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Media contact: (202) 691-5902 TUESDAY, DECEMBER 7, 2004. 

PRODUCTIVITY AND COSTS 

Third Quarter 2004, revised 

 The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised 

productivity data—as measured by output per hour of all persons—for the third quarter of 2004. 

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

 2.4 percent in the business sector, and 

 1.8 percent in the nonfarm business sector. 

In both sectors, changes in productivity are similar to the preliminary estimates published 

November 4. Output and hours were revised upwards in both sectors. 

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

 4.6 percent in manufacturing, 

 4.8 percent in durable goods manufacturing, and 

 5.4 percent in nondurable goods manufacturing. 

Productivity in the manufacturing sector rose more rapidly than was reported on Nov. 4. 

Both output and hours were revised up with the revisions to output larger than those to hours. 

Output and hours in manufacturing, which includes about 13 percent of U.S. business sector 

employment, tend to vary more from quarter to quarter than data for the aggregate business and 

nonfarm business sectors. Third-quarter measures are summarized in table A and appear in 

detail in tables 1 through 5. 

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

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

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

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

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

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

System. See Technical Notes for further information on data sources (page 8). 
2 

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

(Seasonally adjusted annual rates) 

 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

Business 2.4 4.5 2.0 4.0 2.1 1.5 

Nonfarm business 1.8 4.2 2.4 3.6 1.8 1.8 

Manufacturing 4.6 4.5 -0.1 4.6 2.7 0.0 

 Durable 4.8 6.4 1.6 4.0 2.1 -0.8 

 Nondurable 5.4 2.4 -2.8 5.4 3.5 0.0 

 Percent change from same quarter a year ago 

Business 2.9 4.4 1.5 4.0 1.2 1.1 

Nonfarm business 3.1 4.7 1.5 4.0 1.2 0.8 

Manufacturing 4.7 5.9 1.2 3.2 0.4 -1.5 

 Durable 5.2 8.0 2.7 2.3 -0.5 -2.8 

 Nondurable 4.7 3.4 -1.3 4.5 1.7 -0.2 

Business 

 From the second quarter to the third quarter of 2004, business sector productivity rose at 

an annual rate of 2.4 percent, as output increased 4.5 percent and hours of all persons engaged in 

the sector rose 2.0 percent (table 1). The hours increase was the largest since a 2.4-percent rise 

in the third quarter of 1999. Output per hour had increased 2.9 percent in the second quarter. 

 Business sector hourly compensation increased 4.0 percent during the third quarter of 

2004, following a 5.2-percent increase in the second quarter (as revised). Hourly compensation 

includes wages and salaries, supplements, employer contributions to employee benefit plans, and 

taxes. Real hourly compensation, which takes into account changes in consumer prices, rose 2.1 

percent in the third quarter of 2004. 

Unit labor costs increased 1.5 percent in the third quarter of 2004, less than the 2.3-percent 

rise in the second quarter. The implicit price deflator for the business sector, which reflects 

changes both in unit labor costs and in unit nonlabor payments, rose at a 0.9 percent annual rate 

in the third quarter of 2004. 
3 

Nonfarm business 

 Output per hour of all persons in the nonfarm business sector rose 1.8 percent during the 

third quarter of 2004, as output grew 4.2 percent and hours of all persons increased 2.4 percent 

(table 2). Output had also increased 4.2 percent in the second quarter, but because hours rose 

less, 0.3 percent, nonfarm productivity increased more, 3.9 percent. The 2.4-percent increase in 

hours was the largest since the third quarter of 1999, when they increased 2.6 percent. 

 Hourly compensation grew 3.6 percent in the third quarter of 2004, less than the 5.9-

percent increase in the previous quarter. When the rise in consumer prices is taken into account, 

real hourly compensation rose 1.8 percent in the third quarter of 2004. 

Unit labor costs rose 1.8 percent in the third quarter, similar to the previous quarter, when 

they rose 1.9 percent. The implicit price deflator for nonfarm business increased 1.6 percent in 

the third quarter of 2004. 

Manufacturing 

 Productivity increased 4.6 percent in manufacturing in the third quarter of 2004, as output 

increased 4.5 percent and hours of all persons edged down 0.1 percent (seasonally adjusted 

annual rates). In durable goods industries, productivity increased 4.8 percent, reflecting 

increases of 6.4 percent in output and 1.6 percent in hours. Productivity increased slightly more 

in the nondurable goods industries, 5.4 percent, as output rose 2.4 percent and hours fell 2.8 

percent (tables 3, 4, and 5). 

 The hourly compensation of all manufacturing workers rose 4.6 percent during the third 

quarter of 2004. In durable goods manufacturing, hourly compensation increased 4.0 percent 

and in nondurable goods manufacturing it grew 5.4 percent. When the increase in consumer 

prices is taken into account, real hourly compensation for all manufacturing workers rose 2.7 

percent in the third quarter. 

 Unit labor costs in manufacturing remained unchanged in the third quarter after falling 

1.4 percent in the previous quarter. Unit labor costs declined 0.8 percent in durable goods 

manufacturing in the third quarter, and were unchanged in nondurable goods manufacturing. 
4 

Nonfinancial Corporations 

Third-quarter 2004 measures of productivity and costs also were released for 

nonfinancial corporations (tables B and 6). Output per all-employee hour grew at a 4.2 percent 

annual rate, faster than the 3.3 percent increase in the previous quarter. Output increased 5.6 

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

annual rates). The nonfinancial corporate sector includes all corporations doing business in the 

United States, except those classified as depository institutions, nondepository institutions, 

security and commodity brokers, insurance carriers, regulated investment offices, small business 

investment offices, and real estate investment trusts. 

Table B. Nonfinancial corporations: Third-quarter 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 

2003 III 4.2 5.6 1.3 4.0 2.1 -0.3 0.9 0.3 

 Percent change from same quarter a year ago 

2003 III 3.1 4.8 1.7 4.0 1.2 0.8 13.5 1.6 

Hourly compensation in nonfinancial corporations increased 4.0 percent in the third 

quarter, down from the second quarter increase of 5.5 percent. When the rise in consumer prices 

is taken into account, real hourly compensation increased 2.1 percent in the third quarter. 

Unit labor costs for the sector declined 0.3 percent in third quarter 2004. Unit nonlabor 

costs rose 1.4 percent, while unit profits rose at a 0.9 percent annual rate in the third quarter. As 

a result of these movements, the implicit price deflator for the output of nonfinancial 

corporations—which reflects a weighted average of these three measures—increased 0.3 percent. 
5 

Revised Measures 

Current and previous measures for the second and third quarters of 2004 for the business, 

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

business sector productivity growth was revised up 0.1 percentage point when output was revised 

up more than hours. Conversely, productivity was revised down in the nonfarm business sector, 

as output was revised up less than hours. Unit labor costs in the business sector showed the same 

1.5 percent increase in the third quarter as reported previously, while unit labor costs in nonfarm 

business rose slightly faster than reported on Nov. 4. In manufacturing, an upward revision to 

output raised the third-quarter gain in productivity to 4.6 percent. Because the revision to 

productivity was largely offset by an upward revision to hourly compensation, unit labor costs 

were revised only slightly, and now show no change from the previous quarter. 

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 2004 

Business: 

 Previous........................ 2.3 4.2 1.9 3.8 2.0 1.5 

 Revised......................... 2.4 4.5 2.0 4.0 2.1 1.5 

Nonfarm business: 

 Previous........................ 1.9 4.1 2.1 3.6 1.7 1.6 

 Revised......................... 1.8 4.2 2.4 3.6 1.8 1.8 

Manufacturing: 

 Previous........................ 4.3 4.0 -0.3 4.4 2.5 0.1 

 Revised......................... 4.6 4.5 -0.1 4.6 2.7 0.0 

Second quarter 2004 

Business: 

 Previous........................ 2.9 3.9 1.0 4.3 -0.4 1.4 

 Revised......................... 2.9 3.9 1.0 5.2 0.5 2.3 

Nonfarm business: 

 Previous........................ 3.9 4.2 0.3 4.9 0.2 1.0 

 Revised......................... 3.9 4.2 0.3 5.9 1.1 1.9 

Manufacturing: 

 Previous........................ 8.3 6.7 -1.4 3.8 -0.9 -4.2 

 Revised......................... 8.3 6.7 -1.4 6.8 2.0 -1.4 
6 

The second-quarter 2004 measures of hourly compensation, real hourly compensation, 

and unit labor costs were revised to reflect new information on compensation. In the business 

and nonfarm business sectors, hourly compensation and unit labor costs show larger increases 

than previously reported; real hourly compensation rose instead of fell in the business sector. In 

manufacturing, hourly compensation increased sharply in the second quarter, and real hourly 

compensation rose rather than fell, after revision. Manufacturing unit labor costs decreased less 

during the second quarter of 2004 than previously reported. 

Revised measures: Nonfinancial corporations 

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

information on output and employee compensation during the second quarter of 2004 (table D). 

With hours unchanged, productivity was revised upwards along with output. An upward 

revision to compensation implied larger increases in hourly compensation and real hourly 

compensation. Because the revision to compensation was greater than to output, unit labor costs 

increased more in the second quarter than previously 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 

 Second quarter 2004 

Previous 2.7 3.7 0.9 4.7 0.0 1.9 21.7 3.8 

Revised 3.3 4.2 0.9 5.5 0.7 2.2 21.1 3.8 

 Upcoming change 

 Early in 2005, BLS will improve the way it uses data for farm workers, the nonfarm self 

employed, and nonfarm unpaid family workers in the productivity program by accounting for the 

effects of multiple jobholding. 
7 

Next release date 

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

February 5, 2005. Preliminary fourth-quarter and annual 2004 measures will be released at that 

time. Quarterly measures for the manufacturing sector will reflect the annual revision to the 

index of industrial production. 

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

economy in 2005 are: 

UReference periodU U2005 release dateU

2004:

Fourth quarter, Annual February 3 

Fourth quarter, Annual (revised) March 3 

2005:

First quarter May 5 

First quarter (revised) June 2 

Second quarter August 9 

Second quarter (revised) September 7 

Third quarter November 3 

Third quarter (revised) December 6 

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

source data in 2005. Each issue of Productivity and Costs contains a "Next release date"

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

TECHNICAL NOTES 

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

persons working in the sector—wage and salary 

workers, the self-employed, and unpaid family 

workers. The primary source of hours and employment data is the BLS Current Employment 

Statistics (CES) program, which provides monthly 

survey data on the number of jobs held by wage 

and salary workers in nonfarm establishments. 

The CES also provides average weekly paid hours 

of production and nonsupervisory workers in these 

establishments. Weekly paid hours are adjusted to 

hours at work using data from the National 

Compensation Survey (NCS). The BLS Hours at 

Work survey, conducted for this purpose, was used 

for years prior to 2001. The Office of Productivity 

and Technology estimates average weekly hours at 

work for nonproduction and supervisory workers 

using information from the Current Population 

Survey (CPS), the CES, and the NCS. 

Data from the CPS are used for farm labor, 

nonfarm proprietors, and nonfarm unpaid family 

workers. Estimates of labor input for government 

enterprises are derived from the CPS, the CES, and 

the National Income and Product Accounts (NIPA) 

prepared by the Bureau of Economic Analysis 

(BEA) of the Department of Commerce. 

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 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; private households; unincorporated 

business; and those corporations classified as 

offices of bank holding companies, offices of other 

holding companies, or offices in the finance and 

insurance sector. Nonfinancial corporations 

accounted for about 54 percent of the value of 

GDP in 2000. 

Productivity: These productivity measures 

describe the relationship between real output and 

the labor time involved in its production. They 

show the changes from period to period in the 

amount of goods and services produced per hour. 

Although these measures relate output to hours at 

work of all persons engaged in a sector, they do 

not measure the specific contribution of labor, 

capital, or any other factor of production. Rather, 

they reflect the joint effects of many influences, 

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

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

and effort of the work force. 

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 122.7 142.2 115.9 143.2 115.2 116.7 113.4 115.5 

 II 123.2 142.9 116.0 144.4 115.2 117.2 113.6 115.9 

 III 124.7 144.3 115.7 145.0 115.0 116.3 115.7 116.1 

 IV 125.0 144.7 115.7 145.5 114.8 116.3 116.8 116.5 

 ANNUAL 123.9 143.5 115.8 144.5 115.0 116.6 114.9 116.0 

 2003 I 126.2 145.5 115.3 147.4 115.3 116.8 117.7 117.1 

 II 128.6 147.5 114.7 149.6 116.8 116.4 119.0 117.3 

 III 131.2 150.8 114.9 151.7 117.7 115.6 120.8 117.5 

 IV 132.0 152.3 115.4 153.2 118.7 116.0 120.7 117.8 

 ANNUAL 129.5 149.0 115.1 150.5 117.1 116.2 119.6 117.4 

 2004 I 133.3 154.3 115.8 154.2 118.4 115.7 122.9 118.4 

 II 134.2 155.8 116.1 r156.2 r118.6 r116.4 r124.4 119.4 

 III 135.0 r157.5 116.6 r157.7 r119.2 r116.8 r124.3 119.6 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 5.9 3.5 -2.3 4.9 3.5 -1.0 1.0 -0.3 

 II 1.7 2.1 0.4 3.4 -0.1 1.7 1.0 1.4 

 III 4.8 3.8 -1.0 1.6 -0.7 -3.1 7.3 0.7 

 IV 1.2 1.2 0.0 1.3 -0.6 0.0 3.8 1.4 

 ANNUAL 4.3 1.8 -2.4 3.2 1.5 -1.1 4.5 0.9 

 2003 I 3.9 2.2 -1.6 5.5 1.7 1.6 3.1 2.1 

 II 7.6 5.6 -1.9 6.1 5.4 -1.4 4.5 0.8 

 III 8.5 9.3 0.7 5.6 3.1 -2.6 6.3 0.7 

 IV 2.4 4.2 1.7 4.0 3.3 1.6 -0.4 0.8 

 ANNUAL 4.5 3.8 -0.7 4.1 1.8 -0.4 4.1 1.3 

 2004 I 3.9 5.3 1.3 2.8 -0.8 -1.1 7.4 2.1 

 II 2.9 3.9 1.0 r5.2 r0.5 r2.3 r5.0 3.3 

 III r2.4 r4.5 r2.0 r4.0 r2.1 1.5 0.0 0.9 

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

 Percent change from corresponding quarter of previous year 

 2002 I 4.9 0.8 -3.9 3.2 1.9 -1.6 6.6 1.2 

 II 4.0 1.1 -2.8 3.4 2.1 -0.6 3.5 0.9 

 III 4.9 2.8 -2.0 3.3 1.6 -1.6 5.0 0.8 

 IV 3.4 2.7 -0.7 2.8 0.5 -0.6 3.2 0.8 

 ANNUAL 4.3 1.8 -2.4 3.2 1.5 -1.1 4.5 0.9 

 2003 I 2.9 2.3 -0.6 2.9 0.1 0.0 3.8 1.4 

 II 4.4 3.2 -1.1 3.6 1.4 -0.7 4.7 1.3 

 III 5.3 4.5 -0.7 4.6 2.4 -0.6 4.4 1.3 

 IV 5.6 5.3 -0.3 5.3 3.4 -0.3 3.4 1.1 

 ANNUAL 4.5 3.8 -0.7 4.1 1.8 -0.4 4.1 1.3 

 2004 I 5.6 6.1 0.5 4.6 2.7 -0.9 4.4 1.1 

 II 4.4 5.6 1.2 r4.4 r1.5 r0.0 r4.5 1.7 

 III 2.9 4.4 1.5 r4.0 r1.2 r1.1 r2.9 1.8 

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

 See footnotes following Table 6. December 7, 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 122.4 142.6 116.5 142.6 114.7 116.4 115.1 116.0 

 II 122.8 143.2 116.7 143.8 114.7 117.1 115.4 116.5 

 III 124.1 144.5 116.4 144.3 114.4 116.2 117.7 116.8 

 IV 124.6 145.0 116.4 144.7 114.3 116.1 118.9 117.2 

 ANNUAL 123.5 143.9 116.5 143.8 114.5 116.5 116.8 116.6 

 2003 I 125.8 145.9 116.0 146.6 114.7 116.6 119.6 117.7 

 II 127.8 147.8 115.6 148.7 116.1 116.3 120.4 117.8 

 III 130.6 151.1 115.7 150.9 117.1 115.5 122.3 118.0 

 IV 131.7 152.8 116.1 152.5 118.2 115.9 121.9 118.1 

 ANNUAL 129.0 149.4 115.8 149.7 116.5 116.1 121.1 117.9 

 2004 I 132.8 155.0 116.7 153.3 117.7 115.4 124.3 118.7 

 II 134.1 156.5 116.7 r155.5 r118.0 r115.9 r125.7 119.6 

 III 134.7 r158.2 117.4 r156.9 r118.5 r116.5 r126.0 120.0 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 6.9 4.0 -2.7 5.5 4.1 -1.4 1.6 -0.3 

 II 1.1 1.7 0.6 3.4 -0.1 2.3 1.0 1.8 

 III 4.5 3.6 -0.9 1.5 -0.8 -2.9 8.0 1.0 

 IV 1.6 1.4 -0.2 1.2 -0.6 -0.3 4.2 1.3 

 ANNUAL 4.4 1.8 -2.5 3.3 1.6 -1.1 4.7 1.0 

 2003 I 3.7 2.4 -1.3 5.3 1.5 1.6 2.4 1.9 

 II 6.7 5.3 -1.4 5.7 5.0 -1.0 2.9 0.5 

 III 9.0 9.3 0.3 6.1 3.6 -2.7 6.3 0.6 

 IV 3.1 4.6 1.4 4.4 3.6 1.2 -1.2 0.3 

 ANNUAL 4.4 3.8 -0.6 4.1 1.7 -0.4 3.7 1.1 

 2004 I 3.7 5.7 2.0 2.0 -1.6 -1.6 8.0 2.0 

 II 3.9 4.2 0.3 r5.9 r1.1 r1.9 r4.6 2.9 

 III r1.8 r4.2 r2.4 3.6 r1.8 r1.8 r1.2 1.6 

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

 Percent change from corresponding quarter of previous year 

 2002 I 5.1 0.9 -4.0 3.2 2.0 -1.8 6.7 1.2 

 II 4.0 1.0 -2.9 3.5 2.2 -0.5 3.4 0.9 

 III 4.8 2.6 -2.1 3.4 1.7 -1.3 5.2 1.0 

 IV 3.5 2.7 -0.8 2.9 0.6 -0.6 3.7 1.0 

 ANNUAL 4.4 1.8 -2.5 3.3 1.6 -1.1 4.7 1.0 

 2003 I 2.7 2.3 -0.5 2.9 0.0 0.1 3.9 1.5 

 II 4.1 3.2 -0.9 3.4 1.2 -0.7 4.4 1.2 

 III 5.2 4.6 -0.7 4.6 2.4 -0.6 3.9 1.1 

 IV 5.6 5.4 -0.2 5.4 3.4 -0.2 2.5 0.8 

 ANNUAL 4.4 3.8 -0.6 4.1 1.7 -0.4 3.7 1.1 

 2004 I 5.6 6.2 0.6 4.5 2.6 -1.0 3.9 0.8 

 II 4.9 6.0 1.0 r4.6 r1.7 r-0.3 r4.4 1.5 

 III 3.1 4.7 1.5 r4.0 r1.2 r0.8 r3.1 1.7 

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

 See footnotes following Table 6. December 7, 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 143.8 130.5 90.7 144.1 115.9 100.2 

 II 145.7 131.8 90.4 147.0 117.2 100.8 

 III 147.8 132.4 89.5 148.6 117.8 100.5 

 IV 148.8 131.3 88.2 149.9 118.3 100.7 

 ANNUAL 146.5 131.5 89.7 147.4 117.3 100.6 

 2003 I 151.0 131.3 87.0 155.7 121.8 103.1 

 II 152.1 130.1 85.6 158.5 123.8 104.2 

 III 156.0 131.5 84.3 161.6 125.5 103.6 

 IV 157.2 133.5 84.9 163.9 127.0 104.2 

 ANNUAL 154.1 131.6 85.4 159.9 124.5 103.8 

 2004 I 158.3 135.5 85.6 162.2 124.5 102.5 

 II 161.5 137.8 85.3 r164.9 r125.2 r102.1 

 III r163.3 r139.3 85.3 r166.7 r126.0 r102.1 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 10.0 2.5 -6.9 14.2 12.7 3.8 

 II 5.4 4.0 -1.3 8.2 4.5 2.6 

 III 5.9 1.7 -3.9 4.5 2.1 -1.3 

 IV 2.8 -3.1 -5.7 3.5 1.6 0.7 

 ANNUAL 7.0 -0.6 -7.1 6.7 5.0 -0.3 

 2003 I 6.0 0.1 -5.6 16.6 12.3 10.0 

 II 2.9 -3.6 -6.3 7.4 6.7 4.4 

 III 10.6 4.3 -5.7 8.1 5.6 -2.2 

 IV 3.3 6.2 2.8 5.7 4.9 2.3 

 ANNUAL 5.1 0.1 -4.8 8.5 6.1 3.2 

 2004 I 2.7 6.2 3.4 -4.1 -7.4 -6.6 

 II 8.3 6.7 -1.4 r6.8 r2.0 r-1.4 

 III r4.6 r4.5 r-0.1 r4.6 r2.7 r0.0 

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

 Percent change from corresponding quarter of previous year 

 2002 I 6.6 -3.4 -9.4 4.1 2.8 -2.4 

 II 7.3 -1.1 -7.9 7.0 5.6 -0.3 

 III 8.0 0.9 -6.6 8.2 6.5 0.2 

 IV 6.0 1.2 -4.5 7.5 5.1 1.4 

 ANNUAL 7.0 -0.6 -7.1 6.7 5.0 -0.3 

 2003 I 5.0 0.6 -4.2 8.1 5.1 2.9 

 II 4.4 -1.3 -5.4 7.9 5.6 3.3 

 III 5.5 -0.6 -5.8 8.8 6.5 3.1 

 IV 5.6 1.7 -3.8 9.4 7.3 3.5 

 ANNUAL 5.1 0.1 -4.8 8.5 6.1 3.2 

 2004 I 4.8 3.2 -1.5 4.2 2.3 -0.6 

 II 6.2 5.9 -0.3 r4.0 r1.1 r-2.0 

 III r4.7 r5.9 r1.2 r3.2 r0.4 r-1.5 

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

 See footnotes following Table 6. December 7, 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 161.4 152.6 94.6 142.2 114.4 88.1 

 II 163.9 154.7 94.4 145.2 115.8 88.6 

 III 167.0 155.9 93.4 146.4 116.1 87.7 

 IV 170.5 156.1 91.5 147.7 116.6 86.6 

 ANNUAL 165.7 154.8 93.5 145.4 115.7 87.7 

 2003 I 173.6 156.6 90.2 154.9 121.1 89.2 

 II 175.0 155.1 88.7 157.9 123.3 90.2 

 III 181.5 158.3 87.2 161.2 125.1 88.8 

 IV 183.3 161.9 88.3 163.4 126.5 89.1 

 ANNUAL 178.3 158.0 88.6 159.3 124.0 89.3 

 2004 I 185.2 165.7 89.5 160.4 123.1 86.6 

 II 188.7 168.3 89.2 r163.2 r123.9 r86.5 

 III r190.9 170.9 89.5 r164.8 r124.5 r86.3 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 11.7 2.8 -8.0 8.4 7.0 -2.9 

 II 6.3 5.5 -0.7 8.6 5.0 2.2 

 III 7.9 3.3 -4.3 3.5 1.1 -4.1 

 IV 8.7 0.4 -7.6 3.6 1.7 -4.7 

 ANNUAL 8.3 -0.7 -8.3 5.6 3.9 -2.5 

 2003 I 7.4 1.4 -5.6 20.8 16.4 12.5 

 II 3.1 -3.9 -6.8 8.0 7.3 4.7 

 III 15.8 8.4 -6.3 8.7 6.1 -6.1 

 IV 4.1 9.4 5.1 5.5 4.7 1.3 

 ANNUAL 7.6 2.0 -5.2 9.6 7.1 1.8 

 2004 I 4.3 9.9 5.4 -7.1 -10.4 -10.9 

 II 7.7 6.3 -1.3 r7.4 r2.5 r-0.3 

 III r4.8 r6.4 r1.6 r4.0 r2.1 r-0.8 

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

 Percent change from corresponding quarter of previous year 

 2002 I 7.1 -4.9 -11.2 3.3 2.0 -3.6 

 II 8.3 -1.8 -9.3 6.0 4.7 -2.0 

 III 9.2 1.2 -7.3 7.0 5.2 -2.0 

 IV 8.6 3.0 -5.2 6.0 3.7 -2.4 

 ANNUAL 8.3 -0.7 -8.3 5.6 3.9 -2.5 

 2003 I 7.6 2.6 -4.6 8.9 5.9 1.2 

 II 6.8 0.3 -6.1 8.7 6.5 1.9 

 III 8.7 1.5 -6.6 10.1 7.7 1.3 

 IV 7.5 3.7 -3.5 10.6 8.5 2.9 

 ANNUAL 7.6 2.0 -5.2 9.6 7.1 1.8 

 2004 I 6.7 5.8 -0.8 3.5 1.7 -3.0 

 II 7.9 8.5 0.6 r3.4 r0.5 r-4.1 

 III 5.2 8.0 r2.7 r2.3 r-0.5 r-2.8 

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

 See footnotes following Table 6. December 7, 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 126.1 107.2 85.0 146.2 117.6 116.0 

 II 127.5 107.8 84.5 148.8 118.7 116.7 

 III 128.5 107.7 83.8 151.2 119.9 117.6 

 IV 126.9 105.7 83.3 152.5 120.4 120.2 

 ANNUAL 127.3 107.1 84.2 149.6 119.1 117.6 

 2003 I 128.2 105.3 82.1 155.9 121.9 121.6 

 II 129.0 104.4 81.0 158.3 123.6 122.7 

 III 130.4 104.3 80.0 161.1 125.0 123.5 

 IV 131.5 105.0 79.9 163.3 126.5 124.2 

 ANNUAL 129.8 104.8 80.7 159.6 124.2 123.0 

 2004 I 132.0 105.5 79.9 163.9 125.9 124.2 

 II 134.8 107.2 79.6 r166.2 r126.1 r123.3 

 III r136.6 r107.9 79.0 r168.4 r127.2 r123.3 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 7.4 2.0 -5.1 26.5 24.9 17.7 

 II 4.6 2.2 -2.3 7.2 3.6 2.5 

 III 3.2 -0.2 -3.3 6.6 4.1 3.2 

 IV -4.9 -7.3 -2.5 3.7 1.8 9.0 

 ANNUAL 4.8 -0.6 -5.2 9.3 7.5 4.3 

 2003 I 4.2 -1.5 -5.5 9.1 5.1 4.7 

 II 2.3 -3.2 -5.5 6.3 5.7 3.9 

 III 4.4 -0.4 -4.6 7.2 4.7 2.7 

 IV 3.4 2.6 -0.7 5.6 4.8 2.2 

 ANNUAL 2.0 -2.2 -4.1 6.7 4.3 4.6 

 2004 I 1.6 1.8 0.2 1.5 -2.0 0.0 

 II 8.7 6.9 -1.7 r5.6 r0.8 r-2.9 

 III r5.4 r2.4 -2.8 r5.4 r3.5 r0.0 

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

 Percent change from corresponding quarter of previous year 

 2002 I 5.0 -1.7 -6.4 6.2 5.0 1.2 

 II 5.3 -0.4 -5.4 9.2 7.9 3.7 

 III 6.2 0.5 -5.4 10.9 9.2 4.5 

 IV 2.5 -0.9 -3.3 10.6 8.2 8.0 

 ANNUAL 4.8 -0.6 -5.2 9.3 7.5 4.3 

 2003 I 1.7 -1.8 -3.4 6.6 3.6 4.8 

 II 1.2 -3.1 -4.2 6.4 4.2 5.2 

 III 1.5 -3.1 -4.5 6.6 4.3 5.0 

 IV 3.6 -0.7 -4.1 7.1 5.1 3.3 

 ANNUAL 2.0 -2.2 -4.1 6.7 4.3 4.6 

 2004 I 2.9 0.2 -2.7 5.2 3.3 2.2 

 II 4.5 2.7 -1.7 r5.0 r2.1 r0.5 

 III r4.7 r3.4 -1.3 r4.5 r1.7 r-0.2 

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

 See footnotes following Table 6. December 7, 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 126.3 149.7 118.5 139.9 112.6 110.8 114.0 111.6 89.1 109.6 

 II 127.9 151.4 118.4 141.3 112.7 110.5 112.9 111.2 94.7 109.7 

 III 129.2 152.3 117.9 142.1 112.7 110.0 112.7 110.7 95.7 109.4 

 IV 130.2 153.1 117.6 142.9 112.8 109.7 112.3 110.4 101.8 109.6 

 ANNUAL 128.4 151.6 118.1 141.5 112.7 110.2 113.0 111.0 95.4 109.6 

 2003 I 131.3 153.4 116.8 144.1 112.7 109.8 113.2 110.7 99.2 109.7 

 II 134.1 156.1 116.4 146.3 114.2 109.1 111.4 109.7 111.0 109.8 

 III 137.2 159.4 116.2 148.5 115.3 108.2 111.1 109.0 118.7 109.9 

 IV 138.9 162.0 116.7 150.0 116.2 108.0 110.5 108.7 123.2 110.0 

 ANNUAL 135.4 157.7 116.5 147.3 114.6 108.8 111.5 109.5 113.2 109.8 

 2004 I 138.9 163.2 117.5 150.9 115.9 108.6 109.5 108.8 128.1 110.6 

 II r140.1 r164.9 117.7 r152.9 r116.1 r109.2 r109.9 109.4 r134.3 111.6 

 III 141.5 167.2 118.1 154.4 116.7 109.1 110.3 109.4 134.6 111.7 

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

 Percent change from previous quarter at annual rate(5) 

 2002 I 7.9 5.7 -2.0 1.7 0.4 -5.8 -7.3 -6.2 90.8 -1.6 

 II 4.9 4.8 -0.1 4.0 0.4 -0.9 -3.7 -1.7 27.4 0.2 

 III 4.1 2.3 -1.7 2.3 0.0 -1.7 -0.9 -1.5 4.5 -1.0 

 IV 3.4 2.1 -1.2 2.2 0.3 -1.1 -1.4 -1.2 28.1 0.9 

 ANNUAL 4.4 1.5 -2.8 3.1 1.4 -1.3 -0.2 -1.0 15.4 0.1 

 2003 I 3.2 0.6 -2.5 3.6 -0.2 0.4 3.0 1.1 -10.0 0.1 

 II 9.1 7.4 -1.5 6.2 5.5 -2.6 -6.2 -3.6 56.4 0.5 

 III 9.4 8.8 -0.6 6.2 3.6 -3.0 -1.0 -2.5 30.8 0.2 

 IV 5.0 6.7 1.6 4.2 3.4 -0.8 -2.1 -1.2 16.1 0.4 

 ANNUAL 5.4 4.0 -1.3 4.0 1.7 -1.3 -1.3 -1.3 18.7 0.2 

 2004 I 0.1 2.9 2.8 2.3 -1.3 2.1 -3.5 0.6 16.9 2.1 

 II r3.3 r4.2 0.9 r5.5 r0.7 r2.2 r1.3 1.9 r21.1 3.8 

 III 4.2 5.6 1.3 4.0 2.1 -0.3 1.4 0.2 0.9 0.3 

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

 Percent change from corresponding quarter of previous year 

 2002 I 3.4 -1.1 -4.3 3.2 2.0 -0.2 4.0 0.9 1.5 1.0 

 II 4.2 0.8 -3.2 3.4 2.1 -0.8 0.6 -0.4 8.4 0.2 

 III 5.0 2.5 -2.4 3.1 1.4 -1.8 -1.7 -1.8 20.6 -0.4 

 IV 5.1 3.7 -1.3 2.5 0.3 -2.4 -3.3 -2.7 34.3 -0.4 

 ANNUAL 4.4 1.5 -2.8 3.1 1.4 -1.3 -0.2 -1.0 15.4 0.1 

 2003 I 3.9 2.5 -1.4 3.0 0.1 -0.9 -0.8 -0.8 11.3 0.1 

 II 4.9 3.1 -1.7 3.6 1.4 -1.3 -1.4 -1.3 17.2 0.1 

 III 6.2 4.7 -1.5 4.5 2.3 -1.6 -1.4 -1.6 23.9 0.4 

 IV 6.6 5.8 -0.8 5.0 3.1 -1.5 -1.6 -1.6 20.9 0.3 

 ANNUAL 5.4 4.0 -1.3 4.0 1.7 -1.3 -1.3 -1.3 18.7 0.2 

 2004 I 5.9 6.4 0.5 4.7 2.8 -1.1 -3.2 -1.7 29.1 0.8 

 II r4.4 r5.6 1.2 r4.5 r1.6 r0.1 r-1.3 -0.3 r21.1 1.6 

 III 3.1 4.8 1.7 4.0 1.2 0.8 -0.7 0.4 13.5 1.6 

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

 See footnotes following Table 6. December 7, 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 +1.4 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 2004. 

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.