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Media contact: (202) 691-5902 hoyle_k@bls.gov THURSDAY, JUNE 3, 2004. 

PRODUCTIVITY AND COSTS 

First Quarter 2004 

 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 first quarter of 2004. 

The revised seasonally adjusted annual rates of productivity change in the first quarter were: 

 4.6 percent in the business sector and 

 3.8 percent in the nonfarm business sector. 

In both sectors, the first-quarter productivity gains were somewhat higher than those reported 

initially on May 6. 

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

2.9 percent in manufacturing, 

5.9 percent in durable goods manufacturing, and 

 -0.7 percent in nondurable goods manufacturing. 

 Manufacturing productivity growth was revised down from the figure reported on May 6, 

reflecting a downward revision to productivity growth in nondurable goods manufacturing—

which comprises less than forty percent of employment in the sector. Productivity in durable 

goods manufacturing was unchanged from the figure released last month. Output and hours in 

manufacturing, which includes about 13 percent of U.S. business-sector employment, tend to 

vary more from quarter to quarter than data for the aggregate business and nonfarm business 

sectors. First-quarter measures are summarized in table A and appear in detail in tables 1 

through 5. 
2 

The data sources and methods used in the preparation of the manufacturing series differ 

from those used in preparing the business and nonfarm business series, and these measures are 

not directly comparable. Output measures for business and nonfarm business are based on 

measures of gross domestic product prepared by the Bureau of Economic Analysis of the U.S. 

Department of Commerce. Quarterly output measures for manufacturing reflect indexes of 

industrial production independently prepared by the Board of Governors of the Federal Reserve 

System. See Technical Notes for further information on data sources (page 8). 

Table A. Productivity and costs: Revised first-quarter 2004 measures 

(Seasonally adjusted annual rates) 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Percent change from preceding quarter 

Business 4.6 5.2 0.5 5.9 2.2 1.2

Nonfarm business 3.8 5.4 1.5 4.6 0.9 0.8

Manufacturing 2.9 5.8 2.8 6.2 2.5 3.1

Durable 5.9 9.3 3.2 5.5 1.8 -0.4

Nondurable -0.7 1.4 2.1 7.3 3.6 8.1

Percent change from same quarter a year ago 

Business 5.6 5.9 0.3 4.8 2.8 -0.8

Nonfarm business 5.5 5.9 0.4 4.6 2.7 -0.8

Manufacturing 5.2 3.1 -2.0 6.1 4.2 0.9

Durable 7.4 5.7 -1.6 6.3 4.4 -1.0

Nondurable 2.8 0.1 -2.6 5.6 3.7 2.8

Business 

Productivity increased 4.6 percent in the business sector (seasonally adjusted annual rate) 

from the fourth quarter of 2003 to the first quarter of 2004, as output increased 5.2 percent and 

hours worked by all persons grew 0.5 percent (table 1). 

Hourly compensation increased 5.9 percent during the first quarter of 2004, up from 3.8 

percent in the previous quarter, as revised. The first quarter increase was the largest in the sector 

since an 8.5-percent increase in the third quarter of 2000. This measure of 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 by 

2.2 percent in the first quarter of 2004, down from a 3.0-percent rise in the previous quarter. 

Unit labor costs rose 1.2 percent during the first quarter of 2004. In the fourth quarter of 

2003, unit labor costs had risen 1.9 percent. The change in unit labor costs approximates the 
3 

change in hourly compensation less the change in productivity. The implicit price deflator for 

business output, which reflects changes in both unit labor costs and unit nonlabor payments, 

grew by 2.2 percent in the first quarter of 2004. 

Nonfarm business 

Productivity rose 3.8 percent in the nonfarm business sector during the first quarter of 

2004, reflecting a 5.4-percent rise in output and a 1.5-percent increase in working hours of all 

persons (table 2). 

Hourly compensation increased 4.6 percent in the first quarter of 2004, slightly more 

rapidly than in the previous quarter when it grew by 4.2 percent. However, when the rise in 

consumer prices is taken into account, real hourly compensation in the first quarter, which rose 

0.9 percent, grew more slowly than in the fourth quarter, when it increased by 3.4 percent. 

Unit labor costs grew 0.8 percent during the first quarter of 2004, less than the 1.7-

percent increase of the fourth quarter. The implicit price deflator for nonfarm business output 

rose by 2.1 percent in the first quarter of 2004. 

Manufacturing 

Productivity rose 2.9 percent in manufacturing in the first quarter of 2004, as output grew 

5.8 percent and working hours of all persons increased 2.8 percent (seasonally adjusted annual 

rates). In durable goods industries, productivity grew 5.9 percent, as output expanded 9.3 

percent and hours rose 3.2 percent. In nondurable goods industries, productivity fell 0.7 percent, 

as output grew 1.4 percent and hours grew faster, 2.1 percent (tables 3, 4, and 5). 

Hourly compensation in manufacturing rose 6.2 percent during the first quarter. This 

increase reflects a rise of 5.5 percent in the hourly compensation of persons in durable goods 

industries and a larger increase, 7.3 percent, in the hourly compensation of workers in 

nondurable goods industries. Real hourly compensation, which takes account of changes in 

consumer prices, rose 2.5 percent for all manufacturing workers. 

Unit labor costs rose 3.1 percent in manufacturing during the first quarter. In durable 

goods industries, rapid productivity growth enabled producers to more than offset the increase in 

hourly compensation and unit labor costs declined by 0.4 percent. In nondurable goods 

industries, however, where productivity dropped in the first quarter, unit labor costs rose 

substantially, 8.1 percent. 
4 

Nonfinancial corporations 

Preliminary first-quarter 2004 measures of productivity and costs for nonfinancial 

corporations also were announced today (tables B and 6). Productivity rose 2.3 percent in the 

first quarter, less than the 4.3-percent rise (as revised) recorded in the fourth quarter of 2003. 

Output increased 4.5 percent in first quarter 2004, while employee-hours rose 2.1 percent 

(seasonally adjusted annual rates). The 2.1-percent increase in employee hours was the fastest 

one-quarter rise since a similar increase in the first quarter of 2000. Nonfinancial corporations 

include all corporations doing business in the United States, except banks, stock and commodity 

brokers, and finance and insurance agencies. 

Table B. Nonfinancial corporations: Preliminary first-quarter 2004 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 

2004 I 2.3 4.5 2.1 5.1 1.4 2.7 -0.9 1.9

Percent change from same quarter a year ago 

2004 I 6.4 6.7 0.3 4.9 3.0 -1.4 29.0 1.1

Hourly compensation increased 5.1 percent during the first quarter of 2004. When the 

rise in consumer prices is taken into account, real hourly compensation rose 1.4 percent in the 

first quarter. Unit labor costs in nonfinancial corporations rose 2.7 percent in the first quarter, 

after falling in eight of the previous nine quarters. 

REVISED MEASURES 

Current and previous measures for the first quarter of 2004 in the business, nonfarm

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

business sectors, both output and hours were revised up somewhat. Since output was revised up 

more than hours, productivity also is higher than reported on May 6, based on information 

available at that time. In the manufacturing sector, hours were revised up while output was not. 

As a result, productivity was revised down in the first 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 

First quarter 2004 

Business:

Previous ....................... 4.5 4.8 0.3 5.3 1.6 0.8

Current ......................... 4.6 5.2 0.5 5.9 2.2 1.2

Nonfarm business:

Previous ....................... 3.5 4.9 1.3 4.0 0.4 0.5

Current ......................... 3.8 5.4 1.5 4.6 0.9 0.8

Manufacturing:

Previous ....................... 3.1 5.8 2.7 5.2 1.5 2.0

Current ......................... 2.9 5.8 2.8 6.2 2.5 3.1

Fourth quarter 2003 

Business:

Previous ....................... 1.8 3.9 2.0 2.1 1.3 0.2

Current ......................... 1.8 3.9 2.0 3.8 3.0 1.9

Nonfarm business:

Previous ....................... 2.5 4.2 1.6 2.5 1.7 0.0

Current ......................... 2.5 4.2 1.6 4.2 3.4 1.7

Manufacturing:

Previous ....................... 4.8 6.2 1.4 2.9 2.1 -1.8

Current ......................... 4.8 6.2 1.4 6.8 6.0 2.0

Annual average 2003 

Business:

Previous ....................... 4.5 3.7 -0.8 3.5 1.2 -0.9

Current ......................... 4.5 3.7 -0.8 3.6 1.3 -0.8

Nonfarm business:

Previous ....................... 4.4 3.7 -0.7 3.4 1.1 -1.0

Current ......................... 4.4 3.7 -0.7 3.5 1.2 -0.9

Manufacturing:

Previous ....................... 5.1 0.1 -4.8 5.6 3.2 0.4

Current ......................... 5.1 0.1 -4.8 5.9 3.5 0.7
6 

Hourly compensation was revised up in all sectors in the first quarter of 2004. In the 

business and nonfarm business sectors, unit labor costs were revised up less than hourly 

compensation since compensation costs were somewhat offset by the upward revisions to 

productivity. In manufacturing, where first quarter productivity was revised down, unit labor 

costs were revised up by more than the revision to hourly compensation. 

The BLS also announced revised hourly compensation and unit labor costs for the fourth 

quarter and annual average of 2003. In the business and nonfarm business sectors, hourly 

compensation and unit labor costs grew more rapidly than announced on May 6. The revisions 

to fourth quarter hourly compensation were large enough to change movements in the annual 

averages for both sectors. In the year 2003, hourly compensation grew 0.1 percentage-point 

more—and unit labor costs dropped 0.1 percentage point less—than reported on May 6. In the 

manufacturing sector, fourth quarter hourly compensation was revised up sharply and now shows 

a rise of 6.8 percent for the quarter. Unit labor costs, which originally had shown a decline in the 

quarter, now show an increase of 2.0 percent. For the full year 2003, both hourly compensation 

and unit labor costs were revised up by 0.3 percentage point. 

REVISED MEASURES: NONFINANCIAL CORPORATIONS 

Fourth quarter and annual average 2003 measures also were revised for the nonfinancial 

corporate sector. In the fourth quarter of 2003, output and productivity were revised up by 1.0 

percentage point; productivity rose 4.3 percent. Hourly compensation was revised up and unit 

labor costs now show a decline of 0.4 percent for the quarter. Annual average productivity and 

hourly compensation rose slightly faster than reported on May 6 while unit labor costs show 

less of a decline than originally reported. 

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

Quarterly percent changes at seasonally adjusted annual rates 

Productivity Output Hours

Hourly 

compensation

Real 

hourly 

compensation

Unit 

labor 

costs

Unit 

profits

Implicit 

price 

deflator

Fourth quarter 2003 

Previous 3.3 5.0 1.6 2.3 1.6 -1.0 12.7 1.1

Current 4.3 6.0 1.6 3.9 3.1 -0.4 11.6 1.1

Annual average 2003 

Previous 5.7 4.2 -1.5 4.2 1.8 -1.5 20.5 0.2

Current 5.8 4.2 -1.5 4.3 1.9 -1.4 20.4 0.2
7 

Next release date 

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

Aug. 10, 2004. Preliminary second-quarter measures for business, nonfarm business, and 

manufacturing will be released at that time. The Aug. 10 release also will incorporate the threeyear revision of the national income and product accounts. In addition, the release will include 

changes in employment and hours due to incorporation of new hours measures for supervisory 

and nonproduction workers in private nonfarm businesses and new information on seasonal 

patterns. 

Current and upcoming changes to productivity and cost data 

Beginning with this release of productivity and costs, BLS is issuing revised measures for 

hourly compensation and unit labor costs for both of the two previous quarters. Previously, 

revisions to the earlier quarter had been reported two months later in the next quarter's

preliminary estimates. This change is in accordance with the announcement by the Bureau of 

Economic Analysis of their new revision schedule for wage and salary data. See "Gross 

Domestic Product: First Quarter 2004 (Advance)" (BEA 04-18), released April 29. 

New estimates of average weekly hours at work for nonproduction and supervisory 

workers will be introduced into the BLS major sector productivity and cost measures beginning 

with the August 10, 2004, release. An article discussing these new measures and the effects of 

this change was published in the April 2004 issue of Monthly Labor Review. A technical note 

describing the methodology will be available this summer. 

In addition, beginning on Aug. 10, concurrent seasonal adjustment will be used when 

measuring employment and hours for the farm sector, nonfarm self-employed, and nonfarm

unpaid family workers and hours for employees of government enterprises in the productivity 

and cost measures. Late in 2004 or early in 2005, BLS also intends to improve the way it uses 

these series from the Current Population Survey in the productivity program, adjusting them to 

account for the effects of multiple jobholding. Further information on this change will be 

announced later this year. 
8 

TECHNICAL NOTES 

Labor Hours: Hours data for the labor productivity and cost measures include hours for all 

persons working in the sector—wage and salary 

workers, the self-employed, and unpaid family 

workers. The primary source of hours and em- ployment 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 were 

adjusted to hours at work using the BLS Hours 

at Work survey, conducted for this purpose. 

Data from the National Compensation Survey 

are used for recent years. 

Data from the BLS Current Population 

Survey (CPS) are used for farm labor, nonfarm

proprietors, and nonfarm unpaid family workers. 

Estimates of labor input for government enterprises are derived from the CPS, the CES, and 

the National Income and Product Accounts 

(NIPA) prepared by the Bureau of Economic 

Analysis (BEA) of the Department of 

Commerce.

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

gross domestic product (GDP) the following 

outputs: General government, nonprofit institutions, and private households (including owneroccupied housing). Corresponding exclusions 

also are made in labor inputs. Business output 

accounted for about 78 percent of the value of 

GDP in 2000. Nonfarm business, which also 

excludes farming, accounted for about 77 

percent of GDP in 2000. 

Annual indexes for manufacturing and its 

durable and nondurable goods components are 

constructed by deflating current-dollar industry 

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

the Census with deflators from the BEA. These 

deflators are based on data from the BLS 

producer price program and other sources. The 

industry shipments are aggregated using annual 

weights, and intrasector transactions are 

removed. Quarterly manufacturing output 

measures are based on the index of industrial 

production prepared monthly by the Board of 

Governors of the Federal Reserve System

adjusted to be consistent with annual indexes of 

manufacturing sector output prepared by BLS. 

Durables include the following 3-digit NAICS 

industries: wood product manufacturing; nonmetallic mineral product manufacturing; primary 

metal manufacturing; fabricated metal product 

manufacturing; machinery manufacturing; 

computer and electronic product manufacturing; 

electrical equipment and appliance 

manufacturing; transportation equipment manufacturing; furniture and related product manufacturing; and miscellaneous manufacturing. 

Nondurables include: Food manufacturing; 

beverage and tobacco product manufacturing; 

textile mills; textile product mills; apparel 

manufacturing; leather and allied product manufacturing; paper manufacturing; printing and related support activities; petroleum and coal products manufacturing; chemical manufacturing; 

and plastics and rubber products manufacturing. 

Nonfinancial corporate output is an 

annual-weighted index calculated on the basis of 

the costs incurred and the incomes earned from

production. The output measure excludes the 

following outputs from GDP: general government; nonprofit institutions; private households; 

unincorporated business; and those corporations 

classified as offices of bank holding companies, 

offices of other holding companies, or in the 

finance and insurance sector. Nonfinancial 

corporations accounted for about 54 percent of 

the value of GDP in 2000. 

Productivity: These productivity measures 

describe the relationship between real output and 

the labor time involved in its production. They 

show the changes from period to period in the 

amount of goods and services produced per hour. 

Although these measures relate output to hours 

at work of all persons engaged in a sector, they 

do not measure the specific contribution of labor, 

capital, or any other factor of production. Rather, 

they reflect the joint effects of many influences, 

including changes in technology; capital investment; level of output; utilization of capacity, 

energy, and materials; the organization of production; managerial skill; and the characteristics 

and effort of the work force. 

Information in this release will be made 

available to sensory-impaired individuals upon 

request. Voice phone: 202-691-5606; Federal 

Relay Service number: 1-800-877-8339.
9 

 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 

 2002 I 122.8 142.6 116.1 141.8 114.1 115.5 115.0 115.3 

 II 123.3 143.1 116.1 142.6 113.8 115.7 115.8 115.7 

 III 124.7 144.6 115.9 143.1 113.5 114.7 117.9 115.9 

 IV 125.4 145.1 115.8 143.8 113.5 114.7 119.3 116.5 

 ANNUAL 124.0 143.8 116.0 142.8 113.7 115.2 117.0 115.8 

 2003 I 126.4 145.8 115.4 145.5 113.8 115.1 120.0 116.9 

 II 128.6 147.3 114.5 147.4 115.1 114.6 121.5 117.2 

 III 131.3 151.0 115.0 148.9 115.6 113.4 124.6 117.6 

 IV 131.9 152.4 115.5 r150.3 r116.4 r113.9 r124.8 118.0 

 ANNUAL 129.6 149.1 115.1 r148.0 r115.2 r114.2 r122.8 117.4 

 2004 I r133.5 r154.4 r115.7 r152.4 r117.1 r114.2 r125.9 118.6 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 8.4 5.6 -2.6 0.9 -0.4 -6.9 11.0 -0.7 

 II 1.5 1.4 -0.1 2.3 -1.1 0.9 3.0 1.6 

 III 4.9 4.3 -0.5 1.3 -1.0 -3.4 7.4 0.5 

 IV 2.0 1.6 -0.5 2.2 0.3 0.1 4.9 1.9 

 ANNUAL 4.9 2.3 -2.5 2.2 0.6 -2.5 6.8 0.8 

 2003 I 3.5 1.9 -1.5 4.8 1.0 1.3 2.3 1.6 

 II 7.2 4.2 -2.8 5.3 4.6 -1.7 5.2 0.9 

 III 8.7 10.3 1.5 4.1 1.6 -4.3 10.6 1.3 

 IV 1.8 3.9 2.0 r3.8 r3.0 r1.9 r0.4 1.3 

 ANNUAL 4.5 3.7 -0.8 r3.6 r1.3 r-0.8 r4.9 1.4 

 2004 I r4.6 r5.2 r0.5 r5.9 r2.2 r1.2 r3.9 r2.2 

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

 Percent change from corresponding quarter of previous year 

 2002 I 5.1 1.0 -3.9 2.6 1.4 -2.3 7.4 1.1 

 II 4.7 1.6 -2.9 2.5 1.2 -2.1 5.7 0.7 

 III 5.5 3.4 -2.1 2.1 0.5 -3.3 7.7 0.6 

 IV 4.2 3.2 -0.9 1.7 -0.6 -2.4 6.5 0.8 

 ANNUAL 4.9 2.3 -2.5 2.2 0.6 -2.5 6.8 0.8 

 2003 I 3.0 2.3 -0.6 2.6 -0.2 -0.3 4.4 1.4 

 II 4.4 3.0 -1.3 3.4 1.2 -1.0 4.9 1.2 

 III 5.3 4.4 -0.8 4.1 1.9 -1.2 5.7 1.4 

 IV 5.3 5.0 -0.2 r4.5 r2.5 r-0.7 r4.6 1.3 

 ANNUAL 4.5 3.7 -0.8 r3.6 r1.3 r-0.8 r4.9 1.4 

 2004 I r5.6 r5.9 r0.3 r4.8 r2.8 r-0.8 r5.0 1.4 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
10 

 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 

 2002 I 122.6 143.1 116.7 141.1 113.5 115.1 116.9 115.8 

 II 122.8 143.4 116.8 141.9 113.2 115.6 117.6 116.3 

 III 124.2 144.8 116.6 142.4 112.9 114.6 119.9 116.6 

 IV 124.9 145.4 116.4 143.2 113.0 114.6 121.3 117.1 

 ANNUAL 123.6 144.2 116.6 142.1 113.2 115.0 119.0 116.4 

 2003 I 126.0 146.3 116.1 144.6 113.1 114.8 122.2 117.5 

 II 127.9 147.6 115.4 146.3 114.2 114.4 123.4 117.7 

 III 130.8 151.3 115.7 148.0 114.9 113.2 126.5 118.1 

 IV 131.6 152.9 116.2 r149.5 r115.9 r113.6 r126.1 118.2 

 ANNUAL 129.1 149.5 115.9 r147.1 r114.5 r114.0 r124.6 117.9 

 2004 I r132.8 r154.9 r116.6 r151.2 r116.1 r113.9 r127.4 r118.9 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 9.8 6.7 -2.9 1.2 -0.1 -7.8 13.0 -0.7 

 II 0.7 0.8 0.1 2.3 -1.1 1.6 2.3 1.9 

 III 4.5 4.0 -0.5 1.3 -1.0 -3.1 8.2 1.0 

 IV 2.3 1.6 -0.7 2.2 0.3 -0.1 4.8 1.7 

 ANNUAL 5.0 2.3 -2.6 2.3 0.7 -2.5 7.1 0.9 

 2003 I 3.4 2.4 -1.0 4.0 0.2 0.6 3.0 1.5 

 II 6.2 3.8 -2.3 4.9 4.2 -1.3 4.0 0.7 

 III 9.5 10.4 0.9 4.7 2.3 -4.3 10.2 1.1 

 IV 2.5 4.2 1.6 r4.2 r3.4 r1.7 r-1.1 0.6 

 ANNUAL 4.4 3.7 -0.7 r3.5 r1.2 r-0.9 r4.7 1.2 

 2004 I r3.8 r5.4 r1.5 r4.6 r0.9 r0.8 r4.2 r2.1 

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

 Percent change from corresponding quarter of previous year 

 2002 I 5.3 1.1 -4.0 2.7 1.4 -2.5 7.6 1.0 

 II 4.7 1.6 -3.0 2.6 1.3 -2.0 5.7 0.7 

 III 5.5 3.2 -2.1 2.2 0.6 -3.1 8.0 0.8 

 IV 4.3 3.2 -1.0 1.8 -0.5 -2.4 7.0 1.0 

 ANNUAL 5.0 2.3 -2.6 2.3 0.7 -2.5 7.1 0.9 

 2003 I 2.7 2.2 -0.5 2.5 -0.4 -0.3 4.5 1.5 

 II 4.1 2.9 -1.1 3.1 0.9 -1.0 5.0 1.2 

 III 5.3 4.5 -0.8 4.0 1.7 -1.3 5.4 1.3 

 IV 5.4 5.1 -0.2 r4.5 r2.5 r-0.9 r3.9 1.0 

 ANNUAL 4.4 3.7 -0.7 r3.5 r1.2 r-0.9 r4.7 1.2 

 2004 I r5.5 r5.9 0.4 r4.6 r2.7 r-0.8 r4.2 1.1 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
11 

 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 

 2002 I 144.0 130.5 90.6 141.1 113.5 98.0 

 II 146.3 131.8 90.1 143.3 114.3 97.9 

 III 148.5 132.4 89.2 144.6 114.7 97.4 

 IV 149.5 131.3 87.8 146.5 115.7 98.0 

 ANNUAL 147.1 131.5 89.4 143.8 114.5 97.8 

 2003 I 151.4 131.3 86.7 149.0 116.5 98.4 

 II 152.6 130.1 85.3 151.2 118.0 99.0 

 III 156.4 131.5 84.1 153.2 118.9 98.0 

 IV 158.2 133.5 84.4 r155.8 r120.7 r98.5 

 ANNUAL 154.6 131.6 85.1 r152.3 r118.5 r98.5 

 2004 I r159.3 135.4 85.0 r158.1 r121.4 r99.2 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 10.2 2.5 -7.0 4.2 2.8 -5.5 

 II 6.5 4.0 -2.3 6.2 2.7 -0.2 

 III 6.0 1.7 -4.1 3.7 1.4 -2.2 

 IV 3.0 -3.1 -5.9 5.5 3.6 2.5 

 ANNUAL 7.2 -0.6 -7.3 4.0 2.4 -3.0 

 2003 I 5.1 0.1 -4.8 6.9 3.0 1.7 

 II 3.3 -3.6 -6.6 5.9 5.2 2.6 

 III 10.1 4.3 -5.3 5.6 3.1 -4.1 

 IV 4.8 6.2 1.4 r6.8 r6.0 r2.0 

 ANNUAL 5.1 0.1 -4.8 r5.9 r3.5 r0.7 

 2004 I r2.9 5.8 r2.8 r6.2 r2.5 r3.1 

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

 Percent change from corresponding quarter of previous year 

 2002 I 6.7 -3.4 -9.5 1.8 0.5 -4.6 

 II 7.6 -1.1 -8.1 4.3 3.0 -3.1 

 III 8.1 0.9 -6.6 5.2 3.5 -2.7 

 IV 6.4 1.2 -4.9 4.9 2.6 -1.4 

 ANNUAL 7.2 -0.6 -7.3 4.0 2.4 -3.0 

 2003 I 5.1 0.6 -4.3 5.6 2.6 0.4 

 II 4.3 -1.3 -5.4 5.5 3.3 1.1 

 III 5.3 -0.6 -5.7 6.0 3.7 0.6 

 IV 5.8 1.7 -3.9 r6.3 r4.3 r0.5 

 ANNUAL 5.1 0.1 -4.8 r5.9 r3.5 r0.7 

 2004 I r5.2 3.1 -2.0 r6.1 r4.2 r0.9 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
12 

 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 

 2002 I 161.2 152.6 94.7 140.0 112.6 86.8 

 II 164.4 154.7 94.1 142.4 113.5 86.6 

 III 167.4 155.9 93.1 143.5 113.8 85.7 

 IV 171.0 156.1 91.3 145.7 115.0 85.2 

 ANNUAL 166.0 154.8 93.3 142.9 113.7 86.1 

 2003 I 173.8 156.6 90.1 147.8 115.6 85.0 

 II 175.5 155.1 88.4 150.1 117.2 85.5 

 III 181.6 158.3 87.2 152.5 118.4 84.0 

 IV 184.1 161.9 87.9 r155.1 r120.1 r84.2 

 ANNUAL 178.7 158.0 88.4 r151.4 r117.8 r84.7 

 2004 I r186.8 165.5 88.6 r157.2 r120.7 r84.2 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 11.9 2.8 -8.1 1.7 0.4 -9.1 

 II 8.0 5.5 -2.3 7.0 3.4 -0.9 

 III 7.7 3.3 -4.1 3.3 0.9 -4.1 

 IV 8.9 0.4 -7.8 6.1 4.1 -2.6 

 ANNUAL 8.5 -0.7 -8.5 3.8 2.1 -4.4 

 2003 I 6.7 1.4 -5.0 6.0 2.2 -0.7 

 II 4.0 -3.9 -7.5 6.5 5.8 2.4 

 III 14.5 8.4 -5.3 6.5 4.0 -7.0 

 IV 5.6 9.4 3.5 r6.8 r6.0 r1.1 

 ANNUAL 7.7 2.0 -5.3 r6.0 r3.6 r-1.6 

 2004 I 5.9 9.3 r3.2 r5.5 r1.8 r-0.4 

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

 Percent change from corresponding quarter of previous year 

 2002 I 6.9 -4.9 -11.0 1.5 0.3 -5.0 

 II 8.4 -1.8 -9.4 4.1 2.8 -4.0 

 III 9.4 1.2 -7.5 5.0 3.3 -4.1 

 IV 9.1 3.0 -5.6 4.5 2.2 -4.2 

 ANNUAL 8.5 -0.7 -8.5 3.8 2.1 -4.4 

 2003 I 7.8 2.6 -4.8 5.6 2.6 -2.1 

 II 6.8 0.3 -6.1 5.5 3.2 -1.2 

 III 8.5 1.5 -6.4 6.3 4.0 -2.0 

 IV 7.6 3.7 -3.7 r6.5 r4.5 r-1.1 

 ANNUAL 7.7 2.0 -5.3 r6.0 r3.6 r-1.6 

 2004 I 7.4 5.7 -1.6 r6.3 r4.4 r-1.0 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
13 

 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 

 2002 I 126.6 107.2 84.7 141.6 113.9 111.8 

 II 128.1 107.8 84.1 143.3 114.3 111.9 

 III 129.4 107.7 83.3 144.9 114.9 112.0 

 IV 127.9 105.7 82.7 146.7 115.8 114.7 

 ANNUAL 128.0 107.1 83.7 144.1 114.7 112.6 

 2003 I 128.8 105.3 81.8 149.7 117.1 116.3 

 II 129.4 104.4 80.7 151.6 118.4 117.1 

 III 131.1 104.3 79.6 153.1 118.8 116.8 

 IV 132.6 105.0 79.2 r155.4 r120.4 r117.2 

 ANNUAL 130.5 104.8 80.3 r152.4 r118.6 r116.8 

 2004 I r132.3 r105.4 r79.6 r158.2 r121.5 r119.5 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 7.5 2.0 -5.1 9.5 8.1 1.8 

 II 4.8 2.2 -2.5 4.9 1.3 0.1 

 III 4.1 -0.2 -4.1 4.6 2.2 0.5 

 IV -4.7 -7.3 -2.8 5.0 3.0 10.1 

 ANNUAL 5.1 -0.6 -5.4 4.9 3.2 -0.2 

 2003 I 2.9 -1.5 -4.3 8.6 4.7 5.5 

 II 2.0 -3.2 -5.2 5.1 4.5 3.1 

 III 5.2 -0.4 -5.3 3.9 1.4 -1.3 

 IV 4.7 2.6 -1.9 r6.2 r5.5 r1.5 

 ANNUAL 1.9 -2.2 -4.0 r5.8 r3.4 r3.8 

 2004 I r-0.7 r1.4 r2.1 r7.3 r3.6 r8.1 

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

 Percent change from corresponding quarter of previous year 

 2002 I 5.5 -1.7 -6.9 2.8 1.6 -2.6 

 II 5.8 -0.4 -5.8 5.0 3.7 -0.7 

 III 6.0 0.5 -5.2 5.8 4.1 -0.2 

 IV 2.8 -0.9 -3.6 6.0 3.6 3.0 

 ANNUAL 5.1 -0.6 -5.4 4.9 3.2 -0.2 

 2003 I 1.7 -1.8 -3.4 5.8 2.8 4.0 

 II 1.0 -3.1 -4.1 5.8 3.6 4.7 

 III 1.3 -3.1 -4.4 5.6 3.4 4.3 

 IV 3.7 -0.7 -4.2 r6.0 r4.0 r2.2 

 ANNUAL 1.9 -2.2 -4.0 r5.8 r3.4 r3.8 

 2004 I r2.8 r0.1 r-2.6 r5.6 r3.7 r2.8 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
14 

 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 

 2002 I 126.4 150.2 118.8 138.1 111.1 109.3 111.9 110.0 105.3 109.5 

 II 128.3 152.2 118.7 139.6 111.4 108.8 111.5 109.6 112.3 109.8 

 III 129.8 153.4 118.2 140.6 111.5 108.3 111.5 109.2 111.8 109.4 

 IV 131.4 154.5 117.6 142.0 112.1 108.1 111.3 109.0 116.2 109.6 

 ANNUAL 128.9 152.6 118.3 140.1 111.5 108.6 111.5 109.4 111.4 109.6 

 2003 I 132.2 154.7 117.0 143.3 112.1 108.4 110.7 109.0 114.0 109.5 

 II 135.3 157.3 116.3 145.3 113.5 107.4 108.0 107.6 130.7 109.6 

 III 138.4 160.9 116.3 147.1 114.1 106.3 107.4 106.6 143.4 109.9 

 IV r139.8 r163.2 116.7 r148.5 r115.0 r106.2 r107.5 106.5 r147.4 110.2 

 ANNUAL r136.4 r159.0 116.6 r146.0 r113.7 r107.1 108.4 107.4 r134.1 109.8 

 2004 I 140.6 165.0 117.3 150.3 115.4 106.9 107.8 107.1 147.1 110.7 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 4.6 2.3 -2.2 -2.5 -3.7 -6.7 1.5 -4.6 42.4 -1.4 

 II 6.0 5.6 -0.4 4.4 0.9 -1.5 -1.4 -1.5 29.5 0.9 

 III 4.9 3.2 -1.6 3.0 0.7 -1.8 0.0 -1.3 -1.7 -1.4 

 IV 4.9 2.8 -2.0 3.9 2.0 -0.9 -0.4 -0.8 16.7 0.7 

 ANNUAL 5.1 2.0 -3.0 2.3 0.7 -2.7 1.2 -1.6 21.9 0.1 

 2003 I 2.4 0.5 -1.9 3.8 0.0 1.3 -2.4 0.3 -7.4 -0.5 

 II 9.7 7.1 -2.4 5.7 5.0 -3.7 -9.3 -5.2 72.6 0.6 

 III 9.5 9.4 -0.1 4.9 2.4 -4.2 -2.1 -3.6 45.0 0.9 

 IV r4.3 r6.0 1.6 r3.9 r3.1 r-0.4 r0.2 r-0.3 r11.6 1.1 

 ANNUAL r5.8 4.2 -1.5 r4.3 r1.9 r-1.4 -2.8 -1.8 r20.4 0.2 

 2004 I 2.3 4.5 2.1 5.1 1.4 2.7 1.2 2.3 -0.9 1.9 

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

 Percent change from corresponding quarter of previous year 

 2002 I 4.2 -0.3 -4.3 2.3 1.0 -1.8 3.4 -0.5 15.8 0.8 

 II 5.2 1.7 -3.4 2.5 1.2 -2.6 1.5 -1.5 23.2 0.3 

 III 5.8 3.1 -2.5 2.1 0.5 -3.4 0.1 -2.5 28.2 -0.3 

 IV 5.1 3.5 -1.6 2.2 -0.1 -2.8 -0.1 -2.1 20.6 -0.3 

 ANNUAL 5.1 2.0 -3.0 2.3 0.7 -2.7 1.2 -1.6 21.9 0.1 

 2003 I 4.6 3.0 -1.5 3.8 0.9 -0.7 -1.1 -0.8 8.3 -0.1 

 II 5.5 3.4 -2.0 4.1 1.9 -1.3 -3.1 -1.8 16.4 -0.1 

 III 6.6 4.9 -1.6 4.6 2.3 -1.9 -3.6 -2.4 28.3 0.4 

 IV r6.5 r5.7 -0.7 r4.6 r2.6 r-1.8 r-3.5 r-2.2 r26.8 0.5 

 ANNUAL r5.8 4.2 -1.5 r4.3 r1.9 r-1.4 -2.8 -1.8 r20.4 0.2 

 2004 I 6.4 6.7 0.3 4.9 3.0 -1.4 -2.6 -1.8 29.0 1.1 

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

 See footnotes following Table 6. June 3, 2004 

 r=revised Source: Bureau of Labor Statistics 
15 

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

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

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

Statistics and the Bureau of Economic Analysis. 

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

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

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

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

output per hour of all persons has differed from the initial value by between –1.4 and +1.5 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 fourth quarter of 2003. 

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 1978-2003 is based on the Consumer Price Index research 

series (CPI-U-RS). 

(3) Unit nonlabor payments include profits, consumption of fixed capital, taxes on production 

and imports less subsidies, net interest and miscellaneous payments, business current 

transfer payments, rental income of persons, and the current surplus of government 

enterprises. 

(4) Current dollar output divided by the output index. 

(5) Quarterly changes: Percent change compounded at annual rate from the original data rather 

than index numbers. Annual changes: Percent change between annual average levels. 

(6) Unit nonlabor costs include consumption of fixed capital, taxes on production and imports 

less subsidies, net interest and miscellaneous payments, and business current transfer 

payments. 

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

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

consumption adjustments.