7 7.9 4.3 3.4

 IV 2.9 0.2 -2.6 5.9 2.4 2.9

 ANNUAL 4.1 2.5 -1.5 7.4 3.9 3.2

 2001 I 1.3 -2.3 -3.6 0.5 -2.7 -0.9

 II 0.4 -4.9 -5.2 2.9 -0.5 2.5

 III 0.7 -5.7 -6.4 0.8 -1.8 0.1

 IV 1.3 -6.1 -7.3 2.1 0.3 0.8

 ANNUAL 0.9 -4.8 -5.6 1.5 -1.2 0.6

 2002 I 4.0 -3.7 -7.4 2.7 1.4 -1.3

 II 5.1 -1.3 -6.1 2.7 1.4 -2.3

 III r5.8 0.8 r-4.7 3.6 2.0 -2.1

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
11

 Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor costs,

 seasonally adjusted

 Real

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor

 quarter all persons Output persons hour (1) hour (2) costs

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

 Indexes 1992=100

 2000 I 148.6 162.9 109.7 130.8 109.9 88.0

 II 150.0 165.2 110.2 127.5 106.4 85.0

 III 150.3 164.6 109.5 130.6 108.0 86.9

 IV 150.1 162.0 107.9 128.4 105.5 85.5

 ANNUAL 149.7 163.7 109.3 129.3 107.5 86.4

 2001 I 149.0 157.9 106.0 129.4 105.3 86.8

 II 149.1 155.3 104.1 130.5 105.4 87.5

 III 150.1 152.2 101.4 130.2 105.0 86.7

 IV 150.9 148.6 98.5 131.8 106.3 87.3

 ANNUAL 149.8 153.5 102.5 130.4 105.5 87.1

 2002 I 155.7 150.3 96.5 132.7 106.7 85.2

 II 158.0 152.3 96.4 133.6 106.5 84.6

 III r161.3 r154.2 r95.5 135.0 r107.1 83.7

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

 Percent change from previous quarter at annual rate(5)

 2000 I 7.6 6.3 -1.2 29.7 24.6 20.5

 II 3.9 5.8 1.8 -9.6 -12.1 -13.0

 III 0.8 -1.6 -2.3 9.9 6.1 9.1

 IV -0.6 -6.2 -5.7 -6.5 -9.2 -6.0

 ANNUAL 4.4 3.6 -0.7 7.7 4.2 3.2

 2001 I -3.0 -9.7 -6.9 3.1 -0.6 6.2

 II 0.4 -6.5 -6.9 3.6 0.4 3.2

 III 2.7 -7.6 -10.0 -1.0 -1.7 -3.6

 IV 2.3 -9.2 -11.2 5.0 5.4 2.7

 ANNUAL 0.0 -6.2 -6.2 0.9 -1.9 0.8

 2002 I 13.2 4.7 -7.5 2.8 1.3 -9.2

 II 6.0 5.4 -0.5 2.8 -0.6 -3.0

 III 8.8 r4.9 r-3.5 r4.3 r2.3 r-4.2

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

 Percent change from corresponding quarter of previous year

 2000 I 5.2 5.1 -0.1 10.5 7.0 5.0

 II 5.1 5.3 0.2 7.4 4.0 2.2

 III 4.3 3.2 -1.1 8.1 4.5 3.6

 IV 2.9 1.0 -1.9 4.8 1.4 1.8

 ANNUAL 4.4 3.6 -0.7 7.7 4.2 3.2

 2001 I 0.3 -3.1 -3.3 -1.1 -4.2 -1.3

 II -0.6 -6.0 -5.5 2.3 -1.0 3.0

 III -0.1 -7.5 -7.4 -0.3 -2.8 -0.2

 IV 0.6 -8.2 -8.8 2.6 0.8 2.1

 ANNUAL 0.0 -6.2 -6.2 0.9 -1.9 0.8

 2002 I 4.5 -4.8 -8.9 2.6 1.3 -1.9

 II 5.9 -1.9 -7.4 2.4 1.1 -3.4

 III 7.5 r1.3 r-5.8 3.7 2.1 -3.5

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
12

 Table 5. Nondurable manufacturing sector: Productivity, hourly compensation, and unit labor costs,

 seasonally adjusted

 Real

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor

 quarter all persons Output persons hour (1) hour (2) costs

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

 Indexes 1992=100

 2000 I 120.6 114.9 95.3 130.6 109.8 108.3

 II 121.8 115.6 95.0 130.4 108.9 107.1

 III 122.6 115.4 94.1 133.2 110.2 108.7

 IV 123.9 114.5 92.4 135.0 110.9 108.9

 ANNUAL 122.2 115.1 94.2 132.3 110.0 108.3

 2001 I 123.9 113.4 91.6 134.7 109.7 108.7

 II 123.6 111.7 90.4 135.5 109.4 109.6

 III 124.4 111.3 89.5 137.2 110.6 110.3

 IV 125.9 110.5 87.8 137.1 110.6 108.9

 ANNUAL 124.4 111.7 89.8 136.1 110.1 109.4

 2002 I 127.5 110.8 86.9 139.1 111.8 109.1

 II 128.3 111.2 86.7 140.4 112.0 109.5

 III r128.7 r111.6 86.7 142.1 112.8 r110.4

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

 Percent change from previous quarter at annual rate(5)

 2000 I 0.8 -1.8 -2.5 17.8 13.3 17.0

 II 3.8 2.4 -1.4 -0.5 -3.4 -4.2

 III 2.6 -0.9 -3.5 8.7 4.9 5.9

 IV 4.6 -3.0 -7.2 5.6 2.5 0.9

 ANNUAL 3.8 1.1 -2.6 6.7 3.3 2.9

 2001 I -0.1 -3.7 -3.6 -0.8 -4.4 -0.7

 II -0.9 -5.9 -5.0 2.3 -0.8 3.2

 III 2.5 -1.5 -3.8 5.1 4.4 2.5

 IV 4.9 -2.9 -7.4 -0.3 0.0 -5.0

 ANNUAL 1.8 -2.9 -4.7 2.9 0.1 1.0

 2002 I 5.3 1.2 -3.9 6.0 4.5 0.6

 II 2.4 1.5 -0.9 3.9 0.5 1.5

 III r1.3 r1.2 r-0.1 r4.9 r3.0 r3.5

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

 Percent change from corresponding quarter of previous year

 2000 I 3.4 1.6 -1.8 6.1 2.8 2.6

 II 4.4 1.8 -2.5 5.8 2.5 1.4

 III 4.4 1.7 -2.5 7.4 3.8 2.9

 IV 2.9 -0.8 -3.7 7.7 4.2 4.6

 ANNUAL 3.8 1.1 -2.6 6.7 3.3 2.9

 2001 I 2.7 -1.3 -3.9 3.1 -0.1 0.4

 II 1.5 -3.4 -4.8 3.9 0.5 2.3

 III 1.5 -3.5 -4.9 3.0 0.4 1.5

 IV 1.6 -3.5 -5.0 1.5 -0.3 0.0

 ANNUAL 1.8 -2.9 -4.7 2.9 0.1 1.0

 2002 I 2.9 -2.3 -5.0 3.2 2.0 0.3

 II 3.7 -0.4 -4.0 3.6 2.3 -0.1

 III r3.4 r0.2 -3.1 3.6 2.0 r0.1

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
13

 Table 6. Nonfinancial corporations: Productivity, hourly compensation, unit labor costs, unit profits,

 and prices, seasonally adjusted

 Output Hourly Real Unit Total Unit Implicit

 Year per all- compen- hourly Unit non- unit pro- price

 and employee Employee sation compen- labor labor costs fits deflator

 quarter hour Output hours (1) sation(2) costs costs(6) (7) (8) (4)

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

 Indexes 1992=100

 2000 I r117.8 r147.3 125.1 126.9 106.7 r107.8 r104.5 r106.9 r119.5 r108.0

 II r118.3 r147.9 125.0 127.8 106.6 r108.0 r106.3 r107.5 r118.8 r108.5

 III r119.5 r149.4 125.0 130.4 107.9 r109.1 r107.1 r108.6 r109.5 r108.6

 IV r119.5 r149.2 124.8 131.7 108.2 r110.2 r108.9 r109.8 r98.6 r108.9

 ANNUAL r118.8 r148.4 125.0 129.2 107.4 r108.8 r106.7 r108.2 r111.6 r108.5

 2001 I r118.8 r147.9 124.6 131.3 106.9 r110.6 r111.6 r110.8 r93.1 r109.3

 II r119.4 r147.8 123.7 131.9 106.5 r110.4 r113.5 r111.3 r95.4 r109.9

 III r120.4 r147.7 122.7 132.7 107.0 r110.3 r115.5 r111.7 r97.9 r110.5

 IV r123.5 r149.6 121.2 133.6 107.8 r108.2 r114.1 r109.8 r107.6 r109.6

 ANNUAL r120.5 r148.2 123.0 132.4 107.0 r109.9 r113.7 r110.9 r98.5 r109.8

 2002 I r124.9 r150.8 120.8 134.7 108.3 r107.9 r114.0 r109.5 r107.6 r109.4

 II r126.7 r152.8 120.6 136.2 108.6 r107.5 r114.5 r109.4 r107.8 r109.3

 III 128.4 154.4 120.2 138.1 109.6 107.5 114.8 109.5 104.9 109.1

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

 Percent change from previous quarter at annual rate(5)

 2000 I r7.1 r9.5 2.3 14.2 9.8 r6.7 r-0.4 r4.7 r-19.0 r2.2

 II r2.0 r1.6 -0.4 2.8 -0.1 r0.8 r7.0 r2.4 r-2.2 r2.0

 III r4.1 r4.0 0.0 8.5 4.7 r4.2 r3.0 r3.9 r-27.8 r0.6

 IV r0.1 r-0.4 -0.5 4.1 1.1 r4.0 r6.9 r4.8 r-34.5 r0.8

 ANNUAL r3.5 r5.0 1.5 6.7 3.2 r3.1 r3.3 r3.1 r-15.2 r1.2

 2001 I -2.6 r-3.3 -0.7 -1.2 -4.8 1.4 10.1 r3.7 -20.2 r1.7

 II r2.2 r-0.5 -2.7 1.8 -1.3 r-0.4 7.1 r1.6 10.0 r2.2

 III 3.2 -0.3 -3.4 2.5 1.9 r-0.6 7.2 1.5 r10.8 r2.2

 IV 10.8 5.4 -4.8 2.7 3.0 -7.3 r-4.9 -6.7 r46.1 -3.3

 ANNUAL r1.4 r-0.1 -1.5 2.5 -0.3 r1.0 r6.5 r2.5 r-11.7 r1.2

 2002 I 4.6 3.3 -1.3 3.4 2.0 r-1.2 -0.2 -0.9 r-0.2 -0.8

 II r5.8 r5.2 -0.5 4.4 1.0 -1.3 1.7 -0.5 0.9 r-0.3

 III 5.7 4.3 -1.3 5.7 3.7 0.0 1.1 0.3 -10.4 -0.6

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

 Percent change from corresponding quarter of previous year

 2000 I r3.0 r5.7 2.6 5.6 2.3 r2.5 r2.9 r2.6 r-12.9 r0.9

 II r3.5 r5.4 1.9 6.2 2.8 r2.6 r3.5 r2.8 r-12.4 r1.2

 III r4.2 r5.4 1.2 7.6 4.0 r3.3 r2.5 r3.1 r-14.2 r1.3

 IV r3.3 r3.6 0.3 7.3 3.8 r3.9 r4.1 r4.0 r-21.8 r1.4

 ANNUAL r3.5 r5.0 1.5 6.7 3.2 r3.1 r3.3 r3.1 r-15.2 r1.2

 2001 I r0.9 r0.4 -0.4 3.5 0.2 r2.6 r6.7 r3.7 r-22.0 r1.3

 II r0.9 r-0.1 -1.0 3.2 -0.1 r2.3 r6.8 r3.5 r-19.7 r1.3

 III r0.7 r-1.1 -1.8 1.8 -0.8 r1.1 r7.8 r2.9 r-10.6 r1.7

 IV 3.3 0.3 -2.9 1.4 -0.4 -1.8 4.7 r0.0 r9.2 r0.7

 ANNUAL r1.4 r-0.1 -1.5 2.5 -0.3 r1.0 r6.5 r2.5 r-11.7 r1.2

 2002 I 5.2 r1.9 -3.1 2.6 1.4 r-2.4 r2.2 -1.2 r15.5 0.0

 II 6.1 3.4 -2.5 3.3 1.9 r-2.6 r0.9 -1.7 13.0 -0.6

 III 6.7 4.5 -2.0 4.0 2.4 -2.5 -0.6 -2.0 7.2 -1.3

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

 See footnotes following Table 6. December 4, 2002

 r=revised Source: Bureau of Labor Statistics
14

SOURCES: Output data are from the Bureau of Economic Analysis and the Census Bureau of 

the U.S. Department of Commerce; the Bureau of Labor Statistics, U.S. Department of Labor; 

and the Federal Reserve Board. Compensation and hours data are from the Bureau of Labor 

Statistics and the Bureau of Economic Analysis.

RELIABILITY: Productivity and cost measures are regularly revised as more complete 

information becomes available. The measures are first published within 40 days of the close of 

the reference period; revisions appear 30 days later, and second revisions after an additional 60 

days. In the business sector, the third publication (second revision) of a quarterly index of output 

per hour of all persons has differed from the initial value by between –1.5 and +1.7 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 2002. 

Footnotes, Tables 1-6

(1) Wages and salaries of employees plus employers' contributions for social insurance and 

private benefit plans. Except for nonfinancial corporations, where there are no selfemployed, data also include an estimate of wages, salaries, and supplemental payments 

for the self-employed.

(2) The change for recent quarters is based on the Consumer Price Index for all urban consumers 

(CPI-U). The trend from 1978-2001 is based on the Consumer Price Index research 

series (CPI-U-RS).

(3) Unit nonlabor payments include profits, capital consumption allowances, interest, rental 

income of persons, and indirect taxes.

(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 capital consumption allowances, interest, rental income of 

persons, and indirect taxes. For nonfinancial corporations, rental income of persons is 

zero by definition.

(7) Total unit costs are the sum of unit labor and nonlabor costs.

(8) Unit profits include corporate profits with inventory valuation and capital consumption 

adjustments.
15

 Appendix table 1. Nonfinancial corporations: Revised 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

 1999 I 114.3 139.3 121.9 120.2 104.3 105.1 101.6 104.2 137.1 107.0

 II 114.4 140.3 122.7 120.4 103.8 105.2 102.7 104.5 135.6 107.2

 III 114.7 141.7 123.5 121.2 103.7 105.6 104.5 105.3 127.7 107.2

 IV 115.8 144.0 124.4 122.7 104.2 106.0 104.6 105.7 126.0 107.4

 ANNUAL 114.8 141.3 123.1 121.1 104.1 105.5 103.4 104.9 131.5 107.2

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

 Percent change from previous quarter at annual rate(5)

 1999 I 4.1 6.1 2.0 8.3 6.5 4.0 -6.3 1.1 -1.7 0.8

 II 0.2 2.9 2.7 0.7 -2.1 0.5 4.3 1.5 -4.4 0.8

 III 1.3 4.0 2.7 2.8 -0.1 1.4 7.2 2.9 -21.3 0.1

 IV 3.6 6.7 3.0 5.2 1.9 1.6 0.6 1.3 -5.3 0.6

 ANNUAL 2.7 5.2 2.4 4.4 2.3 1.7 1.2 1.5 -7.2 0.6

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

 Percent change from corresponding quarter of previous year

 1999 I 4.0 6.2 2.1 5.6 4.0 1.5 -0.1 1.0 -4.7 0.4

 II 2.8 5.4 2.5 4.3 2.3 1.4 0.8 1.2 -3.4 0.7

 III 1.8 4.5 2.6 3.8 1.5 1.9 2.7 2.1 -11.9 0.5

 IV 2.3 4.9 2.6 4.2 1.5 1.9 1.3 1.7 -8.5 0.6

 ANNUAL 2.7 5.2 2.4 4.4 2.3 1.7 1.2 1.5 -7.2 0.6

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

 See footnotes following Table 6. December 4, 2002

 Source: Bureau of Labor Statistics