Internet address: http://www.bls.gov/lpc/ USDL 04-2259 

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 information: (202) 691-5606 MATERIAL IS EMBARGOED 

Current data: (202) 691-5200 UNTIL 8:30 A.M. EST, 

Media contact: (202) 691-5902 THURSDAY, NOVEMBER 4, 2004 

PRODUCTIVITY AND COSTS 

Third Quarter 2004, preliminary 

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

preliminary productivity data—as measured by output per hour of all persons—for the third 

quarter of 2004. The preliminary seasonally-adjusted annual rates of productivity growth in the 

third quarter were: 

 2.3 percent in the business sector and 

 1.9 percent in the nonfarm business sector. 

Productivity increased 2.3 percent in the business sector, as output grew 4.2 percent and hours 

increased 1.9 percent. The 1.9-percent rise in nonfarm business productivity occurred as output 

rose 4.1 percent and hours rose 2.1 percent (table A). 

 In manufacturing, productivity increases in the third quarter were: 

 4.3 percent in manufacturing, 

 5.0 percent in durable goods manufacturing, and 

 4.3 percent in nondurable goods manufacturing. 

The third-quarter increase in manufacturing productivity is much lower than the 8.3-percent rise 

reported for the previous quarter (as revised). 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. 
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 6). 

Table A. Productivity and costs: Preliminary 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 2.3 4.2 1.9 3.8 2.0 1.5 

 Nonfarm business 1.9 4.1 2.1 3.6 1.7 1.6 

 Manufacturing 4.3 4.0 -0.3 4.4 2.5 0.1 

 Durable 5.0 6.3 1.3 3.9 2.0 -1.0 

 Nondurable 4.3 1.3 -2.8 5.1 3.2 0.8 

 Percent change from same quarter a year ago 

 Business 2.9 4.4 1.5 3.7 1.0 0.9 

 Nonfarm business 3.1 4.7 1.5 3.7 1.0 0.6 

 Manufacturing 4.6 5.8 1.1 2.4 -0.3 -2.1 

 Durable 5.2 8.0 2.6 1.5 -1.2 -3.5 

 Nondurable 4.5 3.1 -1.3 3.7 1.0 -0.7 

Business 

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

grew at a 2.3 percent seasonally adjusted annual rate. Output increased 4.2 percent, while hours 

of all persons engaged in the sector increased 1.9 percent. After revisions, productivity in the 

business sector rose 2.9 percent in the second quarter of 2004, reflecting a 3.9-percent rise in 

output and a 1.0-percent rise in hours (tables B and 1). 

Hourly compensation in the business sector increased at an annual rate of 3.8 percent 

during the third quarter of 2004, more slowly than the 4.3-percent rise one quarter earlier 

(revised). This measure includes wages and salaries, supplements, employer contributions to 

employee benefit plans, and taxes. Real hourly compensation, which takes into account changes 

in consumer prices, grew by 2.0 percent in the third quarter of 2004 after falling by 0.4 percent in 

the second quarter and 0.8 percent in the first quarter of the year. 
3 

 Unit labor costs, which reflect changes in both hourly compensation and productivity, 

rose 1.5 percent during the third quarter, about the same rate of increase as the 1.4-percent 

growth in the second quarter. The implicit price deflator for the business sector increased 0.9 

percent during the third quarter of 2004, following a 3.3 percent increase in the previous quarter. 

Nonfarm business 

 Productivity in the nonfarm business sector grew at a 1.9-percent annual rate during the 

third quarter of 2004. Output grew 4.1 percent in the third quarter and hours worked in the 

nonfarm business sector rose 2.1 percent, reflecting a 1.7-percent gain in employment and a 0.4-

percent increase in average weekly hours at work. Nonfarm business productivity increased 3.9 

percent in the second quarter of 2004 (revised), as output grew 4.2 percent and hours rose by 0.3 

percent (table 2). 

 Hourly compensation increased at a 3.6 percent annual rate in the third quarter of 2004. 

When the rise in consumer prices is taken into account, real hourly compensation rose 1.7 

percent during the July-September period. During the second quarter of 2004, real hourly 

compensation had risen 0.2 percent. 

Unit labor costs grew 1.6 percent during the third quarter of 2004. In the second quarter, 

unit labor costs in the nonfarm business sector had risen 1.0 percent. The implicit price deflator 

for nonfarm business output rose 1.6 percent in the third quarter of 2004. 

Manufacturing 

 Productivity increased 4.3 percent in manufacturing in the third quarter of 2004, as 

output grew 4.0 percent and hours of all persons fell 0.3 percent (seasonally adjusted annual 

rates). In durable goods, productivity grew 5.0 percent in the third quarter as output increased 

6.3 percent and hours of all persons rose 1.3 percent. Productivity increased 4.3 percent in 

nondurable goods, as a modest output increase of 1.3 percent was combined with a decline of 2.8 

percent in hours of all persons (tables 3, 4, and 5). 

 The hourly compensation of manufacturing workers increased an average of 4.4 percent 

during the third quarter of 2004, reflecting increases of 3.9 percent in durable goods and 5.1 

percent in nondurable goods. When the increase in consumer prices is taken into account, real 

hourly compensation in total manufacturing rose 2.5 percent in the third quarter. Real hourly 

compensation had fallen in both of the previous quarters, 0.9 percent in the second quarter (as 

revised) and 7.4 percent in the first quarter. 

 Unit labor costs in manufacturing edged up by 0.1 percent in the third quarter of 2004, 

after falling in three of the previous four quarters. In the durable goods sector, unit labor costs in 

the third quarter fell 1.0 percent in the third quarter and in the nondurable goods sector, these 

costs rose 0.8 percent. 
4 

Revised Measures 

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

nonfarm business, and manufacturing sectors are compared in table B. Hours data for the second 

quarter now reflect more current data on the ratio of hours worked to hours paid and updated 

information on the relative average weekly hours of supervisory (nonproduction) workers to 

nonsupervisory (production) workers in private nonfarm businesses. 

In the business and nonfarm business sectors, productivity grew more rapidly than 

reported on Sept. 2, based on information then available. In both sectors, the growth in output 

was revised up and the growth in hours was revised down. Hourly compensation was revised up 

in both sectors. Unit labor costs rose much less than reported earlier. Productivity also was 

revised up in the manufacturing sector, reflecting faster growth in output and a larger decline in 

hours than previously reported. Hourly compensation rose more rapidly in the second quarter 

than reported earlier. Because productivity was revised up more than hourly compensation, unit 

labor costs in manufacturing show more of a decline in the second quarter than reported on 

Sept. 2. 

On Oct. 13, 2004, a notice regarding corrections to the data released on Sept. 2 was 

posted on the BLS web site. Data for the second quarter 2004 for business, nonfarm business, 

manufacturing, and nonfinancial corporations were not affected. The Productivity and Costs 

news release of Aug. 10, 2004, which included revisions to historical measures, also contained 

some incorrect data. For more information, see www.bls.gov/lpc/note09022004.htm 

Table B. 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 

 Second quarter 2004 

Business: 

 Previous ....................... 1.5 3.2 1.6 3.7 -1.0 2.1 

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

Nonfarm business: 

 Previous ....................... 2.5 3.5 1.0 4.3 -0.4 1.8 

 Current ......................... 3.9 4.2 0.3 4.9 0.2 1.0 

Manufacturing: 

 Previous ....................... 6.9 6.2 -0.6 3.2 -1.5 -3.5 

 Current ......................... 8.3 6.7 -1.4 3.8 -0.9 -4.2 
5 

Revised measures: Nonfinancial Corporations 

Productivity and cost measures for nonfinancial corporations for the second quarter of 

2004 also were revised to incorporate more recent information than was available on Sept. 2. 

Table C. 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 ........... 1.4 3.2 1.8 4.0 -0.7 2.6 16.6 3.7 

Current ............. 2.7 3.7 0.9 4.7 0.0 1.9 21.7 3.8 

Productivity grew at an annual rate of 2.7 percent in second-quarter 2004, compared with 

the increase of 1.4 percent published Sept. 2. This was the combined result of both an upward 

revision in output growth, from 3.2 percent to 3.7 percent, and a downward revision to hours 

growth, from 1.8 to 0.9 percent. Hourly compensation was revised up. However, the upward 

revision to productivity more than offset the upward revision to hourly compensation, and unit 

labor costs grew more slowly than reported previously. Unit profits also grew more rapidly than 

reported on Sept. 2. (tables C and 6). 

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. 

Next release date

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

Dec. 7, 2004. It will present third-quarter measures for nonfinancial corporations and revised 

third-quarter measures for business, nonfarm business, and manufacturing. 
6 

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. 
7 

 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 r134.2 r155.8 r116.1 r155.9 r118.3 r116.1 r124.8 119.4 

 III 135.0 157.4 116.6 157.3 118.9 116.6 124.8 119.6 

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

 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 r2.9 r3.9 r1.0 r4.3 r-0.4 r1.4 r6.4 3.3 

 III 2.3 4.2 1.9 3.8 2.0 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 r4.4 r5.6 r1.2 r4.2 r1.3 r-0.2 r4.9 1.7 

 III 2.9 4.4 1.5 3.7 1.0 0.9 3.3 1.8 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
8 

 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 r134.1 r156.5 r116.7 r155.2 r117.8 r115.7 r126.1 r119.6 

 III 134.7 158.1 117.4 156.5 118.3 116.2 126.6 120.0 

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

 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 r3.9 r4.2 r0.3 r4.9 r0.2 r1.0 r6.0 2.9 

 III 1.9 4.1 2.1 3.6 1.7 1.6 1.6 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 r4.9 r6.0 r1.0 r4.4 r1.4 r-0.5 r4.7 1.5 

 III 3.1 4.7 1.5 3.7 1.0 0.6 3.5 1.7 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
9 

 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 r161.5 r137.8 r85.3 r163.7 r124.3 r101.4 

 III 163.2 139.1 85.3 165.5 125.0 101.4 

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

 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 r8.3 r6.7 r-1.4 r3.8 r-0.9 r-4.2 

 III 4.3 4.0 -0.3 4.4 2.5 0.1 

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

 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 r6.2 r5.9 r-0.3 r3.3 r0.4 r-2.7 

 III 4.6 5.8 1.1 2.4 -0.3 -2.1 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
10 

 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 r188.7 r168.3 r89.2 r162.1 r123.0 r85.9 

 III 191.0 170.9 89.5 163.6 123.6 85.7 

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

 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 r7.7 r6.3 r-1.3 r4.4 r-0.4 r-3.1 

 III 5.0 6.3 1.3 3.9 2.0 -1.0 

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

 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 r7.9 r8.5 r0.6 r2.7 r-0.2 r-4.8 

 III 5.2 8.0 2.6 1.5 -1.2 -3.5 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
11 

 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 r134.8 r107.2 r79.6 r165.0 r125.2 r122.4 

 III 136.2 107.6 79.0 167.1 126.2 122.6 

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

 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 r8.7 r6.9 r-1.7 r2.6 r-2.1 r-5.7 

 III 4.3 1.3 -2.8 5.1 3.2 0.8 

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

 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 r4.5 r2.7 r-1.7 r4.2 r1.3 r-0.3 

 III 4.5 3.1 -1.3 3.7 1.0 -0.7 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
12 

 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 r139.9 r164.7 r117.7 r152.6 r115.8 r109.1 r110.0 r109.4 r134.5 111.6 

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

 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 r2.7 r3.7 r0.9 r4.7 r0.0 r1.9 r1.8 r1.9 r21.7 r3.8 

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

 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 r4.3 r5.5 r1.2 r4.3 r1.4 r0.0 r-1.2 r-0.3 r21.2 1.6 

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

 See footnotes following Table 6. November 4, 2004 

 r=revised Source: Bureau of Labor Statistics 
13 

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.