Internet address: http://www.bls.gov USDL 04-488 

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

Media contact: (202) 691-5902 Friday, March 26, 2004 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, REVISED DATA FOR 2002 

In 2002, the increase in U.S. manufacturing productivity, at 9.2 percent, was the 

largest among 14 economies compared, according to revised data released by the U.S. 

Department of Labor's Bureau of Labor Statistics. Except for Italy, productivity also 

increased in all the other economies, with gains of more than 6 percent in Sweden, Korea, 

Belgium, and Taiwan. (See chart 1.) 

The U.S. productivity growth in 2002 was substantially above its 3.5 percent average 

annual growth rate since 1979. Six of the other 11 economies for which historical 

comparisons are available also surpassed their 1979-2002 average annual rates of 

increase in 2002. (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, 2002

9.2

2.8 2.7

7.2 6.8

3.4

2.7 2.5

-1.4

0.5

1.8

8.2

1.0

6.4

-3

-1

1

3

5

7

9

11

United States

Canada

Japan

Korea

Taiwan

Belgium

Denmark

France

Germany

Italy

Netherlands

Norway

Sweden

United Kingdom

(Percent)
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Unit labor costs in manufacturing, expressed in national currency units, rose in 9 of 

the 14 economies in 2002, with Korea recording the largest increase (+5.4 percent). 

Spurred on by productivity gains, unit labor costs declined in Taiwan (-6.1 percent) and 

in the United States and Sweden (both by -4.1 percent). Canada had a much smaller 

decline (-0.3 percent), while unit labor costs in Germany were unchanged. 

The general rise in unit labor costs in U.S. dollar terms is explained primarily by the 

depreciation of the dollar versus most other national currencies in 2002 and, secondarily, 

by the fact that hourly compensation grew faster than output per hour in most countries. 

Norway had the greatest increase in unit labor costs in dollar terms primarily because it 

also had the greatest increase in the value of its currency versus the dollar. (See chart 2 

and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2001-2002

2.4

-4.1

4.2

4.5

3.9

0.0

0.5

0.8

0.5

-6.1

5.4

4.3

-0.3

-4.1

6.9

2.0

17.4

10.4

9.7

5.6

6.2

6.5

6.1

-8.0

8.9

1.3

-1.7

-4.1

-12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Belgium

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, 14 countries or areas, 2001-2002

 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 9.2 1.8 - 6.8 - 6.8 0.0 - 2.4 4.7 - 4.1 - 4.1 ---

Canada 2.8 2.9 0.1 0.3 - 0.2 2.6 2.4 - 0.3 - 1.7 - 1.4

Japan 2.7 - 2.0 - 4.5 - 4.7 0.2 2.3 7.1 4.3 1.3 - 2.9

Korea 7.2 6.3 - 0.8 - 0.2 - 0.7 12.0 13.0 5.4 8.9 3.3

Taiwan 6.4 6.3 - 0.1 - 1.8 1.7 - 0.2 - 0.1 - 6.1 - 8.0 - 2.1

Belgium 6.8 1.0 - 5.5 - 3.6 - 2.0 1.5 7.3 0.5 6.1 5.6

Denmark 3.4 0.2 - 3.1 - 2.9 - 0.2 1.0 4.2 0.8 6.5 5.7

France 2.7 0.1 - 2.6 - 1.7 - 0.9 0.6 3.3 0.5 6.2 5.6

Germany 2.5 - 0.2 - 2.7 - 2.2 - 0.5 - 0.3 2.5 0.0 5.6 5.6

Italy - 1.4 - 0.7 0.7 0.9 - 0.2 3.1 2.5 3.9 9.7 5.6

Netherlands 0.5 - 1.6 - 2.2 - 2.2 0.0 2.8 5.1 4.5 10.4 5.6

Norway 1.8 - 0.6 - 2.4 - 1.1 - 1.3 3.5 6.0 4.2 17.4 12.7

Sweden 8.2 3.4 - 4.5 - 2.8 - 1.7 - 0.9 3.7 - 4.1 2.0 6.4

United Kingdom 1.0 - 3.5 - 4.5 - 5.0 0.5 - 1.2 3.4 2.4 6.9 4.4

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

Percent change

Table A summarizes changes in manufacturing productivity, unit labor costs, and 

related variables between 2001 and 2002. 

This release examines comparative trends in the revised figures for manufacturing 

output per hour, unit labor costs, and related measures in 2002, the most recent year for 

which comparative data are available, and for certain selected time periods shown in table 

B (pages 7-11). 

Additional data available

Annual index series of these data also are estimated for the time period 1950-2002 

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 

measures 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. 
- 4 -

Notes about the measures 

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

2002 and earlier years were made to the measures for several countries to incorporate data not 

available at the time of the September 2003 report. 

U.S. manufacturing output measure

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

gross domestic product by industry (deflated value added), published by the Bureau of Economic 

Analysis (BEA), U.S. Department of Commerce. This series is based on annually changing price 

weights. 

The U.S. real output data through 2001 used in this report were released by BEA in November 

2002 and are described in the Survey of Current Business, November 2002. Real U.S. output for 

2002, for the first time, comes from the newly-available BEA accelerated estimates of gross 

domestic product by industry using an abbreviated methodology, described in the May 2003 

Survey of Current Business. The regular BEA estimates, ordinarily available in November, have 

been delayed until June 2004 because of a comprehensive revision of the national income and 

product accounts. The new accounts will be based on the North American Industry Classification 

System (NAICS 2002), as opposed to the current 1987 Standard Industrial Classification (SIC). 

The change in U.S. manufacturing output for 2002, published in the September 2003 news release, 

was estimated from the Federal Reserve Board's Industrial Production Index for Total 

Manufacturing. Use of the BEA preliminary output estimate in the current release resulted in an 

upward revision of U.S. manufacturing output growth, from a decline of 1.1 percent to an increase 

of 1.8 percent. 

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

series that BLS publishes as part of its major sector productivity and costs measures for the United 

States. The international comparisons program uses a value added output concept, while the major 

sector series is on a sectoral output basis. See Technical Notes section of this release for 

additional information. 

Canada

Data for Canada have been revised from 1997 forward because of the introduction of the North 

American Industry Classification System (NAICS 97). Data prior to 1997 have not been 

converted from the Canadian Standard Industrial Classification system (SIC 80). The two data 

series have been linked in 1997. 

Denmark

Statistics Denmark has published a new hours worked series for employees from 1995 forward. 

No hours measure is available for 1994. Thus no trends involving hours could be calculated over 

time periods which include 1994. 

Germany

German data pertain to unified Germany from 1991 onward and to the former West Germany for 

prior years. The two data series have been linked in 1991. 

United Kingdom

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 method, consistent with the United 

Nations System of National Accounts (SNA 93) guidelines. 
- 5 -

Manufacturing productivity, output, and labor input

The growth in labor productivity (output per hour) in U.S. manufacturing of 9.2 

percent in 2002 was the highest since the beginning of the current series in 1977, 

surpassing the previous high of 8.0 percent in 1987. The U.S. productivity increase in 

2002 was followed by Sweden (+8.2 percent), Korea (+7.2 percent), Belgium (+6.8 

percent), and Taiwan (+6.4 percent). Italy's productivity declined 1.4 percent, and the 

United Kingdom’s gain of 1.0 percent and the Netherlands' gain of 0.5 percent were the 

lowest among the economies compared. In a majority of the economies, the 2002 

productivity gains followed smaller productivity increases or declines in 2001. Denmark, 

France, Italy, Norway, and the United Kingdom, where labor productivity growth slowed 

or declined in 2002, were exceptions. (See table B.) 

In the United States, Canada, Taiwan, and Sweden, manufacturing output increased in 

2002 following declines in 2001. Only three of the other eight European countries 

increased their manufacturing output, but by no more than 1 percent. Manufacturing 

output fell in Japan, but, unlike the European countries that experienced declines, less 

than in 2001. Canada, Taiwan, and Sweden were the only economies whose rate of 

increase in manufacturing output was greater in 2002 than the average annual growth 

since 1979. (See table B.) 

Hours worked in manufacturing declined in 2002 in all the economies compared, 

except Canada and Italy. In the United States, hours worked fell by 6.8 percent in 2002, 

the greatest annual drop in 20 years and the largest among the economies compared. This 

was the second year in a row of substantial declines in U.S. hours worked. Other 

declines in 2002 ranged from 0.1 percent in Taiwan to 5.5 percent in Belgium. In seven 

economies, these declines in hours worked were accompanied by increases in 

manufacturing output, leading in most cases to substantial increases in productivity. In 

five other countries, declines in manufacturing output were more than offset by larger 

drops in hours worked, also resulting in productivity gains. Canada’s productivity 

increase was associated with an increase in output that greatly surpassed the increase in 

hours worked. Italy’s productivity downturn was related to a decline in output that 

equaled the increase in hours worked. (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. The only exception to 

this general trend is Canada, where hours rose 0.2 percent per year over the period 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 trended 

downward since then. Only two of the eight European countries for which hours data are 

available experienced smaller declines than in the United States over the period 1979–

2002. 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 

1990's, when compared to the 1990–1995 period. (See table B.) 

For most countries, 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, Italy, and Sweden, average hours have risen 

slightly since 1979. (See table B.) 
- 6 -

The 2002 U.S. decline in manufacturing employment was the largest among the 

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

declined in all the other economies except Canada and Italy. The declines were 

accompanied by the same or fewer average hours worked in all the other economies 

except for Japan, Taiwan, and the United Kingdom. (See tables A and B.) 

Manufacturing hourly compensation and unit labor costs

Hourly compensation in manufacturing, expressed in national currencies, increased in 

all but one of the economies compared. Korea posted an increase of 13.0 percent, 

followed by Belgium and Japan, at over 7 percent. The U.S. increase of 4.7 percent was 

about average. Only Taiwan showed a small decline. For most economies for which 

historical comparisons are available, hourly compensation increases in 2002 lagged 

behind their average annual growth rates for the 1979–2002 period. (See table B.) 

Unit labor costs, expressed in national currency units, also increased in a majority of 

the economies compared, although only Japan and the Netherlands had increases in 2002 

greater than their average annual rate since 1979. The United States, Canada, and 

Sweden recorded declines in unit labor costs in 2002, as their productivity growth 

exceeded the hourly compensation increases. In Taiwan, the increase in productivity and 

decline in hourly compensation resulted in a 6.1 percent decline in unit labor costs. (See 

tables A and B.) 

To compare changes in competitiveness across economies, the impact of exchange 

rate fluctuations have to 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 converted from the foreign 

currency into U.S. dollars 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 2002, the U.S. dollar depreciated against the currencies of most economies 

compared, particularly against the Norwegian krone (12.7 percent). The decline against 

the euro was 5.6 percent. This depreciation reversed a seven-year trend, when the U.S. 

dollar recorded annual average appreciation against most other currencies. Only the 

Japanese yen and Canadian and Taiwanese dollars depreciated against the U.S. dollar in 

2002. (See table B.) 

Because of the dollar's depreciation, the unit labor costs of all European countries and 

of Korea increased more when expressed in U.S. dollars than in national currencies. In 

Sweden, a krona-denominated 4.1 percent decline in unit labor costs changed to a 2.0 

percent increase in dollar terms. The European increases were all well above the average 

annual rates of increase since 1979, though, with the exception of Norway, they were less 

than in the 1985-1990 period. The increase in Korean unit labor costs, expressed in U.S. 

dollars, was the largest since 1995. In both 2001 and 2002, Taiwan showed the largest 

decline in unit labor costs. Unit labor costs in dollar terms also declined in Canada. (See 

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

Manufacturing, 14 countries or areas, 1979-2002

Average annual rates of change1

Country 1979-2002 1979-1985 1985-1990 1990-1995 1995-2000 2000-2001 2001-2002

or area

Output per hour

United States 3.5 3.5 2.4 3.3 4.5 0.4 9.2

Canada 2.5 3.6 .5 3.8 2.8 -1.8 2.8

Japan 3.6 3.5 4.3 3.3 4.1 - .1 2.7

Korea NA NA 8.2 9.7 11.0 - .8 7.2

Taiwan 5.9 5.1 7.9 5.3 5.5 6.3 6.4

Belgium 3.7 6.0 2.2 3.2 2.9 1.4 6.8

Denmark NA 2.4 .7 NA 2.0 5.0 3.4

France 4.2 5.1 3.3 4.0 4.6 3.4 2.7

Germany2 2.4 2.1 2.1 3.3 2.5 .6 2.5

Italy 1.8 3.0 1.3 2.2 1.0 2.0 -1.4

Netherlands 3.0 4.6 2.2 3.5 2.5 - .3 .5

Norway 1.5 2.4 1.4 .5 1.1 2.2 1.8

Sweden 4.2 3.1 1.9 5.7 7.1 -3.0 8.2

United Kingdom 3.7 4.4 4.6 3.6 2.7 3.7 1.0

Output

United States 2.5 2.2 2.5 3.1 4.3 -6.0 1.8

Canada 2.7 2.0 1.8 2.4 5.9 -3.6 2.9

Japan 2.5 4.7 4.8 .4 2.0 -3.4 -2.0

Korea 8.8 8.3 12.2 8.4 8.1 2.1 6.3

Taiwan 6.0 8.2 7.0 5.0 5.7 -5.7 6.3

Belgium 2.1 2.6 2.5 .6 2.9 .4 1.0

Denmark 1.4 2.3 - .6 1.7 1.8 4.4 .2

France 2.1 1.6 2.5 1.1 3.5 3.0 .1

Germany2 .6 .2 2.3 - .7 1.0 - .2 - .2

Italy 1.5 .9 3.2 1.5 1.2 .8 - .7

Netherlands 2.0 2.0 3.1 1.8 2.6 - .9 -1.6

Norway .3 .6 -1.6 1.1 1.0 .5 - .6

Sweden 3.3 2.2 1.4 3.7 7.4 -2.8 3.4

United Kingdom .6 -1.2 3.4 .5 1.3 -1.3 -3.5

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

Manufacturing, 14 countries or areas, 1979-2002

Average annual rates of change1

Country 1979-2002 1979-1985 1985-1990 1990-1995 1995-2000 2000-2001 2001-2002

or area

Total hours

United States -1.0 -1.2 0.0 -0.1 -0.2 -6.4 -6.8

Canada .2 -1.5 1.3 -1.3 3.0 -1.8 .1

Japan -1.0 1.1 .5 -2.8 -2.0 -3.3 -4.5

Korea NA NA 3.7 -1.2 -2.6 2.9 - .8

Taiwan .0 2.9 - .8 - .3 .2 -11.3 - .1

Belgium -1.6 -3.2 .4 -2.5 - .1 -1.0 -5.5

Denmark NA - .1 -1.3 NA - .2 - .6 -3.1

France -2.0 -3.3 - .7 -2.8 -1.1 - .4 -2.6

Germany2 -1.8 -1.9 .2 -3.9 -1.5 - .8 -2.7

Italy - .3 -2.0 1.9 - .7 .1 -1.2 .7

Netherlands -1.0 -2.5 .9 -1.7 .0 - .6 -2.2

Norway -1.2 -1.8 -2.9 .6 - .1 -1.7 -2.4

Sweden - .9 - .8 - .5 -1.9 .3 .2 -4.5

United Kingdom -3.0 -5.3 -1.2 -3.0 -1.4 -4.8 -4.5

Employment

United States -1.1 -1.4 -0.1 -0.6 -0.1 -4.7 -6.8

Canada .2 -1.3 1.2 -1.5 2.8 - .8 .3

Japan - .6 1.2 .8 -1.6 -1.9 -2.6 -4.7

Korea NA NA 5.4 - .9 -2.5 5.2 - .2

Taiwan .7 4.1 - .5 - .3 .5 -4.5 -1.8

Belgium -1.5 -2.6 - .3 -2.2 - .7 .8 -3.6

Denmark - .7 .2 - .8 -1.2 - .5 -1.1 -2.9

France -1.4 -2.3 - .9 -2.5 - .3 1.2 -1.7

Germany2 -1.2 -1.1 1.1 -4.2 - .8 .4 -2.2

Italy - .7 -1.8 .3 -1.6 .1 - .3 .9

Netherlands - .8 -2.3 1.0 -1.6 .2 - .5 -2.2

Norway -1.1 -1.8 -2.7 .3 .1 -1.4 -1.1

Sweden -1.3 -1.2 - .8 -3.5 .0 1.1 -2.8

United Kingdom -2.7 -4.5 - .9 -3.0 -1.1 -4.5 -5.0

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

Manufacturing, 14 countries or areas, 1979-2002

Average annual rates of change1

Country 1979-2002 1979-1985 1985-1990 1990-1995 1995-2000 2000-2001 2001-2002

or area

Average hours

United States 0.1 0.2 0.1 0.4 -0.1 -1.8 0.0

Canada .0 - .2 .1 .3 .1 -1.0 - .2

Japan - .4 .0 - .3 -1.3 - .1 - .7 .2

Korea NA NA -1.6 - .2 - .1 -2.1 - .7

Taiwan - .7 -1.1 - .4 .0 - .3 -7.1 1.7

Belgium - .1 - .6 .7 - .3 .6 -1.7 -2.0

Denmark NA - .3 - .5 NA .3 .5 - .2

France - .6 -1.1 .1 - .3 - .8 -1.6 - .9

Germany2 - .6 - .8 - .9 .3 - .6 -1.2 - .5

Italy .5 - .1 1.6 .9 .0 - .9 - .2

Netherlands - .2 - .3 - .2 .0 - .2 - .1 .0

Norway - .1 .0 - .2 .3 - .2 - .3 -1.3

Sweden .5 .4 .3 1.7 .2 - .8 -1.7

United Kingdom - .4 - .8 - .3 - .1 - .3 - .3 .5

Total labor compensation in manufacturing3

: National currency basis

 

United States 3.6 5.8 3.9 3.4 3.7 -4.1 -2.4

Canada 5.0 7.5 5.6 2.4 5.5 1.6 2.6

Japan 2.5 5.9 5.1 .7 -1.1 -2.5 2.3

Korea NA NA 19.9 16.8 4.1 10.2 12.0

Taiwan 8.2 15.9 10.6 6.8 4.2 -9.4 - .2

Belgium 3.1 4.7 4.0 1.3 2.0 4.4 1.5

Denmark 4.7 9.1 4.8 2.3 2.9 3.9 1.0

France 3.7 9.0 3.6 1.1 1.1 3.4 .6

Germany2 3.1 4.0 5.2 2.3 1.6 2.6 - .3

Italy 7.2 13.6 8.8 4.2 2.9 2.3 3.1

Netherlands 3.1 2.4 3.9 2.8 3.4 4.6 2.8

Norway 5.4 8.0 4.7 4.0 5.0 3.7 3.5

Sweden 5.8 8.9 7.9 2.0 5.3 5.3 - .9

United Kingdom 4.5 6.3 8.1 2.5 3.2 - .3 -1.2

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

Manufacturing, 14 countries or areas, 1979-2002

Average annual rates of change1

Country 1979-2002 1979-1985 1985-1990 1990-1995 1995-2000 2000-2001 2001-2002

or area

Hourly compensation3

: National currency basis

 

United States 4.6 7.2 3.9 3.5 4.0 2.4 4.7

Canada 4.8 9.1 4.2 3.7 2.5 3.4 2.4

Japan 3.6 4.7 4.6 3.6 1.0 .8 7.1

Korea NA NA 15.6 18.2 6.9 7.0 13.0

Taiwan 8.2 12.6 11.5 7.1 4.0 2.2 - .1

Belgium 4.7 8.1 3.7 3.9 2.0 5.5 7.3

Denmark NA 9.3 6.2 NA 3.1 4.5 4.2

France 5.9 12.7 4.4 4.0 2.3 3.8 3.3

Germany2 5.0 6.0 5.0 6.4 3.2 3.4 2.5

Italy 7.4 15.9 6.8 4.9 2.8 3.6 2.5

Netherlands 4.1 5.1 3.0 4.5 3.3 5.2 5.1

Norway 6.6 10.0 7.8 3.4 5.2 5.5 6.0

Sweden 6.7 9.8 8.4 4.0 5.1 5.1 3.7

United Kingdom 7.8 12.2 9.4 5.7 4.7 4.8 3.4

Unit labor costs3

: National currency basis

United States 1.1 3.6 1.4 0.2 -0.5 2.0 -4.1

Canada 2.3 5.3 3.7 - .1 - .4 5.3 - .3

Japan .0 1.1 .3 .3 -3.0 .9 4.3

Korea NA NA 6.9 7.8 -3.7 7.9 5.4

Taiwan 2.1 7.1 3.4 1.7 -1.5 -3.9 -6.1

Belgium 1.0 2.0 1.5 .7 - .9 4.0 .5

Denmark 3.3 6.7 5.4 .6 1.1 - .5 .8

France 1.6 7.3 1.1 - .1 -2.2 .4 .5

Germany2 2.5 3.8 2.8 3.1 .6 2.8 .0

Italy 5.5 12.5 5.4 2.6 1.7 1.5 3.9

Netherlands 1.1 .5 .8 1.0 .8 5.5 4.5

Norway 5.1 7.4 6.4 2.9 4.0 3.2 4.2

Sweden 2.4 6.5 6.4 -1.6 -1.9 8.4 -4.1

United Kingdom 3.9 7.5 4.5 2.0 1.9 1.1 2.4

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

Manufacturing, 14 countries or areas, 1979-2002

Average annual rates of change1

Country 1979-2002 1979-1985 1985-1990 1990-1995 1995-2000 2000-2001 2001-2002

or area

Unit labor costs3

: U.S. dollar basis

United States 1.1 3.6 1.4 0.2 -0.5 2.0 -4.1

Canada 1.0 2.7 7.0 -3.3 -2.0 1.0 -1.7

Japan 2.4 - .3 10.8 9.4 -5.7 -10.5 1.3

Korea NA NA 11.1 6.0 -10.7 -5.6 8.9

Taiwan 2.3 5.3 11.8 2.0 -4.7 -11.2 -8.0

Belgium - .6 -9.3 13.8 3.3 -8.4 .9 6.1

Denmark 1.5 -5.0 17.4 2.7 -6.1 -3.3 6.5

France - .5 -5.3 11.7 1.7 -8.9 -2.6 6.2

Germany2 2.0 -4.1 15.9 5.6 -6.9 - .3 5.6

Italy 1.5 -2.0 15.7 -3.5 -3.3 -1.6 9.7

Netherlands .4 -7.6 13.6 3.6 -6.9 2.3 10.4

Norway 3.0 -1.7 13.3 2.6 -2.7 1.1 17.4

Sweden -1.1 -5.2 14.7 -5.2 -6.7 -3.9 2.0

United Kingdom 2.4 -1.0 11.4 - .4 1.1 -4.0 6.9

Exchange rates4

United States — — — — — — —

Canada -1.3 -2.5 3.2 -3.2 -1.6 -4.1 -1.4

Japan 2.4 -1.5 10.5 9.1 -2.7 -11.3 -2.9

Korea -4.0 -9.2 3.9 -1.7 -7.3 -12.5 3.3

Taiwan .2 -1.7 8.2 .3 -3.3 -7.6 -2.1

Belgium -1.6 -11.1 12.2 2.5 -7.6 -3.0 5.6

Denmark -1.7 -11.0 11.4 2.0 -7.1 -2.8 5.7

France -2.1 -11.7 10.5 1.8 -6.8 -3.0 5.6

Germany2 - .5 -7.6 12.7 2.5 -7.5 -3.0 5.6

Italy -3.8 -12.9 9.8 -6.0 -4.9 -3.0 5.6

Netherlands - .7 -8.0 12.7 2.6 -7.6 -3.0 5.6

Norway -2.0 -8.4 6.6 - .3 -6.4 -2.0 12.7

Sweden -3.5 -11.0 7.8 -3.7 -4.9 -11.3 6.4

United Kingdom -1.5 -7.9 6.6 -2.4 - .8 -5.0 4.4

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 r r r r r

r

r

r

r

r

r

r

r

r

r

r

r

r

r

r r

r

r
- 12 -

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 12 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 12(1) competitors, 1979-2002

70

80

90

100

110

120

130

1979

1980

1981

1982

19831984

1985

1986

1987

19881989

1990

19911992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

(1979 = 100)

U.S. dollar 

basis

National 

currency 

basis

(1) Data for Korea begin with 1985 and 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 in 2002 with a weakening of the U.S. dollar. 
- 13 -

Table C. U.S. manufacturing unit labor 

costs relative to 12(1) competitors, 1979-2002 

 

 Unit Labor Costs Unit Labor Costs 

National Currency Basis U.S. Dollar Basis 

Year U.S. Competitors' U.S. Competitors' 

 Index Index Ratio Index Index Ratio 

 

1979 100.0 100.0 100.0 100.0 100.0 100.0 

1980 111.4 110.4 100.9 111.4 110.1 101.2 

1981 116.5 118.4 98.4 116.5 108.9 107.0 

1982 124.2 126.0 98.6 124.2 104.9 118.5 

1983 121.6 127.6 95.2 121.6 103.3 117.6 

1984 121.0 128.3 94.3 121.0 98.0 123.4 

1985 123.4 129.7 95.1 123.4 96.2 128.2 

1986 128.9 135.7 95.0 128.9 122.6 105.2 

1987 122.8 137.7 89.1 122.8 141.1 87.0 

1988 122.5 137.6 89.0 122.5 151.9 80.7 

1989 128.0 140.6 91.0 128.0 149.8 85.4 

1990 132.4 146.6 90.3 132.4 162.3 81.6 

1991 138.0 152.2 90.7 138.0 171.6 80.4 

1992 141.3 155.6 90.8 141.3 179.6 78.7 

1993 142.3 156.2 91.1 142.3 175.9 80.9 

1994 139.2 153.6 90.6 139.2 175.8 79.1 

1995 134.0 153.0 87.6 134.0 185.1 72.4 

1996 132.1 154.0 85.8 132.1 176.9 74.7 

1997 129.9 152.0 85.5 129.9 162.2 80.1 

1998 131.2 153.7 85.4 131.2 155.3 84.5 

1999 129.1 151.1 85.4 129.1 157.4 82.0 

2000 130.4 145.9 89.4 130.4 147.7 88.3 

2001 133.0 149.2 89.1 133.0 141.2 94.2 

2002 127.5 151.2 84.3 127.5 144.0 88.5 

(1) Data for Korea begin with 1985 and have been omitted from this chart. 
- 14 -

Technical Notes

The comparisons in this release are based on data available to BLS as of January 

2004. 

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, Denmark, 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. Data for Canada are in accordance with the North 

American Industry Classification System (NAICS 97) from 1997 forward and, prior to 

1997, with the Canadian Standard Industrial Classification (SIC 80). The change to 

NAICS reduced Canadian manufacturing employment and hours by about 8 percent. 

U.S. manufacturing output in this release is based on the 1987 Standard Industrial 

Classification (SIC). The next regular U.S. Department of Commerce, Bureau of 

Economic Analysis publication (scheduled for June 2004) of U.S. manufacturing output, 

for the period 1998–2002 will be on a NAICS basis. Likewise, in the present release, 

U.S. data for manufacturing employment, hours worked, and labor compensation are 

based on the 1987 SIC, but will be based on NAICS in the next and future releases. 

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 some countries, data were compiled 

according to previously used systems. 

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 
- 15 -

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

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

years prior to 1977. For more information on the U.S. measure, see Sherlene K.S. Lum, 

Brian C. Moyer, and Robert E. Yuskavage, “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 series that BLS publishes as part of its official 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. For information on 

sectoral output, see William Gullickson, “Measurement of productivity growth in U.S. 

manufacturing,” Monthly Labor Review, July 1995, pp. 13-28. The official U.S. major 

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

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 chain-weighted indexes, 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), Norway, Sweden, and Canada 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. Denmark released a new hours worked series beginning with 1995. 

The previous series ends with 1993, and no hours measure is available for 1994. Because 

of the break in series, no historic trends involving hours can be calculated for periods that 

include 1994. 
- 16 -

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. For 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. 

When data for the self-employed are not available, total compensation is estimated by 

assuming the same hourly compensation for self-employed and employees. Real 

compensation for the United States is derived using the Consumer Price Index research 

series (CPI-U-RS). 

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. 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 25.31 Germany 11.61 

 Japan 30.57 Italy 4.60 

 Taiwan 5.79 Netherlands 2.25 

 Belgium 2.14 Norway 0.48 

 Denmark 0.48 Sweden 1.89 

 France 5.90 United Kingdom 8.99 

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 
- 17 -

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. 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 linked to the euro-denominated series 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 were 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.