Internet address: http://www.bls.gov USDL 04-1945 

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

Media contact: (202) 691-5902 Thursday, September 30, 2004 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, 2003 

The increase in U.S. manufacturing productivity in 2003 was the second highest (+6.8 

percent) among the 14 economies compared, according to the U.S. Department of 

Labor’s Bureau of Labor Statistics. Korea registered the largest gain (+9.0 percent). 

Manufacturing productivity increased in all the compared economies, except for Italy. 

(See chart 1.) In this news release, data for Australia are included for the first time. 

As in 2002, U.S. productivity growth in manufacturing in 2003 was substantially 

above its average annual growth rate since 1979. Seven of the other 12 economies for 

which comparisons are available also had productivity growth in 2003 that exceeded their 

annual average over the 1979-2003 period. (Average annual growth rates for selected 

measures over various time periods are found in tables A and B.) 

Chart 1. Percent change in

 manufacturing output per hour, 2003

6.8

1.2

3.3

4.5

3.7 3.2

4.3

1.9

2.6

-1.0

1.6

5.9 5.5

9.0

-3

-1

1

3

5

7

9

11

United States

Canada

Australia

Japan

Korea

Taiwan

Belgium

Denmark

France

Germany

Italy

Norway

Sweden

United Kingdom

(Percent)
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Unit labor costs in manufacturing, expressed in national currency units, rose in 8 of 

the 13 economies for which 2003 data are available, with a 1.6 percent increase in the 

United States. Of the five economies that recorded declines in unit labor costs, Japan and 

Taiwan experienced very small increases in hourly compensation, Sweden had a 

relatively large increase in productivity, with the remaining two having productivity 

increases that were slightly greater than the corresponding hourly compensation 

increases. 

The widespread, and mostly large, increases in unit labor costs in U.S. dollar terms 

are explained by the depreciation of the dollar, particularly with respect to the euro and 

other European currencies. The U.S. dollar depreciated against the currencies of all the 

economies compared, but the depreciation was very slight versus the Taiwan dollar. Unit 

labor costs fell in U.S. dollar terms only in Taiwan. (See chart 2 and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2002-2003

-0.2

-2.0

2.6

3.5

4.2

-0.3

1.0

0.5

-3.0

0.3

-3.5

2.4

1.6

8.5

17.8

15.6

23.8

24.8

19.3

20.9

20.5

-2.6

5.2

4.2

14.7

1.6

-6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Taiwan

Korea

Japan

Canada

United States

National currency basis U.S. dollar basis
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Table A. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 2002-2003

 Output Total Hourly Unit labor costs

Country per Total Employ- Average compen- compen- National U.S. Exchange

or area hour Output hours ment hours sation sation currency dollars rate (1)

United States 6.8 1.7 - 4.8 - 4.7 - 0.1 3.3 8.5 1.6 1.6 ---

Canada 1.2 - 0.5 - 1.7 - 0.8 - 0.9 1.9 3.6 2.4 14.7 12.1

Australia 3.3 1.2 - 2.0 - 1.9 - 0.1 NA NA NA NA 19.9

Japan 4.5 3.2 - 1.3 - 2.0 0.7 - 0.5 0.8 - 3.5 4.2 8.0

Korea 9.0 4.8 - 3.9 - 3.7 - 0.2 5.1 9.3 0.3 5.2 4.9

Taiwan 3.7 5.8 2.1 1.7 0.4 2.6 0.6 - 3.0 - 2.6 0.4

Belgium 3.2 - 0.6 - 3.7 - 3.0 - 0.7 NA NA NA NA 19.7

Denmark 4.3 0.5 - 3.6 - 3.1 - 0.5 1.0 4.8 0.5 20.5 19.9

France 1.9 - 0.5 - 2.3 - 2.2 - 0.1 0.5 2.9 1.0 20.9 19.7

Germany 2.6 0.2 - 2.4 - 2.7 0.3 - 0.2 2.3 - 0.3 19.3 19.7

Italy - 1.0 - 1.4 - 0.4 0.2 - 0.6 2.8 3.2 4.2 24.8 19.7

Netherlands NA - 2.8 NA - 3.0 NA 0.6 NA 3.5 23.8 19.7

Norway 1.6 - 3.8 - 5.4 - 4.6 - 0.8 - 1.4 4.3 2.6 15.6 12.7

Sweden 5.9 2.0 - 3.7 - 2.9 - 0.8 - 0.1 3.7 - 2.0 17.8 20.3

United Kingdom 5.5 0.4 - 4.8 - 4.5 - 0.4 0.2 5.3 - 0.2 8.5 8.8

(1) Value of foreign currency relative to the U.S. dollar.

NA=Not Available

Percent change

Additional data available

Annual indexes of these variables also are estimated for the time period 1950-2003 

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

website at address http://www.bls.gov/fls/home.htm. Because the value added output 

data for U.S. manufacturing industries are not available prior to 1977, the comparative 

measure of output, output per hour, and unit labor costs for the United States begin with 

1977. However, for analytical purposes, the international comparisons in this release go 

back to 1979. 

For further information, contact the Office of Productivity and Technology by phone 

at 202-691-5654, by e-mail at flspr@bls.gov, or by mail at Bureau of Labor Statistics, 2 

Massachusetts Avenue, NE, Room 2150, Washington, DC 20212. 
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 Notes about the measures 

 

The measures in this release are based on data available to BLS as of August 2004. 

Revisions for 2002 and earlier years were made for several countries to incorporate data 

not available at the time of the March 2004 report. 

United States

U.S. data in this release have been revised from 1998 forward and are based for the first 

time on the 1997 North American Industry Classification System (NAICS). Output, a 

value-added measure, is based on a new methodology that balances and reconciles 

industry production with commodity usage. Data for 2003 are accelerated estimates from 

limited source data, prepared by the Bureau of Economic Analysis (BEA) using 

extrapolations from the National Income and Product Accounts (NIPAs). Additional 

details are available in “Improved Annual Industry Accounts for 1998-2003,” Survey of 

Current Business, June 2004. The NAICS-based employment, hours, and compensation 

data back to 1998 are taken from the series published by BLS as part of the major sector 

productivity and costs measures for the United States. (Canadian data are also on a 

NAICS basis for 1997 onward. See Technical Notes.) 

Australia

With this press release, Australia becomes the fifteenth country for which manufacturing 

productivity and unit labor costs are compared. Australian economic data are published 

by fiscal year, which runs from July 1 through June 30. The Australian Bureau of 

Statistics (ABS) was able to supply unpublished calendar-year data for real value added, 

employment, and hours worked for recent years. For earlier years, and for compensation, 

the Bureau of Labor Statistics made estimates using two-year moving averages of the 

data for fiscal years. The earliest year for which suitable fiscal-year data are available for 

real value added, employment, and hours is 1975. Manufacturing compensation data are 

not available for years prior to 1990. The data for the following series, for the years 

given, are estimates using two-year moving averages: real value added, 1975; 

employment, 1975-1986; hours, 1975-1986; compensation, 1990-2002. 

Denmark

Denmark published new employment and hours worked series for all employed persons 

from 1966 forward. The data for compensation of employees also has been revised from 

1966 forward. The deflation method used for converting output in current prices to 

output in real terms has been changed from a fixed base-year to an annual chain-linked 

Laspeyres method, consistent with the United Nations System of National Accounts 

(SNA 93) guidelines. 

Korea

Korea made changes in its national accounts methods to bring them into closer accord 

with SNA 93 guidelines. These changes, from 1995 forward, have resulted in revisions 

downward in manufacturing value added and revisions upward in compensation. The 

annual rates of change in both series were little affected by the revisions. 
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Manufacturing productivity, output, and labor input

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

high at 6.8 percent in 2003. This growth was not as high as the record set in 2002 of 10.2 

percent, an increase that has been revised upward by one percentage point over the figure 

in the March press release. U.S. productivity growth in 2003 trailed only that of Korea, 

at 9.0 percent, and was followed closely by Sweden (+5.9 percent) and the United 

Kingdom (+5.5 percent). All other economies recorded productivity increases except 

Italy, which experienced a decline in productivity of 1.0 percent, following a greater 

decrease in 2002. For the second year, productivity growth continued to be low in 

Canada (+1.2 percent) and in Norway (+1.6 percent). The United Kingdom, Denmark, 

Japan, Australia, and Germany had higher productivity growth in 2003 than in 2002. 

The increases in labor productivity occurred despite a decline in manufacturing 

output in 6 of the 15 economies. In 2003, manufacturing output grew most in the Asian 

economies. The increase in U.S. manufacturing output (+1.7 percent) was exceeded by 

only one of the nine European countries, Sweden (+2.0 percent). Five of the European 

countries experienced declines in manufacturing output in 2003, and the others had only 

very small increases. Output also declined in Canada. (See table B.) 

Hours worked in manufacturing declined in 2003 in all the economies except Taiwan. 

Norway had the greatest decline in hours worked (-5.4 percent), followed by the United 

States and the United Kingdom, both with declines of 4.8 percent. In 2002, the United 

States had the greatest decline among countries compared. In eight of the countries with 

declines in hours worked, output increased in 2003, resulting in substantial productivity 

increases in most cases. In four other countries, declines in manufacturing output were 

more than offset by greater falls in hours worked, also resulting in productivity increases. 

Only in Italy was the output decline greater than the drop in hours worked, resulting in a 

fall in productivity. (See tables A and B.) 

The reductions in hours worked in manufacturing continued a general trend during 

the last decades in the manufacturing sectors of these economies. Canada and Taiwan 

were exceptions, with aggregate hours worked in manufacturing increasing in both since 

1979. In most of the other economies, hours worked in manufacturing reached their 

maximum levels in the 1960s and 1970s (the United States in 1979) and have exhibited a 

downward trend since then. Five of the eight European countries for which hours data 

are available had greater declines than the United States over the period 1979-2003. In 

Taiwan and Korea, manufacturing hours have been declining since the late 1980s. In 

most economies, the rate of decline slowed somewhat in the second half of the 1990s 

when compared with the 1990-1995 period. (See table B.) 

For most economies, reductions in manufacturing hours over the last several decades 

were the result of declines in both manufacturing employment and average hours worked. 

The reduction in average hours began earlier, but the decline in employment has been 

steeper and steadier. In the United States, Australia, Italy, and Sweden, average hours 

have risen slightly since 1979. (See table B.) 
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In 2003, the U.S. decline in manufacturing employment was the largest among the 

economies compared for the third year in a row. Manufacturing employment also 

declined in all the other economies except Italy and Taiwan. Taiwan, Japan, and 

Germany were the only economies that had increases in average hours worked in 2003. 

(See tables A and B.) 

Manufacturing hourly compensation and unit labor costs

The United States had the second highest increase in hourly compensation in 

manufacturing in 2003, expressed in national currencies. All of the 12 economies for 

which statistics are available had increases, with Korea at 9.3 percent outpacing the 8.5 

percent U.S. rate. Of the 11 countries with data for the 1979–2003 period, the United 

States was the only one to have a greater increase in 2003 than its average annual growth 

rate for the entire period. Total compensation data are not available for Australia and 

Belgium for 2003. The absence of hourly compensation data for the Netherlands for 

2003 is a result of unavailable hours data. (See table B.) 

Unit labor costs, expressed in national currency units, exhibited a mixed pattern in 

2003, with increases in 8 of the 13 countries for which data are available. Of the seven 

economies with increases that have data going back to 1979, three had increases in 2003 

that were above their 1979-2003 trend and four had increases that were below. Italy had 

the greatest increase in unit labor costs at 4.2 percent and Japan, with average gains in 

productivity and below average increases in hourly compensation, had the biggest fall in 

unit labor costs. U.S. unit labor costs increased by 1.6 percent in 2003, as the increase in 

hourly compensation surpassed the growth in productivity. 

To compare changes in competitiveness across economies, the effect of exchange rate 

fluctuations must be taken into account by expressing unit labor costs in a common 

monetary unit. When a foreign currency appreciates against the U.S. dollar, more dollars 

must be paid in exchange for each national currency unit. This leads to a larger increase, 

or a smaller decline, in unit labor costs in U.S. dollar terms than the corresponding 

change in unit labor costs expressed in the national currency. This makes products from 

that country more expensive and lessens its competitiveness. 

In 2003, the U.S. dollar depreciated against the currencies of all the economies 

compared, continuing a weakening trend after 2001. In most cases, the depreciation was 

much greater, with the exception of Norway, than the depreciations that occurred in 

2002: 19.7 percent against the euro, 20.3 percent against the Swedish krona, 19.9 percent 

against the Australian dollar and the Danish krone, 12.7 percent against the Norwegian 

krone, and 12.1 percent against the Canadian dollar. Only versus the Taiwanese dollar, at 

0.4 percent, was the depreciation of the U.S. dollar negligible. (See table B.) 

The weakness in the U.S. dollar pushed up dollar-denominated unit labor costs for 

most U.S. competitors in 2003, even where unit labor costs in national currencies 

declined. Unit labor costs of all other countries either increased more (seven countries), 

turned from decreases to increases (four countries), or decreased less (Taiwan) when 

expressed in U.S. dollars than in national currencies. In 8 of the 13 economies, unit labor 
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costs in U.S. dollars rose at double-digit rates. In France, Italy, Denmark, and the 

Netherlands, these increases surpassed 20 percent. The European increases were all well 

above the average annual rates of increase since 1979, though they were still less than in 

the 1985-1987 period, when the dollar weakened even more. (See tables A and B and 

chart 3.) 
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Output per hour

United States 3.8 3.0 3.3 4.7 6.0 10.2 6.8

Canada 2.5 2.2 3.8 2.8 0.7 2.8 1.2

Australia 3.1 2.7 2.9 3.9 3.2 2.9 3.3

Japan 3.6 3.8 3.3 4.1 2.4 3.0 4.5

Korea NA NA 9.7 10.8 5.9 9.8 9.0

Taiwan 5.9 6.4 5.3 5.6 5.5 6.3 3.7

Belgium 3.7 4.2 3.2 2.9 3.8 6.8 3.2

Denmark 2.4 2.1 2.7 2.4 2.6 3.2 4.3

France 4.2 4.2 4.0 4.5 3.5 4.8 1.9

Germany2 2.4 2.1 3.3 2.5 1.9 2.5 2.6

Italy 1.6 2.2 2.2 1.0 -0.8 -1.7 -1.0

Netherlands NA 3.5 3.5 2.5 NA 2.2 NA

Norway 1.5 2.0 0.5 1.1 2.1 1.7 1.6

Sweden 4.3 2.5 5.7 7.1 3.8 9.0 5.9

United Kingdom 3.8 4.5 3.6 2.6 3.7 2.1 5.5

Output

United States 2.6 2.3 3.1 4.5 -0.5 2.4 1.7

Canada 2.6 1.9 2.4 5.9 -0.4 2.9 -0.5

Australia 1.7 1.6 0.9 2.6 1.7 3.9 1.2

Japan 2.5 4.7 0.4 2.0 -0.8 -2.0 3.2

Korea 8.6 10.1 8.4 7.9 4.8 7.6 4.8

Taiwan 6.0 7.6 5.0 5.7 2.0 6.3 5.8

Belgium 1.9 2.6 0.6 2.9 0.3 1.0 -0.6

Denmark 1.2 1.0 2.0 1.6 -0.1 -0.6 0.5

France 2.0 2.0 1.1 3.5 1.1 0.9 -0.5

Germany2 0.6 1.2 -0.7 1.0 -0.1 -0.2 0.2

Italy 1.3 2.0 1.5 1.2 -1.0 -1.2 -1.4

Netherlands 1.9 2.5 1.8 2.6 -1.4 -0.8 -2.8

Norway 0.0 -0.4 1.1 1.0 -1.7 -0.7 -3.8

Sweden 3.2 1.8 3.7 7.4 1.1 4.1 2.0

United Kingdom 0.6 0.9 0.5 1.3 -1.4 -3.1 0.4

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

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Total hours

United States -1.2 -0.7 -0.1 -0.2 -6.2 -7.1 -4.8

Canada 0.1 -0.2 -1.3 3.0 -1.1 0.1 -1.7

Australia -1.4 -1.1 -2.0 -1.2 -1.5 1.0 -2.0

Japan -1.0 0.8 -2.8 -2.0 -3.1 -4.8 -1.3

Korea NA NA -1.2 -2.6 -1.0 -2.0 -3.9

Taiwan 0.1 1.2 -0.3 0.1 -3.3 -0.1 2.1

Belgium -1.7 -1.6 -2.5 -0.1 -3.4 -5.5 -3.7

Denmark -1.1 -1.1 -0.6 -0.8 -2.7 -3.7 -3.6

France -2.1 -2.1 -2.8 -1.0 -2.3 -3.8 -2.3

Germany2 -1.8 - .9 -3.9 -1.5 -2.0 -2.7 -2.4

Italy -0.3 -0.2 -0.7 0.1 -0.3 0.5 -0.4

Netherlands NA -1.0 -1.7 0.0 NA -2.9 NA

Norway -1.4 -2.3 0.6 -0.1 -3.7 -2.4 -5.4

Sweden -1.0 -0.7 -1.9 0.3 -2.7 -4.5 -3.7

United Kingdom -3.1 -3.4 -3.0 -1.3 -4.8 -5.1 -4.8

Employment

United States -1.2 -0.8 -0.6 -0.1 -5.5 -7.3 -4.7

Canada 0.1 -0.2 -1.5 2.8 -0.4 0.3 -0.8

Australia -1.5 -1.3 -2.3 -1.1 -1.4 1.0 -1.9

Japan -0.7 1.0 -1.6 -1.9 -3.1 -4.7 -2.0

Korea NA NA -0.9 -2.5 0.0 -1.2 -3.7

Taiwan 0.7 2.0 -0.3 0.4 -1.6 -1.8 1.7

Belgium -1.5 -1.6 -2.2 -0.7 -2.0 -3.6 -3.0

Denmark -1.0 -0.5 -1.2 -0.9 -2.6 -3.3 -3.1

France -1.4 -1.6 -2.5 -0.3 -0.9 -1.7 -2.2

Germany2 -1.3 -0.1 -4.2 -0.8 -1.5 -2.2 -2.7

Italy -0.7 -0.9 -1.6 0.1 0.3 0.8 0.2

Netherlands -0.9 -0.8 -1.6 0.2 -2.1 -2.9 -3.0

Norway -1.3 -2.2 0.3 0.1 -2.9 -1.2 -4.6

Sweden -1.4 -1.0 -3.5 0.0 -1.6 -2.8 -2.9

United Kingdom -2.7 -2.9 -2.6 -1.4 -4.5 -4.4 -4.5

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

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Average hours

United States 0.1 0.2 0.4 -0.1 -0.7 0.2 -0.1

Canada 0.0 0.0 0.3 0.1 -0.7 -0.2 -0.9

Australia 0.1 0.2 0.3 -0.1 0.0 0.0 -0.1

Japan -0.4 -0.2 -1.3 -0.1 0.0 0.0 0.7

Korea NA NA -0.2 -0.1 -1.1 -0.7 -0.2

Taiwan -0.6 -0.8 0.0 -0.3 -1.8 1.7 0.4

Belgium -0.1 0.0 -0.3 0.6 -1.5 -2.0 -0.7

Denmark -0.2 -0.6 0.6 0.1 -0.1 -0.4 -0.5

France -0.6 -0.5 -0.3 -0.7 -1.4 -2.1 -0.1

Germany2 -0.5 -0.9 0.3 -0.6 -0.4 -0.5 0.3

Italy 0.4 0.6 0.9 0.0 -0.6 -0.3 -0.6

Netherlands NA -0.2 0.0 -0.2 NA 0.0 NA

Norway -0.2 -0.1 0.3 -0.2 -0.9 -1.2 -0.8

Sweden 0.4 0.3 1.7 0.2 -1.1 -1.7 -0.8

United Kingdom -0.4 -0.6 -0.4 0.1 -0.3 -0.7 -0.4

Total labor compensation in manufacturing3

: National currency basis

 

United States 3.7 5.0 3.4 4.1 -0.7 -0.9 3.3

Canada 4.9 6.6 2.4 5.5 2.0 2.6 1.9

Australia NA NA 3.5 3.1 NA 4.5 NA

Japan 2.4 5.5 0.7 -1.1 -0.4 2.0 -0.5

Korea NA NA 16.8 5.4 6.4 7.9 5.1

Taiwan 7.9 13.5 6.8 4.2 -3.3 -2.8 2.6

Belgium NA 4.4 1.3 2.0 NA 1.5 NA

Denmark 4.4 6.8 2.3 3.0 2.0 0.9 1.0

France 3.6 6.5 1.1 1.1 1.8 1.5 0.5

Germany2 3.0 4.6 2.3 1.6 0.7 -0.3 -0.2

Italy 7.0 11.4 4.2 2.9 2.8 3.0 2.8

Netherlands 3.0 3.1 2.8 3.4 2.7 3.5 0.6

Norway 5.0 6.5 4.0 5.0 1.5 3.4 -1.4

Sweden 5.5 8.4 2.0 5.3 1.3 -1.1 -0.1

United Kingdom 4.5 7.1 2.4 3.4 0.1 0.1 0.2

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

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Hourly compensation: National currency basis

 

United States 4.9 5.6 3.5 4.3 5.8 6.7 8.5

Canada 4.8 6.8 3.7 2.4 3.2 2.5 3.6

Australia NA NA 5.6 4.3 NA 3.5 NA

Japan 3.4 4.6 3.6 1.0 2.9 7.1 0.8

Korea NA NA 18.2 8.1 7.5 10.1 9.3

Taiwan 7.8 12.1 7.1 4.0 0.0 -2.8 0.6

Belgium NA 6.1 3.9 2.0 NA 7.3 NA

Denmark 5.6 7.9 2.9 3.8 4.8 4.9 4.8

France 5.8 8.8 4.0 2.2 4.2 5.4 2.9

Germany2 4.9 5.6 6.4 3.2 2.7 2.5 2.3

Italy 7.3 11.7 4.9 2.8 3.1 2.4 3.2

Netherlands NA 4.1 4.5 3.3 NA 6.5 NA

Norway 6.6 9.0 3.4 5.2 5.4 6.0 4.3

Sweden 6.6 9.1 4.0 5.1 4.1 3.5 3.7

United Kingdom 7.8 10.9 5.6 4.8 5.2 5.5 5.3

Unit labor costs3

: National currency basis

United States 1.1 2.6 0.2 -0.4 -0.2 -3.2 1.6

Canada 2.3 4.6 -0.1 -0.4 2.4 -0.3 2.4

Australia NA NA 2.6 0.4 NA 0.5 NA

Japan -0.2 0.8 0.3 -3.0 0.4 4.0 -3.5

Korea NA NA 7.8 -2.4 1.5 0.3 0.3

Taiwan 1.8 5.4 1.7 -1.5 -5.2 -8.6 -3.0

Belgium NA 1.8 0.7 -0.9 NA 0.5 NA

Denmark 3.2 5.7 0.2 1.4 2.2 1.6 0.5

France 1.6 4.4 -0.1 -2.2 0.7 0.6 1.0

Germany2 2.4 3.3 3.1 0.6 0.8 0.0 -0.3

Italy 5.6 9.3 2.6 1.8 3.9 4.2 4.2

Netherlands 1.2 0.6 1.0 0.8 4.2 4.3 3.5

Norway 5.0 6.9 2.9 4.0 3.2 4.2 2.6

Sweden 2.2 6.5 -1.6 -1.9 0.3 -5.0 -2.0

United Kingdom 3.8 6.2 2.0 2.1 1.5 3.3 -0.2

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

Manufacturing, 15 countries or areas, 1979-2003

Average annual rates of change1

Country 1979-2003 1979-1990 1990-1995 1995-2000 2000-2003 2001-2002 2002-2003

or area

Unit labor costs3

: U.S. dollar basis

United States 1.1 2.6 0.2 -0.4 -0.2 -3.2 1.6

Canada 1.5 4.6 -3.3 -2.0 4.5 -1.6 14.7

Australia NA NA 1.5 -4.3 NA 5.8 NA

Japan 2.5 4.6 9.4 -5.7 -2.0 1.0 4.2

Korea NA NA 6.0 -9.5 -0.3 3.7 5.2

Taiwan 2.0 8.2 2.0 -4.7 -8.2 -10.4 -2.6

Belgium NA 0.6 3.3 -8.4 NA 6.1 NA

Denmark 2.2 4.1 2.3 -5.8 9.5 7.3 20.5

France 0.3 2.1 1.7 -8.9 7.8 6.2 20.9

Germany2 2.7 4.5 5.6 -6.9 7.9 5.6 19.3

Italy 2.5 5.7 -3.5 -3.2 11.2 10.0 24.8

Netherlands 1.3 1.5 3.6 -6.9 11.5 10.1 23.8

Norway 3.5 4.9 2.6 -2.7 11.0 17.4 15.6

Sweden -0.5 3.4 -5.2 -6.7 4.6 1.0 17.8

United Kingdom 2.7 4.5 -0.5 1.3 4.1 7.8 8.5

Exchange rates4

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

Canada -0.7 0.0 -3.2 -1.6 2.0 -1.4 12.1

Australia -2.2 -3.2 -1.1 -4.7 3.9 5.2 19.9

Japan 2.7 3.8 9.1 -2.7 -2.4 -2.9 8.0

Korea -3.7 -3.4 -1.7 -7.3 -1.7 3.3 4.9

Taiwan 0.2 2.7 0.3 -3.3 -3.1 -2.1 0.4

Belgium -0.8 -1.2 2.5 -7.6 7.0 5.6 19.7

Denmark -0.9 -1.5 2.0 -7.1 7.2 5.7 19.9

France -1.3 -2.2 1.8 -6.8 7.0 5.6 19.7

Germany2 0.2 1.1 2.5 -7.5 7.0 5.6 19.7

Italy -3.0 -3.3 -6.0 -4.9 7.0 5.6 19.7

Netherlands 0.1 0.9 2.6 -7.6 7.0 5.6 19.7

Norway -1.4 -1.9 -0.3 -6.4 7.6 12.7 12.7

Sweden -2.6 -2.9 -3.7 -4.9 4.3 6.4 20.3

United Kingdom -1.1 -1.6 -2.4 -0.8 2.5 4.4 8.8

r = revised NA = not available

1

Rates of change based on the compound 3Adjusted for employment taxes and 

 rate method. government subsidies to estimate the 

actual cost to employers. 

2

Data for years before 1991 pertain to the

 former West Germany. 4

Value of foreign currency relative to 

the U.S. dollar.

r r

r

r r

r

r r r

r

r

r

r

r

r

r

r
 - 13 -

Trade-weighted unit labor costs

BLS constructs indexes of U.S. unit labor cost trends relative to a trade-weighted 

average of unit labor cost trends in the other economies to take account of differences in 

the relative importance of foreign economies to U.S. trade in manufactured goods. 

Relative trade-weighted unit labor cost indexes are calculated on both a national currency 

and a U.S. dollar basis. In this release, the relative U.S. trade-weighted indexes are 

estimated against 11 economies for which comparable data are available over this period; 

the indexes underlying this chart are shown in table C. 

Chart 3 begins in 1979, a year in which U.S. manufacturing output reached a business 

cycle peak. 

Chart 3. U.S. manufacturing unit labor 

costs relative to 11(1) competitors, 1979-2002

70

80

90

100

110

120

130

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

(1979 = 100)

U.S. dollar 

basis

National 

currency 

basis

(1) Data for Australia, Belgium, and Korea are not available for 1979 and/or for 

2003. These three countries have been omitted from this chart.

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

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

1995, U.S. costs either rose at a slower rate than the "competitors" costs or fell at a faster 

rate. From 1996 to 1998, however, the strength of the U.S. dollar caused relative U.S. 

unit labor costs to rise. After a dip in 1999, the index of relative U.S. unit labor costs 

rose in 2000 and 2001, only to dip again after 2001 with a weakening of the U.S. dollar. 
 - 14 -

Table C. U.S. manufacturing unit labor 

costs relative to 11(1) competitors, 1979-2003

Unit Labor Costs Unit Labor Costs

National Currency Basis U.S. Dollar Basis

Year Own Competitors' Own Competitors'

Index Index Ratio Index Index Ratio

1979 100.0 100.0 100.0 100.0 100.0 100.0

1980 111.4 110.5 100.8 111.4 110.2 101.1

1981 116.5 118.7 98.2 116.5 109.5 106.4

1982 124.2 126.7 98.1 124.2 106.1 117.1

1983 121.6 128.9 94.3 121.6 105.1 115.6

1984 121.0 130.0 93.1 121.0 100.2 120.8

1985 123.4 130.6 94.5 123.4 97.7 126.3

1986 128.9 136.2 94.6 128.9 123.8 104.1

1987 122.8 138.6 88.6 122.8 142.9 85.9

1988 122.5 138.6 88.4 122.5 154.0 79.6

1989 128.0 141.7 90.3 128.0 152.2 84.1

1990 132.4 147.4 89.8 132.4 164.1 80.7

1991 138.0 153.1 90.2 138.0 173.6 79.5

1992 141.3 156.5 90.3 141.3 181.5 77.9

1993 142.3 157.0 90.6 142.3 177.9 80.0

1994 139.2 154.4 90.1 139.2 177.8 78.3

1995 134.0 153.8 87.1 134.0 187.0 71.7

1996 132.1 155.0 85.2 132.1 178.8 73.9

1997 129.9 153.1 84.9 129.9 164.3 79.1

1998 131.2 154.8 84.7 131.2 157.2 83.4

1999 129.8 152.0 85.4 129.8 159.4 81.5

2000 131.2 146.8 89.4 131.2 150.0 87.5

2001 132.7 150.3 88.3 132.7 143.4 92.5

2002 128.4 152.1 84.4 128.4 145.9 88.0

2003 130.4 151.4 86.2 130.4 162.3 80.4

(1) Data for Australia, Belgium, and Korea are not available for 1979 and/or for 2003.

 These three countries have been omitted from this table.
 - 15 -

Technical Notes

The comparisons in this release make use of data made available to BLS as of August 

2004 by the statistical agencies of the individual countries. 

Labor productivity is defined as real output per hour worked. Although the labor 

productivity measure presented in this release relates output to the hours worked of 

persons employed in manufacturing, it does not measure the specific contributions of 

labor as a single factor of production. Rather, it reflects the joint effects of many 

influences, including new technology, capital investment, capacity utilization, energy use, 

and managerial skills, as well as the skills and efforts of the workforce. 

Unit labor costs are defined as the cost of labor input required to produce one unit of 

output. They are computed as compensation in nominal terms divided by real output. 

The Bureau of Labor Statistics constructs trends of manufacturing labor productivity, 

hourly compensation costs, and unit labor costs from three basic aggregate measures – 

output, total labor hours, and total compensation. The hours and compensation measures 

refer to employees (wage and salary earners) in Belgium and Taiwan. For all other 

economies, the measures refer to all employed persons, including employees, selfemployed persons, and unpaid family workers. For all of the economies, the term “hours” 

refers to hours worked. 

In general, the measures relate to total manufacturing as defined by the International 

Standard Industrial Classification (ISIC). However, the measures for Denmark include 

mining and exclude manufacturing handicrafts from 1950 to 1966, and the measures for 

France include parts of mining. From 1998 forward, data for the United States are in 

accordance with the North American Industrial Classification System (NAICS 97). Prior 

to that, they are in accordance with the Standard Industrial Classifications (SIC 87, 1987-

1997; SIC 72, 1950-1986). From 1997 forward, data for Canada are in accordance with 

the NAICS 97 and, prior to 1997, with the Canadian SIC 80. 

For most countries, the data for the most recent years are based on the United Nations 

System of National Accounts 1993 (SNA 93) or its sub-system, the European System of 

Integrated National Accounts (ESA 95). For other countries, data were compiled 

according to previously used systems. 

To obtain historical time series, BLS may link together data series which were 

compiled according to different accounting systems by the countries' statistical agencies. 

Output. For most countries, the output measures are real value added in 

manufacturing from national accounts. However, output for Japan prior to 1970 and for 

the Netherlands prior to 1960 are indexes of industrial production. The manufacturing 

value added measures for the United Kingdom are essentially identical to their indexes of 

industrial production. 

The output measure for manufacturing in the United States is the chain-weighted 

index of real gross product originating (deflated value added), introduced by the Bureau 

of Economic Analysis (BEA) of the U.S. Department of Commerce in August 1996. 

Because these value added output data for U.S. manufacturing industries are not available 

for years prior to 1977, the comparative U.S. measures of output, output per hour, and 

unit labor costs begin with 1977. For more information on the U.S. measure, see 
 - 16 -

“Improved Estimates of Gross Product by Industry for 1947-98,” Survey of Current 

Business, June 2000, pp. 24-38. 

The U.S. output series used for international comparisons differs from the 

manufacturing output series that BLS publishes as part of its major sector productivity 

and costs measures for the United States. While both series are based on annuallychanging price weights, the international comparisons program uses a value added output 

concept, while the major sector series is on a sectoral output basis and begins with 1949. 

Sectoral output is gross output less intrasector sales and transfers. The U.S. major sector 

productivity and costs measures can be found at http://www.bls.gov/lpc/home.htm. For 

information on sectoral output, see “Measurement of productivity growth in U.S. 

manufacturing,” Monthly Labor Review, July 1995, pp. 13-28. 

Value added measures have been used for the international comparisons series 

because the data are more readily available from the countries' national accounts, whereas 

sectoral output would require a complex estimation procedure. Also, although BLS has 

determined that sectoral output is the correct concept for U.S. measures of productivity, 

there are other considerations that may make value added a better concept for 

international comparisons of labor productivity, such as differences among countries in 

the extent of vertical integration of industries. 

Estimation of manufacturing real output using moving price weights, as 

recommended by SNA 93, is becoming prevalent. However, many earlier time periods 

within the historical real output series have been estimated using fixed price weights, 

with the weights updated periodically (for example, every 5 or 10 years). 

Measures of real output also may differ among countries because of different 

approaches to estimating the prices of high-technology products like computers and, in 

general, of products that undergo rapid quality change. 

Labor Input. For the United States, the hours worked data are taken from the BLS 

major sector productivity program. The aggregate hours worked series used for France 

(from 1970 forward), Australia, Canada, Denmark, Norway, and Sweden are series 

published with the national accounts. For the former West Germany after 1959 and 

Germany from 1991, BLS uses aggregate hours worked, which were developed by a 

research institute of the German Ministry of Labor for use with the national accounts 

employment figures. For the United Kingdom from 1992, an annual index of total 

manufacturing hours is used. For all other countries, the U.K. before 1992, and the 

former West Germany before 1959, BLS constructs its own estimates of aggregate hours, 

using employment figures published with the national accounts, or other comprehensive 

employment series, and estimates of average annual hours worked. The Italian hours 

worked series is based on estimates by the Bank of Italy. In this news release, the all 

employed actual hours worked data for Denmark, beginning with 1966, are new series 

released by that country's statistical office. 

Compensation (Labor Cost). The compensation measures are from national accounts 

data. Compensation includes employer expenditures for legally required insurance 

programs and contractual and private benefit plans, in addition to all payments made in 

cash or in kind directly to employees. When data for the self-employed are not available, 

total compensation is estimated by assuming the same average compensation for the self-
 - 17 -

employed as for employees. Real compensation for the United States is derived using the 

Consumer Price Index research series (CPI-U-RS). 

Labor cost is defined as compensation plus employment taxes minus employment 

subsidies, i.e. the cost to employers of hiring labor. For most countries, labor cost is the 

same as compensation. However, for Australia, Canada, France, and Sweden, 

compensation is increased to account for important taxes on payroll or employment. For 

the United Kingdom, compensation is reduced between 1967 and 1991 to account for 

subsidies. 

Data for Germany. German data pertain to unified Germany from 1991 forward and 

to the former West Germany for prior years. The data series are linked in 1991. In the 

index tables, separate indexes are shown for unified Germany and for former West 

Germany. West German estimates end with 1998 and have not been revised by BLS since 

the news release USDL 99-235, on Aug. 27, 1999. 

Current Indicators. The measures for recent years may be based on current indicators 

of output (such as industrial production indexes), employment, average hours, and hourly 

compensation until national accounts and other statistics, normally used for the long-term 

measures, become available. 

Trade-Weighted Measures. The trade weights for Canada, Japan, and the European 

countries were obtained by re-scaling a series of weights, developed by the International 

Monetary Fund, based on average trade flows over the 1989-91 period. These weights are 

based on aggregate trade data for total manufacturing and take account of both bilateral 

trade and the relative importance of "third country" markets. The 1989-91 weights do not 

include Taiwan. BLS developed weights for Taiwan by using data from an earlier study 

from the International Monetary Fund and other sources. The weight used for Germany is 

based on the trade weight of the former West Germany. 

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

labor cost measures are produced: 

Country Weight Country Weight 

 

 Canada 25.87 Italy 4.70 

 Japan 31.23 Netherlands 2.30 

 Taiwan 5.92 Norway 0.49 

 Denmark 0.49 Sweden 1.93 

 France 6.03 United Kingdom 9.18 

 Germany 11.86 

Level Comparisons. The BLS measures are limited to trend comparisons. BLS does 

not prepare level comparisons of manufacturing productivity and unit labor costs because 

of data limitations and technical problems in comparing the levels of manufacturing 

output among countries. Each country measures manufacturing output in its own 

currency units. To compare outputs among countries, a common unit of measure is 

needed. Market exchange rates are not suitable as a basis for comparing output levels. 

What is needed are purchasing power parities, which are the number of foreign currency 
 - 18 -

units required to buy goods and services equivalent to what can be bought with one unit 

of U.S. currency. 

Purchasing power parities are available for total gross domestic product (GDP) from 

the Organization for Economic Cooperation and Development (OECD). However, these 

parities are derived for expenditures made by consumers, business, and government for 

goods and services – not for value added by industry. Therefore, they do not provide 

purchasing power parities by industry. The parities developed for total GDP are not 

suitable for each component industry, such as manufacturing. 

European exchange rates. On Jan. 1, 1999, 11 European countries joined the 

European Monetary Union (EMU). Greece joined on Jan. 1, 2001. The euro, the official 

currency of the EMU, was established at fixed conversion rates to the previous national 

currencies of EMU members. Data on manufacturing value added and labor 

compensation for euro-area countries are now reported in euros. And exchange rates 

between the previous national currencies of euro-area countries and the U.S. dollar are no 

longer reported; only the exchange rate between the euro and the U.S. dollar is available. 

In order to maintain historical continuity of data series, data for euro-area countries 

for years before 1999 have been converted to euros by applying the fixed euro/national 

currency conversion rates. For countries and years where output, compensation, and 

exchange rates are converted from national currency units into euros, the following fixed 

conversion rates are used: 

 

1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire 

 6.55957 French francs 2.20371 Netherlands guilders 

 1.95583 German marks 

 

The currency exchange rates cited in this publication are annual averages of daily 

buying rates in New York City.