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 information: (202) 691-5606 MATERIAL IS EMBARGOED

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

Media contact: (202) 691-5902 THURSDAY, JUNE 1, 2006. 

PRODUCTIVITY AND COSTS 

First Quarter 2006, 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 first quarter of 2006. 

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

 3.9 percent in the business sector and 

 3.7 percent in the nonfarm business sector. 

In both sectors, the first-quarter productivity gains were larger than the preliminary estimates 

reported on May 4. 

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

3.8 percent in manufacturing, 

3.5 percent in durable goods manufacturing, and 

 3.7 percent in nondurable goods manufacturing. 

 Manufacturing productivity growth was slower in the first quarter of 2006 than reported 

on May 4, reflecting downward revisions to output per hour in both durable goods and 

nondurable goods industries. Output and hours in manufacturing, which includes about 13 

percent of U.S. business-sector employment, tend to vary more from quarter to quarter than data 

for the aggregate business and nonfarm business sectors. First-quarter measures are summarized 

in table A and appear in detail in tables 1 through 5. 

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

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

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

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

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

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

System. See Technical Notes for further information on data sources (page 7). 
Table A. Productivity and costs: Revised first-quarter 2006 measures 

(Seasonally adjusted annual rates) 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

Business 3.9 6.4 2.4 5.4 3.3 1.5 

Nonfarm business 3.7 6.5 2.7 5.3 3.2 1.6 

Manufacturing 3.8 6.0 2.1 1.9 -0.2 -1.9 

 Durable 3.5 5.2 1.6 2.7 0.6 -0.9 

 Nondurable 3.7 6.7 2.9 0.5 -1.6 -3.1 

 Percent change from same quarter a year ago 

Business 2.5 4.2 1.7 2.8 -0.8 0.3 

Nonfarm business 2.5 4.2 1.7 2.8 -0.9 0.3 

Manufacturing 4.0 4.8 0.7 2.1 -1.5 -1.8 

 Durable 6.0 7.4 1.3 2.0 -1.6 -3.7 

 Nondurable 1.6 1.4 -0.3 2.3 -1.3 0.6 

Business 

 Productivity increased 3.9 percent in the business sector from the fourth quarter of 2005 

to the first quarter of 2006, as output increased 6.4 percent and hours worked by all persons grew 

2.4 percent (seasonally adjusted annual rates). Productivity had increased 0.2 percent in the 

previous quarter, reflecting increases in output and hours of 1.8 percent and 1.6 percent, 

respectively (table 1). 

 Hourly compensation increased 5.4 percent during the first quarter of 2006, after 

declining 0.6 percent in the fourth quarter of 2005, as revised (seasonally adjusted annual rates). 

This measure of compensation includes wages and salaries, supplements, employer contributions 

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

changes in consumer prices, rose by 3.3 percent in the first quarter of 2006, rebounding from a 

3.8-percent drop in the previous quarter. 

The change in unit labor costs approximates the change in hourly compensation less the 

change in productivity. In the first quarter of 2006, 5.4-percent growth in hourly compensation 

and 3.9-percent growth in productivity yielded a 1.5-percent rise in unit labor costs. Unit labor 

costs declined 0.8 percent in the fourth quarter of 2005, as revised. The implicit price deflator 

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

grew by 2.8 percent in the first quarter of 2006. 
Nonfarm business 

 Productivity rose 3.7 percent in the nonfarm business sector during the first quarter of 

2006, as output increased 6.5 percent and hours of all persons increased 2.7 percent (table 2). 

The hours increase was larger than during any quarter in 2005. In fourth-quarter 2005, nonfarm 

productivity had declined 0.3 percent as output rose 1.5 percent and hours increased 1.8 percent. 

 Hourly compensation increased 5.3 percent in the first quarter of 2006. After revision, 

this measure decreased at a 0.9 percent annual rate in the fourth quarter of 2005—the first 

decline in nonfarm hourly compensation since 1994, when it fell 0.8 percent in the second 

quarter and 0.3 percent in the third quarter. When the rise in consumer prices is taken into 

account, real hourly compensation rose 3.2 in the first quarter and fell 4.1 percent in the fourth 

quarter. 

Unit labor costs grew 1.6 percent during the first quarter of 2006, following a 0.6-percent 

decline in the fourth quarter of 2005, as revised. The implicit price deflator for nonfarm business 

output rose by 2.9 percent in the first quarter of 2006. 

Manufacturing 

 Productivity increased 3.8 percent in manufacturing during the first quarter of 2006, 

reflecting similar performance in the durable and nondurable manufacturing subsectors. In 

durable goods industries, productivity rose 3.5 percent, as output grew 5.2 percent and hours rose 

1.6 percent. In nondurable goods industries, productivity grew 3.7 percent, as output increased 

6.7 percent and hours rose 2.9 percent (tables 3, 4, and 5). 

 Hourly compensation in manufacturing rose 1.9 percent during the first quarter, reflecting 

increases of 2.7 percent in the hourly compensation of persons in durable goods industries and 

0.5 percent in the hourly compensation of workers in nondurable goods industries. Real hourly 

compensation, which takes account of changes in consumer prices, declined 0.2 percent for all 

manufacturing workers, as a 0.6-percent rise in durable manufacturing real hourly compensation 

was eclipsed by a 1.6-percent drop in the nondurable goods industries. 

 Unit labor costs fell 1.9 percent in manufacturing during the first quarter of 2006. In 

nondurable goods industries, productivity grew much faster than hourly compensation, and unit 

labor costs fell 3.1 percent. In durable goods industries, where hourly compensation increased 

faster than in nondurable manufacturing, unit labor costs declined only 0.9 percent. 
Nonfinancial corporations 

Preliminary first-quarter 2006 measures of productivity and costs for nonfinancial 

corporations also were announced today (tables B and 6). Productivity rose 3.7 percent in the 

first quarter, as output increased 5.8 percent and employee-hours rose 2.0 percent (seasonally 

adjusted annual rates). As revised, productivity had increased at a 2.4-percent annual rate in the 

fourth quarter of 2005, as output grew 5.0 percent and employee-hours rose 2.5 percent. 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: Preliminary first-quarter 2006 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 

2006 I 3.7 5.8 2.0 5.0 2.9 1.3 13.1 3.2 

Percent change from same quarter a year ago 

2006 I 3.7 5.7 2.0 2.8 -0.8 -0.8 22.3 2.1 

Hourly compensation rose 5.0 percent during the first quarter of 2006, following a 0.8- 

percent decrease in the fourth quarter of 2005. As in the larger business sector, the fourthquarter decline was the first since the third quarter of 1994 (0.2 percent). When the rise in 

consumer prices is taken into account, real hourly compensation increased 2.9 percent in the first 

quarter of 2006, and fell 4.0 percent in the fourth quarter of 2005. Unit labor costs in 

nonfinancial corporations rose 1.3 percent in the first quarter, after falling 3.2 percent one 

quarter earlier. 

REVISED MEASURES 

 Previous and revised measures for the first quarter of 2006 in the business, nonfarm 

business, and manufacturing sectors are compared in table C. Productivity growth was revised 

up in the business and nonfarm business sectors from the preliminary estimates reported May 4, 

as output was revised up more than hours. In manufacturing, hours were revised up more than 

output, and productivity was revised down. Hourly compensation and real hourly compensation 

were revised down in all sectors for the first quarter of 2006. In the business and nonfarm 

business sectors, upward revisions to productivity and downward revisions to hourly 
compensation both contributed to slower first-quarter growth in unit labor costs than reported 

May 4. In manufacturing, because compensation per hour was revised down more than output 

per hour, unit labor costs fell slightly faster during the first quarter than previously reported. 

Table C. Previous and revised productivity and related measures 

(Quarterly percent change at seasonally adjusted annual rate) 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

First quarter 2006 

Business: 

 Previous ....................... 3.4 5.8 2.3 5.8 3.6 2.3 

 Revised......................... 3.9 6.4 2.4 5.4 3.3 1.5 

Nonfarm business: 

 Previous ....................... 3.2 5.8 2.5 5.7 3.6 2.5 

 Revised......................... 3.7 6.5 2.7 5.3 3.2 1.6 

Manufacturing: 

 Previous ....................... 4.2 5.8 1.6 2.4 0.3 -1.7 

 Revised......................... 3.8 6.0 2.1 1.9 -0.2 -1.9 

Fourth quarter 2005 

Business: 

 Previous ....................... 0.2 1.8 1.6 3.0 -0.3 2.8 

 Revised......................... 0.2 1.8 1.6 -0.6 -3.8 -0.8 

Nonfarm business: 

 Previous ....................... -0.3 1.5 1.8 2.7 -0.6 3.0 

 Revised......................... -0.3 1.5 1.8 -0.9 -4.1 -0.6 

Manufacturing: 

 Previous ....................... 4.7 9.4 4.6 1.2 -2.0 -3.3 

 Revised......................... 4.7 9.4 4.6 -2.4 -5.5 -6.7 

Annual average 2005 

Business: 

 Previous ....................... 2.6 4.0 1.4 5.3 1.9 2.6 

 Revised......................... 2.6 4.0 1.4 5.1 1.7 2.4 

Nonfarm business: 

 Previous ....................... 2.7 4.2 1.4 5.4 2.0 2.5 

 Revised......................... 2.7 4.2 1.4 5.1 1.7 2.3 

Manufacturing: 

 Previous ....................... 5.0 3.9 -1.1 7.0 3.5 1.9 

 Revised......................... 5.0 3.9 -1.1 6.8 3.3 1.7 

Table C also presents preliminary and revised results for the fourth quarter and annual 

average of 2005. Only hourly compensation and related measures were revised—productivity, 

output, and hours were not. These revisions resulted from incorporation of revised data on 

employee compensation released by the Bureau of Economic Analysis (BEA) of the 
U.S. Department of Commerce on May 25. The BEA compensation estimates reflect newly 

available fourth-quarter wage and salary data from the BLS Quarterly Census of Employment 

and Wages. 

 In the fourth quarter of 2005, hourly compensation declined in all sectors, rather than 

increasing as reported May 4. Unit labor costs declined rather than increasing in the business 

and nonfarm business sectors, and fell faster in manufacturing than initially reported. For the 

year 2005, hourly compensation, real hourly compensation, and unit labor costs increased 

somewhat less in all sectors than in the preliminary estimates. 

REVISED MEASURES: NONFINANCIAL CORPORATIONS 

Fourth quarter and annual average 2005 measures also were revised for the nonfinancial 

corporate sector. In the fourth quarter of 2005, output and productivity were revised down 

substantially, and productivity rose 2.4 percent. Hourly compensation was revised down by 

more than productivity so unit labor costs fell faster than reported May 4, based on information 

then available. For the year 2005, productivity growth was revised down slightly to 4.9 

percent. The increase in hourly compensation was revised down more than productivity—from 

5.6 percent to 5.3 percent—and unit labor costs were revised down 0.1 percent. 

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

Quarterly percent changes at seasonally adjusted annual rates 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator 

Fourth quarter 2005 

Previous 4.6 7.3 2.5 2.5 -0.8 -2.0 47.1 1.7 

Revised 2.4 5.0 2.5 -0.8 -4.0 -3.2 50.2 1.7 

Annual average 2005 

Previous 5.0 6.5 1.4 5.6 2.1 0.5 14.7 1.4 

Revised 4.9 6.4 1.4 5.3 1.9 0.4 14.8 1.4 

Next release date 

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

Aug. 8, 2006. Preliminary second-quarter measures for business, nonfarm business, and 

manufacturing will be released at that time. The Aug. 8 release also will incorporate the threeyear revision of the national income and product accounts. 
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 earlier years. 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. 

The CES measures jobs, counting a person who is employed by two or more establishments at 

each place of employment. In contrast, the CPS features measures of employment that count each 

person only once and classify each person according to his or her primary job; hours worked at all jobs 

by that person accrue to his or her primary job. However, the CPS also collects more detailed 

information on employment and hours worked at primary jobs and all other jobs, separately. The BLS 

productivity measures use the more detailed information on employment and hours to assign all hours 

worked to the correct industrial sector and avoid duplicating hours data from the CES. 

Output: Business sector output is an annual-weighted index constructed after excluding from gross 

domestic product (GDP) the following outputs: general government, nonprofit institutions, and private 

households (including owner-occupied housing). Corresponding exclusions also are made in labor 

inputs. Business output accounted for about 78 percent of the value of GDP in 2000. Nonfarm business, 

which also excludes farming, accounted for about 77 percent of GDP in 2000. 

Annual indexes for manufacturing and its durable and nondurable goods components are 

constructed by deflating current-dollar industry value of production data from the U.S. Bureau of the 

Census with deflators from the BEA. These deflators are based on data from the BLS producer price 

program and other sources. The industry shipments are aggregated using annual weights, and 

intrasector transactions are removed. Quarterly manufacturing output measures are based on the index 

of industrial production prepared monthly by the Board of Governors of the Federal Reserve System, 

adjusted to be consistent with annual indexes of manufacturing sector output prepared by BLS. 

Durables include the following 3-digit NAICS industries: wood product manufacturing; nonmetallic 

mineral product manufacturing; primary metal manufacturing; fabricated metal product manufacturing; 

machinery manufacturing; computer and electronic product manufacturing; electrical equipment and 

appliance manufacturing; transportation equipment manufacturing; furniture and related product manufacturing; and miscellaneous manufacturing. Nondurables include: food manufacturing; beverage and 

tobacco product manufacturing; textile mills; textile product mills; apparel manufacturing; leather and 

allied product manufacturing; paper manufacturing; printing and related support activities; petroleum 

and coal products manufacturing; chemical manufacturing; and plastics and rubber products 

manufacturing. 

Nonfinancial corporate output is an annual-weighted index calculated on the basis of the costs 

incurred and the incomes earned from production. The output measure excludes the following outputs 

from GDP: general government; nonprofit institutions; private households; unincorporated business; 

and those corporations classified as offices of bank holding companies, offices of other holding 

companies, or 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. 

Labor Compensation: Estimates of labor compensation by major sector, required for measures of 

hourly compensation and unit labor costs, are based primarily on employee compensation data from the 

NIPA, prepared by the BEA. The compensation of employees in general government, nonprofit 

institutions and private households are subtracted from compensation of domestic employees to derive 

employee compensation for the business sector. The labor compensation of proprietors cannot be 

explicitly identified and must be estimated. This is done by assuming that proprietors have the same 

hourly compensation as employees in the same sector. The quarterly labor productivity and cost 

measures do not contain estimates of compensation for unpaid family workers. 

Unit Labor Costs: The measures of unit labor costs in this release describe the relationship between 

compensation per hour and productivity, or real output per hour, and can be used as an indicator of 

inflationary pressure on producers. Increases in hourly compensation increase unit labor costs; labor 

productivity increases offset compensation increases and lower unit labor costs. 

Presentation of the data: The quarterly data in this release are presented in three ways; as index 

number series where 1992=100, as percent changes from the corresponding quarter of the previous 

year, and as percent changes from the previous quarter presented at a compound annual rate. Annual 

data are presented both as index number series and percent changes from the previous year. 

 The index numbers and rates of change reported in the productivity and costs news release are 

rounded to one decimal place. All percent changes in this release and on the BLS web site are 

calculated using index numbers to three decimal places. These index numbers are available at the BLS 

web site, http://www.bls.gov/data/home.htm, or by contacting the BLS Division of Major Sector 

Productivity. (Telephone 202-691-5606 or email DPRWEB@BLS.GOV) 

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 

 2004 I 131.7 152.6 115.9 154.4 118.5 117.2 123.2 119.4 

 II 132.9 154.1 116.0 155.8 118.4 117.3 126.1 120.5 

 III 133.4 155.8 116.8 158.3 119.6 118.6 124.3 120.7 

 IV 134.3 157.2 117.1 162.5 121.8 121.0 122.2 121.5 

 ANNUAL 133.1 154.9 116.4 157.8 119.6 118.5 123.9 120.6 

 2005 I 135.4 158.9 117.3 164.5 122.5 121.4 123.7 122.3 

 II 135.8 160.4 118.1 164.7 121.5 121.2 126.2 123.1 

 III 137.5 162.3 118.1 167.1 121.7 121.6 128.3 124.1 

 IV 137.5 163.1 118.6 r166.8 r120.5 r121.3 r131.6 125.1 

 ANNUAL 136.6 161.2 118.0 r165.8 r121.6 r121.4 r127.5 123.7 

 2006 I r138.9 r165.6 r119.3 r169.0 r121.5 r121.7 r133.2 r126.0 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 3.7 4.9 1.2 4.2 0.5 0.5 9.1 3.7 

 II 3.7 4.0 0.3 3.9 -0.2 0.2 9.8 3.8 

 III 1.6 4.4 2.8 6.4 4.2 4.8 -5.5 0.7 

 IV 2.7 3.6 0.9 11.2 7.4 8.3 -6.5 2.4 

 ANNUAL 3.5 4.8 1.3 4.7 2.0 1.2 4.4 2.4 

 2005 I 3.4 4.4 0.9 4.8 2.4 1.3 5.1 2.7 

 II 1.1 4.0 2.8 0.5 -3.2 -0.6 8.3 2.6 

 III 4.9 4.8 -0.1 6.0 0.5 1.1 6.7 3.2 

 IV 0.2 1.8 1.6 r-0.6 r-3.8 r-0.8 r10.8 3.5 

 ANNUAL 2.6 4.0 1.4 r5.1 r1.7 r2.4 r2.9 2.6 

 2006 I r3.9 r6.4 r2.4 r5.4 r3.3 r1.5 r4.8 r2.8 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.9 5.5 0.6 4.5 2.6 -0.4 5.7 1.9 

 II 3.9 5.3 1.4 3.7 0.9 -0.2 7.5 2.7 

 III 2.2 4.0 1.7 4.2 1.4 1.9 3.3 2.4 

 IV 2.9 4.2 1.3 6.4 2.9 3.4 1.4 2.6 

 ANNUAL 3.5 4.8 1.3 4.7 2.0 1.2 4.4 2.4 

 2005 I 2.8 4.1 1.2 6.5 3.4 3.6 0.5 2.4 

 II 2.2 4.1 1.9 5.7 2.6 3.4 0.1 2.1 

 III 3.0 4.2 1.1 5.6 1.7 2.5 3.2 2.7 

 IV 2.4 3.7 1.3 r2.6 r-1.0 r0.2 r7.7 3.0 

 ANNUAL 2.6 4.0 1.4 r5.1 r1.7 r2.4 r2.9 2.6 

 2006 I r2.5 r4.2 r1.7 r2.8 r-0.8 r0.3 r7.6 3.0 

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

 See footnotes following Table 6. June 1, 2006 

 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 

 2004 I 130.8 152.8 116.8 153.4 117.7 117.3 123.6 119.6 

 II 132.3 154.5 116.8 154.9 117.7 117.1 126.4 120.6 

 III 132.8 156.3 117.6 157.3 118.9 118.4 125.4 121.0 

 IV 133.5 157.7 118.2 161.1 120.7 120.7 123.6 121.8 

 ANNUAL 132.4 155.3 117.3 156.7 118.8 118.4 124.8 120.7 

 2005 I 134.7 159.4 118.3 163.3 121.7 121.2 125.1 122.7 

 II 135.5 161.2 118.9 163.8 120.9 120.9 127.9 123.5 

 III 136.9 163.0 119.1 166.0 120.9 121.3 130.1 124.5 

 IV 136.8 163.6 119.6 r165.7 r119.7 r121.1 r133.4 125.6 

 ANNUAL 136.0 161.8 119.0 r164.7 r120.8 r121.1 r129.2 124.1 

 2006 I r138.1 r166.2 r120.4 r167.8 r120.6 r121.6 r135.1 r126.5 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 2.4 4.2 1.7 3.4 -0.2 1.0 7.9 3.6 

 II 4.5 4.6 0.1 4.0 0.0 -0.5 9.5 3.2 

 III 1.7 4.6 2.9 6.2 4.0 4.5 -3.2 1.5 

 IV 2.0 3.9 1.9 10.0 6.3 7.9 -5.7 2.6 

 ANNUAL 3.4 4.8 1.3 4.6 1.8 1.1 3.9 2.1 

 2005 I 3.8 4.3 0.5 5.6 3.2 1.8 5.1 3.0 

 II 2.4 4.4 2.0 1.3 -2.4 -1.0 9.0 2.7 

 III 4.2 4.7 0.4 5.5 0.0 1.2 7.3 3.5 

 IV -0.3 1.5 1.8 r-0.9 r-4.1 r-0.6 r10.6 3.6 

 ANNUAL 2.7 4.2 1.4 r5.1 r1.7 r2.3 r3.5 2.8 

 2006 I r3.7 r6.5 r2.7 r5.3 r3.2 r1.6 r5.0 r2.9 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.7 5.5 0.8 4.3 2.5 -0.3 4.5 1.5 

 II 4.2 5.5 1.2 3.8 1.0 -0.4 6.5 2.1 

 III 2.3 4.0 1.7 4.1 1.3 1.8 3.0 2.3 

 IV 2.6 4.3 1.7 5.9 2.5 3.2 1.9 2.7 

 ANNUAL 3.4 4.8 1.3 4.6 1.8 1.1 3.9 2.1 

 2005 I 3.0 4.4 1.4 6.4 3.3 3.4 1.2 2.6 

 II 2.4 4.3 1.8 5.8 2.7 3.2 1.1 2.4 

 III 3.1 4.3 1.2 5.6 1.7 2.4 3.8 2.9 

 IV 2.5 3.7 1.2 r2.8 r-0.9 r0.3 r8.0 3.2 

 ANNUAL 2.7 4.2 1.4 r5.1 r1.7 r2.3 r3.5 2.8 

 2006 I r2.5 r4.2 1.7 r2.8 r-0.9 r0.3 r7.9 r3.2 

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

 See footnotes following Table 6. June 1, 2006 

 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 

 2004 I 159.0 135.7 85.4 159.2 122.1 100.1 

 II 162.2 137.9 85.0 161.2 122.5 99.4 

 III 164.0 139.3 84.9 165.0 124.7 100.6 

 IV 166.7 140.8 84.4 169.9 127.3 101.9 

 ANNUAL 163.0 138.4 84.9 163.8 124.1 100.5 

 2005 I 168.7 142.2 84.3 172.8 128.7 102.4 

 II 170.3 142.7 83.8 174.3 128.7 102.4 

 III 171.8 143.6 83.6 176.7 128.7 102.8 

 IV 173.8 146.9 84.5 r175.6 r126.9 r101.1 

 ANNUAL 171.2 143.8 84.0 r174.9 r128.2 r102.2 

 2006 I r175.4 r149.0 r84.9 r176.5 r126.8 r100.6 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 3.6 5.9 2.2 -9.6 -12.7 -12.7 

 II 8.3 6.6 -1.6 5.1 1.1 -3.0 

 III 4.6 4.1 -0.4 10.0 7.6 5.1 

 IV 6.7 4.3 -2.3 12.3 8.5 5.2 

 ANNUAL 5.5 5.0 -0.5 2.3 -0.4 -3.1 

 2005 I 4.8 4.2 -0.5 6.9 4.5 2.0 

 II 3.9 1.2 -2.5 3.6 -0.1 -0.2 

 III 3.7 2.6 -1.0 5.6 0.1 1.8 

 IV 4.7 9.4 4.6 r-2.4 r-5.5 r-6.7 

 ANNUAL 5.0 3.9 -1.1 r6.8 r3.3 r1.7 

 2006 I r3.8 r6.0 r2.1 r1.9 r-0.2 r-1.9 

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

 Percent change from corresponding quarter of previous year 

 2004 I 5.2 3.4 -1.8 1.6 -0.2 -3.4 

 II 6.3 5.7 -0.6 1.3 -1.5 -4.7 

 III 4.8 5.7 0.9 2.2 -0.5 -2.5 

 IV 5.8 5.2 -0.6 4.1 0.8 -1.6 

 ANNUAL 5.5 5.0 -0.5 2.3 -0.4 -3.1 

 2005 I 6.1 4.8 -1.2 8.6 5.4 2.3 

 II 5.0 3.4 -1.5 8.2 5.1 3.0 

 III 4.8 3.1 -1.6 7.1 3.2 2.2 

 IV 4.2 4.3 0.1 r3.4 r-0.3 r-0.8 

 ANNUAL 5.0 3.9 -1.1 r6.8 r3.3 r1.7 

 2006 I r4.0 r4.8 r0.7 r2.1 r-1.5 r-1.8 

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

 See footnotes following Table 6. June 1, 2006 

 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 

 2004 I 185.9 165.9 89.2 155.6 119.4 83.7 

 II 189.7 168.7 89.0 158.1 120.1 83.4 

 III 192.1 171.6 89.3 162.0 122.4 84.3 

 IV 195.9 174.1 88.9 166.2 124.5 84.8 

 ANNUAL 190.9 170.1 89.1 160.5 121.6 84.1 

 2005 I 199.1 177.0 88.9 169.0 125.9 84.9 

 II 201.1 178.1 88.6 169.9 125.4 84.5 

 III 204.3 181.2 88.7 172.3 125.5 84.4 

 IV 209.2 187.7 89.7 r171.2 r123.7 r81.9 

 ANNUAL 203.4 181.0 89.0 r170.6 r125.1 r83.9 

 2006 I r211.0 r190.0 r90.1 r172.4 r123.9 r81.7 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 4.1 8.5 4.2 -14.8 -17.7 -18.1 

 II 8.4 7.0 -1.2 6.6 2.5 -1.6 

 III 5.3 6.9 1.5 10.1 7.8 4.6 

 IV 8.2 6.1 -1.9 10.9 7.1 2.5 

 ANNUAL 6.7 7.3 0.6 1.2 -1.5 -5.2 

 2005 I 6.7 6.8 0.1 6.9 4.4 0.2 

 II 4.0 2.6 -1.4 2.3 -1.4 -1.7 

 III 6.5 7.0 0.4 5.8 0.3 -0.7 

 IV 9.9 15.2 4.8 r-2.5 r-5.7 r-11.3 

 ANNUAL 6.6 6.4 -0.1 r6.3 r2.9 r-0.2 

 2006 I r3.5 r5.2 r1.6 r2.7 r0.6 r-0.9 

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

 Percent change from corresponding quarter of previous year 

 2004 I 7.0 5.9 -1.0 0.4 -1.4 -6.1 

 II 7.8 8.2 0.4 0.3 -2.4 -6.9 

 III 5.4 8.0 2.5 1.2 -1.5 -3.9 

 IV 6.5 7.1 0.6 2.6 -0.7 -3.6 

 ANNUAL 6.7 7.3 0.6 1.2 -1.5 -5.2 

 2005 I 7.1 6.7 -0.4 8.6 5.4 1.4 

 II 6.0 5.6 -0.4 7.5 4.4 1.4 

 III 6.3 5.6 -0.7 6.4 2.5 0.1 

 IV 6.8 7.8 1.0 r3.0 r-0.7 r-3.5 

 ANNUAL 6.6 6.4 -0.1 r6.3 r2.9 r-0.2 

 2006 I 6.0 r7.4 r1.3 r2.0 r-1.6 r-3.7 

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

 See footnotes following Table 6. June 1, 2006 

 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 

 2004 I 133.3 106.1 79.6 164.1 125.9 123.1 

 II 136.1 107.7 79.1 165.1 125.4 121.3 

 III 137.6 107.8 78.4 168.7 127.5 122.6 

 IV 139.3 108.4 77.8 174.7 130.9 125.5 

 ANNUAL 136.6 107.5 78.7 168.1 127.4 123.1 

 2005 I 140.2 108.6 77.5 177.7 132.4 126.7 

 II 141.7 108.5 76.6 180.3 133.1 127.3 

 III 141.9 107.7 75.9 182.5 132.9 128.6 

 IV 141.2 108.3 76.7 r181.5 r131.1 r128.5 

 ANNUAL 141.3 108.3 76.7 r180.5 r132.4 r127.8 

 2006 I r142.5 r110.1 r77.3 r181.7 r130.6 r127.5 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 3.7 2.6 -1.1 0.8 -2.7 -2.8 

 II 8.5 6.0 -2.3 2.4 -1.6 -5.7 

 III 4.5 0.7 -3.6 9.1 6.8 4.4 

 IV 5.0 2.0 -2.8 15.1 11.2 9.6 

 ANNUAL 4.6 2.2 -2.4 4.2 1.5 -0.4 

 2005 I 2.7 0.9 -1.7 6.9 4.5 4.1 

 II 4.2 -0.4 -4.4 6.0 2.2 1.7 

 III 0.7 -2.8 -3.5 5.0 -0.5 4.2 

 IV -1.9 2.3 4.2 r-2.1 r-5.3 r-0.2 

 ANNUAL 3.4 0.8 -2.6 r7.4 r3.9 r3.8 

 2006 I r3.7 r6.7 r2.9 r0.5 r-1.6 r-3.1 

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

 Percent change from corresponding quarter of previous year 

 2004 I 3.5 0.3 -3.1 3.8 1.9 0.3 

 II 4.9 2.6 -2.2 2.8 0.0 -1.9 

 III 4.8 3.0 -1.7 3.6 0.9 -1.1 

 IV 5.4 2.8 -2.5 6.7 3.3 1.2 

 ANNUAL 4.6 2.2 -2.4 4.2 1.5 -0.4 

 2005 I 5.2 2.4 -2.6 8.3 5.1 3.0 

 II 4.1 0.8 -3.2 9.2 6.1 4.9 

 III 3.1 -0.1 -3.1 8.2 4.2 4.9 

 IV 1.4 0.0 -1.4 r3.9 r0.1 r2.4 

 ANNUAL 3.4 0.8 -2.6 r7.4 r3.9 r3.8 

 2006 I r1.6 r1.4 -0.3 r2.3 r-1.3 r0.6 

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

 See footnotes following Table 6. June 1, 2006 

 r=revised Source: Bureau of Labor Statistics 
14 

 Table 6. Nonfinancial corporate sector: 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 

 2004 I 136.4 160.3 117.6 150.3 115.4 110.2 111.2 110.5 130.0 112.2 

 II 137.3 161.7 117.7 151.8 115.4 110.6 111.2 110.7 138.3 113.2 

 III 139.8 165.4 118.3 154.2 116.5 110.2 110.0 110.2 139.4 112.8 

 IV 142.7 169.4 118.7 158.0 118.4 110.7 108.5 110.1 142.7 113.1 

 ANNUAL 139.1 164.2 118.1 153.6 116.4 110.4 110.2 110.4 137.7 112.8 

 2005 I 143.7 170.8 118.9 160.3 119.4 111.6 107.9 110.6 145.2 113.7 

 II 145.3 173.8 119.6 160.8 118.7 110.6 107.0 109.7 159.1 114.1 

 III 146.8 175.9 119.9 163.2 118.9 111.2 109.2 110.7 155.5 114.7 

 IV r147.7 r178.1 120.6 r162.9 r117.7 r110.3 r107.5 r109.6 r172.1 115.1 

 ANNUAL r145.9 r174.7 119.7 r161.8 r118.7 r110.9 r107.9 r110.1 r158.1 114.4 

 2006 I 149.0 180.6 121.2 164.9 118.5 110.7 108.3 110.0 177.5 116.1 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 0.8 3.6 2.7 1.4 -2.1 0.6 2.0 0.9 18.4 2.6 

 II 2.9 3.5 0.6 4.1 0.1 1.2 0.2 0.9 28.0 3.5 

 III 7.4 9.6 2.0 6.2 4.0 -1.1 -4.4 -2.0 3.3 -1.4 

 IV 8.5 10.1 1.5 10.4 6.7 1.8 -5.3 -0.1 9.8 0.9 

 ANNUAL 4.0 5.5 1.4 4.1 1.3 0.0 -0.5 -0.1 18.1 1.6 

 2005 I 2.8 3.3 0.4 6.0 3.6 3.1 -2.5 1.6 7.1 2.2 

 II 4.6 7.1 2.4 1.1 -2.6 -3.4 -3.1 -3.3 44.3 1.4 

 III 4.1 5.1 1.0 6.3 0.7 2.1 8.2 3.7 -8.8 2.1 

 IV r2.4 r5.0 2.5 r-0.8 r-4.0 r-3.2 r-6.0 r-3.9 r50.2 1.7 

 ANNUAL r4.9 r6.4 1.4 r5.3 r1.9 r0.4 r-2.1 r-0.3 r14.8 1.4 

 2006 I 3.7 5.8 2.0 5.0 2.9 1.3 3.1 1.8 13.1 3.2 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.5 5.2 0.7 3.9 2.1 -0.5 -0.1 -0.4 20.7 1.4 

 II 3.4 4.7 1.3 3.3 0.4 -0.1 0.7 0.1 21.7 2.1 

 III 3.4 5.3 1.8 3.5 0.8 0.1 -0.7 -0.1 16.3 1.5 

 IV 4.8 6.6 1.7 5.5 2.1 0.6 -1.9 -0.1 14.5 1.4 

 ANNUAL 4.0 5.5 1.4 4.1 1.3 0.0 -0.5 -0.1 18.1 1.6 

 2005 I 5.4 6.5 1.1 6.7 3.5 1.2 -3.0 0.1 11.7 1.3 

 II 5.8 7.5 1.6 5.9 2.8 0.1 -3.8 -1.0 15.1 0.8 

 III 5.0 6.4 1.3 5.9 2.0 0.9 -0.8 0.4 11.5 1.7 

 IV r3.5 r5.1 1.6 r3.1 r-0.6 r-0.4 r-1.0 -0.5 r20.6 1.8 

 ANNUAL r4.9 r6.4 1.4 r5.3 r1.9 r0.4 r-2.1 r-0.3 r14.8 1.4 

 2006 I 3.7 5.7 2.0 2.8 -0.8 -0.8 0.4 -0.5 22.3 2.1 

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

 See footnotes following Table 6. June 1, 2006 

 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 fourth quarter of 2005. 

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 self-employed, 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 1978-2005 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.