Internet address: http://www.bls.gov/lpc/ USDL 08-1616 

Historical, technical TRANSMISSION OF THIS 

 information: (202) 691-5606 MATERIAL IS EMBARGOED 

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

Media contact: (202) 691-5902 THURSDAY, NOVEMBER 6, 2008 

PRODUCTIVITY AND COSTS 

Third Quarter 2008, preliminary 

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

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

quarter of 2008. The preliminary seasonally-adjusted annual rates of productivity growth in the 

third quarter were: 

1.3 percent in the business sector and 

1.1 percent in the nonfarm business sector. 

In both sectors, productivity gains were smaller than in the first two quarters of 2008, and were 

the result of hours at work falling faster than output. (See table A). 

In manufacturing, productivity changes in the third quarter were: 

-1.0 percent in manufacturing, 

3.3 percent in durable goods manufacturing, and 

-7.3 percent in nondurable goods manufacturing. 

Manufacturing productivity fell for the second consecutive quarter; the third-quarter 

decline was concentrated in the nondurable goods sector, whereas the second-quarter decrease 

was due to a drop in durable goods productivity. Output and hours in manufacturing, which 

includes about 12 percent of U.S. business sector employment, tend to vary more from quarter to 

quarter than data for the aggregate business and nonfarm business sectors. Third-quarter 

measures are summarized in table A and appear in detail in tables 1 through 5. 

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

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

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

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

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

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

System. See Technical Notes for further information on data sources (page 6).

 
2 

Table A. Productivity and costs: Preliminary third-quarter 2008 measures 

(Seasonally adjusted annual rates) 

 Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

 Business 1.3 -1.5 -2.8 4.7 -1.9 3.4 

 Nonfarm business 1.1 -1.7 -2.7 4.7 -1.9 3.6 

 Manufacturing -1.0 -5.8 -4.9 5.0 -1.6 6.1 

 Durable 3.3 -4.7 -7.7 6.0 -0.7 2.6 

 Nondurable -7.3 -7.0 0.4 3.7 -2.9 11.8 

 Percent change from same quarter a year ago 

 Business 1.8 0.3 -1.5 4.1 -1.1 2.3 

 Nonfarm business 2.0 0.3 -1.7 4.3 -0.9 2.3 

 Manufacturing 1.1 -2.6 -3.7 5.1 -0.2 3.9 

 Durable 1.9 -2.6 -4.4 5.1 -0.2 3.1 

 Nondurable -0.2 -2.7 -2.5 5.3 0.0 5.5 

Business 

Business sector output per hour grew 1.3 percent in the third quarter of 2008 as output 

decreased 1.5 percent and hours worked by all persons—employees, proprietors, and unpaid 

family workers—fell 2.8 percent (seasonally adjusted annual rates). The decline in output was 

the largest since the third quarter of 2001, when output fell 3.1 percent. Hours had not dropped 

as much in one quarter since the first quarter of 2002, (-3.1 percent). From the third quarter of 

2007 to the third quarter of 2008, productivity increased 1.8 percent; output edged up 0.3 percent 

and hours decreased 1.5 percent in the business sector. 

Hourly compensation in the business sector increased at an annual rate of 4.7 percent 

during the third quarter of 2008. This measure includes wages and salaries, supplements, 

employer contributions to employee benefit plans, and taxes. Real hourly compensation, which 

takes into account changes in consumer prices, decreased by 1.9 percent in the third quarter of 

2008. 

Changes in unit labor costs approximate the change in hourly compensation less the 

change in productivity. In the third quarter of 2008, unit labor costs rose at a 3.4 percent annual 

rate. The implicit price deflator for business sector output, which reflects changes in both unit 

labor cost and unit nonlabor payments, rose 4.5 percent in the third quarter of 2008. 

 
3 

Nonfarm business 

 Productivity increased 1.1 percent in the nonfarm business sector in the third quarter of 

2008; output and hours fell 1.7 percent and 2.7 percent, respectively. The decline in output was 

the largest since third-quarter 2001 (-2.9 percent), and the drop in hours was the largest since the 

first quarter of 2002 (-3.4 percent). Over the last four quarters, nonfarm business output per hour 

increased 2.0 percent; output rose 0.3 percent, and hours fell 1.7 percent (chart 1). From 2000 to 

2007, nonfarm productivity increased at a 2.5 percent average annual rate, as output grew 2.5 

percent and hours edged up 0.1 percent on average. 

Nonfarm hourly compensation increased at a 4.7 percent annual rate in the third quarter 

of 2008. Real hourly compensation decreased 1.9 percent in the third quarter, as consumer 

prices increased 6.7 percent (seasonally adjusted annual rates). 

Unit labor costs in the nonfarm business sector increased 3.6 percent during the third 

quarter of 2008 and 2.3 percent over the last four quarters (chart 2). The implicit price deflator 

for nonfarm business output increased 5.0 percent in the third quarter of 2008. 

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2001 2002 2003 2004 2005 2006 2007 2008

Percent change

From previous quarter, compound annual rate

From same quarter a year ago

Chart 1. Output per Hour, Nonfarm Business, all persons, 2001:1-2007:4 Chart 1. Output per Hour, Nonfarm Business, all persons, 2001:1-2008:3

 

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2001 2002 2003 2004 2005 2006 2007 2008

Percent change

From previous quarter, compound annual rate

From same quarter a year ago

Chart 2. Unit Labor Costs, Nonfarm Business, all persons, 2001:1-2008:3

Manufacturing 

 Manufacturing output per hour decreased 1.0 percent in the third quarter of 2008; output 

fell 5.8 percent and hours of all persons declined 4.9 percent (seasonally adjusted annual rates). 

Productivity increased 3.3 percent in durable goods industries as the 4.7 percent decline in 

output was outpaced by a 7.7 percent decline in hours. By contrast, productivity declined 7.3 

percent in the nondurable goods sector in the third quarter as output fell 7.0 percent while hours 

increased 0.4 percent. Total manufacturing productivity grew 1.1 percent from the third quarter 

of 2007 to the third quarter of 2008, compared to a 3.7 percent average annual growth rate from 

2000 to 2007 (chart 3). 

 Hourly compensation of manufacturing workers increased 5.0 percent during the third 

quarter of 2008, reflecting a 6.0 percent gain in the durable goods subsector and a 3.7 percent 

gain in nondurable goods industries. Real hourly compensation for total manufacturing 

decreased 1.6 percent in the third quarter. 

 
4 

 

 Unit labor costs in manufacturing rose 6.1 percent in the third quarter of 2008, reflecting 

a 2.6 percent increase in durable goods industries and an 11.8 percent jump in nondurable goods 

industries. Total manufacturing sector unit labor costs have increased 3.9 percent since the third 

quarter of 2007 (chart 4). 

-16

-12

-8

-4

0

4

8

12

16

2001 2002 2003 2004 2005 2006 2007 2008

Percent change

From previous quarter, compound annual rate

From same quarter a year ago

Chart 3. Output per Hour, Manufacturing, all persons, 2001:1-2008:3

 

-16

-12

-8

-4

0

4

8

12

16

2001 2002 2003 2004 2005 2006 2007 2008

Percent change

From previous quarter, compound annual rate

from same quartera year ago

Chart 4. Unit Labor Costs, Manufacturing, all persons, 2001:1-2008:3

Revised Measures 

 Revised and previous measures for the second quarter of 2008, for the business, nonfarm 

business, and manufacturing sectors are compared in table B. Hours declined at the same rates 

reported September 4 in all sectors. In the business and nonfarm business sectors output was 

revised downward, resulting in a corresponding downward revision to productivity. In the 

manufacturing sector productivity change, while negative, was revised up due to a small upward 

revision to output. 

Table B. Previous and revised productivity and related measures 

Quarterly percent change at seasonally adjusted annual rate 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Second quarter 2008 

Business: 

 Previous ....................... 4.3 3.2 -1.0 4.0 -1.0 -0.4 

 Revised......................... 3.7 2.6 -1.0 3.8 -1.2 0.1 

Nonfarm business: 

 Previous ....................... 4.3 3.4 -0.8 3.7 -1.3 -0.5 

 Revised......................... 3.6 2.8 -0.8 3.5 -1.4 -0.1 

Manufacturing: 

 Previous ....................... -2.2 -3.7 -1.5 3.9 -1.1 6.2 

 Revised......................... -1.9 -3.4 -1.5 3.8 -1.2 5.8 
5 

 In all three sectors, hourly compensation was revised down slightly. In the business and 

nonfarm business sectors, unit labor costs were revised upwards—this was the result of 

productivity being revised down more than hourly compensation. In manufacturing both the 

upward revision to productivity and the downward revision to hourly compensation contributed 

to a downward revision to unit labor costs. 

Revised measures: Nonfinancial Corporations 

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

2008 also were revised. Revised productivity growth was 8.6 percent due to an upward revision 

in output; hours were virtually unchanged (table C). Productivity grew 3.0 percent in the sector 

when measured over the four quarters ending with the second quarter (table 6). 

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

Quarterly percent c anges at easonally adjusted annual rate h s s

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator

Second quarter 2008 

Previous ........... 5.6 3.8 -1.7 3.7 -1.2 -1.8 -24.7 -3.6 

Revised............. 8.6 6.9 -1.6 3.7 -1.3 -4.6 -8.4 -3.9 

Unit labor costs were revised down from -1.8 percent to -4.6 percent—the result of 

productivity being revised up while hourly compensation remained unrevised. 

Next release date

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

Wednesday, December 3, 2008. It will present third-quarter measures for nonfinancial 

corporations and revised third-quarter measures for business, nonfarm business, and 

manufacturing. 

 
6 

TECHNICAL NOTES 

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

persons working in the sector—wage and salary workers, the self-employed and unpaid family 

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

Statistics (CES) program, which provides monthly survey data on the number of jobs held by 

wage and salary workers in nonfarm establishments. The CES also provides average weekly 

paid hours of production and nonsupervisory workers in these establishments. Weekly paid 

hours are adjusted to hours at work using data from the National Compensation Survey (NCS). 

The BLS Hours at Work survey, conducted for this purpose, was used for 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 a chain-type, current-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 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 BLS. 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 a chain-type, current-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 

 
7 

 

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. 
8 

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 

2006 I 136.1 162.8 119.6 168.0 120.7 123.5 133.4 127.2 

 II 136.6 164.0 120.1 168.1 119.7 123.1 136.2 128.0 

 III 135.9 164.1 120.8 169.0 119.1 124.3 136.2 128.8 

 IV 135.9 164.8 121.2 172.6 122.1 127.0 133.4 129.4 

 ANNUAL 136.1 163.9 120.4 169.5 120.4 124.5 134.8 128.3 

2007 I 135.9 164.5 121.0 174.7 122.4 128.5 134.3 130.7 

 II 137.6 166.8 121.2 175.5 121.6 127.5 137.4 131.2 

 III 139.7 169.0 121.0 177.0 121.9 126.7 139.7 131.6 

 IV 139.7 168.8 120.8 178.9 121.7 128.1 139.2 132.2 

 ANNUAL 138.2 167.3 121.0 176.5 121.9 127.7 137.7 131.4 

2008 I 140.5 169.1 120.3 180.6 121.5 128.5 140.2 132.9 

 II r141.8 r170.2 r120.0 r182.2 r121.2 r128.6 r140.9 r133.2 

 III 142.2 169.5 119.2 184.3 120.6 129.6 143.1 134.7 

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

 Percent change from previous quarter at annual rate(5) 

2006 I 2.6 5.6 3.0 5.5 3.6 2.8 3.1 3.0 

 II 1.4 2.9 1.5 0.2 -3.3 -1.2 8.6 2.6 

 III -2.0 0.3 2.4 2.0 -1.9 4.1 -0.1 2.4 

 IV 0.2 1.7 1.5 9.0 10.6 8.8 -8.0 1.9 

 ANNUAL 0.9 3.0 2.1 3.8 0.5 2.9 3.3 3.0 

2007 I -0.1 -0.7 -0.6 4.8 1.1 4.8 2.8 4.0 

 II 5.0 5.6 0.6 1.9 -2.6 -2.9 9.6 1.7 

 III 6.2 5.5 -0.7 3.6 0.8 -2.5 6.9 1.1 

 IV 0.1 -0.6 -0.7 4.4 -0.6 4.3 -1.6 2.0 

 ANNUAL 1.5 2.0 0.5 4.2 1.3 2.6 2.1 2.4 

2008 I 2.3 0.7 -1.6 3.6 -0.6 1.3 3.1 2.0 

 II r3.7 r2.6 -1.0 r3.8 r-1.2 r0.1 r2.0 0.9 

 III 1.3 -1.5 -2.8 4.7 -1.9 3.4 6.3 4.5 

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

 Percent change from corresponding quarter of previous year 

2006 I 1.3 3.6 2.3 4.3 0.5 2.9 3.9 3.3 

 II 1.7 3.5 1.8 4.0 0.1 2.3 5.2 3.4 

 III 0.2 2.4 2.2 2.9 -0.4 2.7 3.5 3.0 

 IV 0.5 2.6 2.1 4.1 2.1 3.6 0.7 2.5 

 ANNUAL 0.9 3.0 2.1 3.8 0.5 2.9 3.3 3.0 

2007 I -0.1 1.0 1.2 3.9 1.5 4.1 0.7 2.7 

 II 0.7 1.7 1.0 4.4 1.7 3.6 0.9 2.5 

 III 2.8 3.0 0.2 4.8 2.4 1.9 2.6 2.2 

 IV 2.8 2.4 -0.3 3.7 -0.3 0.9 4.3 2.2 

 ANNUAL 1.5 2.0 0.5 4.2 1.3 2.6 2.1 2.4 

2008 I 3.4 2.8 -0.6 3.4 -0.7 0.0 4.4 1.7 

 II r3.0 r2.0 -1.0 3.9 -0.4 r0.8 r2.6 1.5 

 III 1.8 0.3 -1.5 4.1 -1.1 2.3 2.4 2.3 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics

 
9 

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 

2006 I 135.1 163.2 120.8 166.8 119.8 123.5 135.5 127.9 

 II 135.7 164.3 121.1 167.1 118.9 123.2 138.6 128.8 

 III 135.0 164.4 121.8 167.9 118.3 124.4 138.3 129.5 

 IV 135.0 165.0 122.2 171.7 121.4 127.1 134.8 130.0 

 ANNUAL 135.2 164.2 121.5 168.4 119.6 124.6 136.8 129.1 

2007 I 135.0 164.7 122.0 173.7 121.8 128.7 135.2 131.1 

 II 136.4 167.0 122.4 174.1 120.7 127.7 138.2 131.5 

 III 138.3 169.2 122.3 175.5 120.8 126.9 140.3 131.8 

 IV 138.6 168.9 121.9 177.8 120.9 128.3 139.8 132.5 

 ANNUAL 137.1 167.5 122.2 175.3 121.1 127.9 138.4 131.7 

2008 I 139.5 169.3 121.4 179.5 120.8 128.7 141.0 133.2 

 II r140.8 r170.5 r121.1 r181.1 r120.4 r128.6 r141.9 r133.5 

 III 141.1 169.8 120.3 183.1 119.8 129.8 144.4 135.2 

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

 Percent change from previous quarter at annual rate(5) 

2006 I 2.5 6.0 3.3 5.2 3.3 2.6 3.9 3.1 

 II 1.8 2.9 1.1 0.7 -2.8 -1.1 9.4 2.9 

 III -2.1 0.3 2.4 1.9 -2.0 4.1 -0.9 2.1 

 IV 0.2 1.4 1.2 9.3 11.0 9.1 -9.5 1.5 

 ANNUAL 1.0 3.2 2.2 3.8 0.5 2.8 3.6 3.1 

2007 I 0.0 -0.9 -0.8 4.9 1.2 4.9 0.9 3.4 

 II 4.1 5.8 1.6 0.8 -3.6 -3.2 9.4 1.5 

 III 5.8 5.5 -0.3 3.3 0.5 -2.4 6.3 0.9 

 IV 0.8 -0.7 -1.6 5.3 0.3 4.5 -1.5 2.1 

 ANNUAL 1.4 2.0 0.5 4.1 1.3 2.7 1.2 2.1 

2008 I 2.6 0.9 -1.7 3.8 -0.4 1.2 3.6 2.1 

 II r3.6 r2.8 -0.8 r3.5 r-1.4 r-0.1 r2.4 0.9 

 III 1.1 -1.7 -2.7 4.7 -1.9 3.6 7.3 5.0 

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

 Percent change from corresponding quarter of previous year 

2006 I 1.3 3.7 2.4 4.2 0.5 2.9 4.3 3.4 

 II 1.7 3.7 2.0 3.9 0.0 2.2 5.9 3.6 

 III 0.3 2.6 2.3 2.9 -0.5 2.6 3.8 3.1 

 IV 0.6 2.6 2.0 4.3 2.2 3.6 0.5 2.4 

 ANNUAL 1.0 3.2 2.2 3.8 0.5 2.8 3.6 3.1 

2007 I 0.0 0.9 1.0 4.2 1.7 4.2 -0.2 2.5 

 II 0.5 1.6 1.1 4.2 1.5 3.7 -0.2 2.1 

 III 2.5 2.9 0.4 4.5 2.1 2.0 1.5 1.8 

 IV 2.7 2.4 -0.3 3.6 -0.4 0.9 3.7 2.0 

 ANNUAL 1.4 2.0 0.5 4.1 1.3 2.7 1.2 2.1 

2008 I 3.3 2.8 -0.5 3.3 -0.8 0.0 4.3 1.6 

 II r3.2 r2.1 -1.1 4.0 r-0.3 r0.8 r2.6 1.5 

 III 2.0 0.3 -1.7 4.3 -0.9 2.3 2.9 2.5 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics 

 
10 

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 

2006 I 172.6 147.2 85.3 170.9 122.7 99.0 

 II 172.7 147.4 85.4 169.5 120.7 98.2 

 III 174.5 148.0 84.8 170.3 120.0 97.6 

 IV 175.4 147.4 84.0 174.6 123.5 99.5 

 ANNUAL 173.8 147.5 84.9 171.3 121.7 98.6 

2007 I 177.0 147.8 83.5 176.9 124.0 100.0 

 II 178.7 149.6 83.7 176.4 122.3 98.7 

 III 180.6 151.2 83.7 176.4 121.4 97.6 

 IV 182.5 151.0 82.8 179.7 122.2 98.5 

 ANNUAL 179.7 149.9 83.4 177.3 122.5 98.7 

2008 I r184.0 r150.7 81.9 181.4 122.1 r98.6 

 II r183.1 r149.4 r81.6 r183.1 r121.7 r100.0 

 III 182.6 147.2 80.6 185.3 121.2 101.5 

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

 Percent change from previous quarter at annual rate(5) 

2006 I -0.6 1.8 2.4 14.3 12.3 15.0 

 II 0.2 0.6 0.4 -3.1 -6.5 -3.3 

 III 4.3 1.6 -2.5 1.8 -2.1 -2.3 

 IV 2.2 -1.7 -3.8 10.4 12.1 8.0 

 ANNUAL 1.1 1.8 0.8 4.1 0.8 3.0 

2007 I 3.6 1.2 -2.3 5.5 1.8 1.8 

 II 3.8 4.9 1.0 -1.1 -5.5 -4.8 

 III 4.5 4.3 -0.2 -0.1 -2.8 -4.4 

 IV 4.2 -0.4 -4.4 7.8 2.7 3.4 

 ANNUAL 3.4 1.6 -1.7 3.5 0.7 0.1 

2008 I 3.3 r-0.8 -4.0 3.8 -0.5 0.5 

 II r-1.9 r-3.4 -1.5 r3.8 r-1.2 r5.8 

 III -1.0 -5.8 -4.9 5.0 -1.6 6.1 

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

 Percent change from corresponding quarter of previous year 

2006 I 1.5 2.4 0.9 5.4 1.6 3.8 

 II 0.4 2.1 1.7 3.3 -0.6 2.9 

 III 0.9 2.3 1.4 2.3 -1.0 1.4 

 IV 1.5 0.6 -0.9 5.6 3.6 4.1 

 ANNUAL 1.1 1.8 0.8 4.1 0.8 3.0 

2007 I 2.6 0.4 -2.1 3.5 1.1 0.9 

 II 3.5 1.5 -1.9 4.1 1.4 0.6 

 III 3.5 2.1 -1.3 3.6 1.2 0.0 

 IV 4.0 2.5 -1.5 2.9 -1.0 -1.1 

 ANNUAL 3.4 1.6 -1.7 3.5 0.7 0.1 

2008 I r4.0 r2.0 -1.9 2.5 -1.6 -1.4 

 II r2.5 r-0.1 -2.5 3.8 r-0.5 r1.3 

 III 1.1 -2.6 -3.7 5.1 -0.2 3.9 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics 

 
11 

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 

2006 I 198.8 179.6 90.3 166.0 119.2 83.5 

 II 198.9 180.5 90.7 164.6 117.1 82.7 

 III 201.7 181.1 89.8 165.3 116.5 81.9 

 IV 202.4 180.1 89.0 170.2 120.4 84.1 

 ANNUAL 200.4 180.3 90.0 166.5 118.3 83.1 

2007 I 204.4 180.3 88.2 173.0 121.3 84.7 

 II 207.9 183.9 88.4 172.5 119.6 83.0 

 III 210.9 186.9 88.6 172.2 118.6 81.7 

 IV 214.3 187.0 87.3 175.5 119.4 81.9 

 ANNUAL 209.4 184.5 88.1 173.3 119.7 82.8 

2008 I r215.5 r186.9 86.7 176.6 118.9 r82.0 

 II r213.2 r184.2 r86.4 r178.3 r118.6 r83.7 

 III 214.9 182.0 84.7 181.0 118.4 84.2 

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

 Percent change from previous quarter at annual rate(5) 

2006 I -1.8 0.4 2.3 13.7 11.7 15.9 

 II 0.3 2.1 1.8 -3.3 -6.6 -3.6 

 III 5.7 1.2 -4.3 1.6 -2.3 -3.9 

 IV 1.4 -2.1 -3.4 12.6 14.4 11.1 

 ANNUAL 2.2 3.3 1.1 3.9 0.6 1.7 

2007 I 3.9 0.4 -3.4 6.7 3.0 2.7 

 II 7.1 8.2 1.0 -1.2 -5.5 -7.7 

 III 6.0 6.8 0.8 -0.7 -3.3 -6.2 

 IV 6.6 0.3 -6.0 7.9 2.8 1.2 

 ANNUAL 4.5 2.3 -2.0 4.1 1.3 -0.3 

2008 I r2.1 r-0.4 -2.5 2.5 -1.7 0.4 

 II r-4.2 r-5.6 r-1.4 r3.9 r-1.1 r8.5 

 III 3.3 -4.7 -7.7 6.0 -0.7 2.6 

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

 Percent change from corresponding quarter of previous year 

2006 I 3.2 4.8 1.6 4.9 1.1 1.6 

 II 2.0 4.6 2.5 3.1 -0.8 1.1 

 III 2.2 3.6 1.4 1.9 -1.5 -0.4 

 IV 1.4 0.4 -1.0 5.9 3.9 4.5 

 ANNUAL 2.2 3.3 1.1 3.9 0.6 1.7 

2007 I 2.8 0.4 -2.4 4.3 1.8 1.4 

 II 4.5 1.8 -2.5 4.8 2.1 0.3 

 III 4.6 3.2 -1.3 4.2 1.8 -0.3 

 IV 5.9 3.9 -1.9 3.1 -0.8 -2.6 

 ANNUAL 4.5 2.3 -2.0 4.1 1.3 -0.3 

2008 I 5.4 r3.7 -1.7 2.1 -2.0 -3.2 

 II r2.5 r0.2 -2.3 3.4 r-0.9 r0.8 

 III 1.9 -2.6 -4.4 5.1 -0.2 3.1 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics 

 
12 

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 

2006 I 148.0 115.0 77.7 178.0 127.8 120.2 

 II 148.4 114.8 77.3 176.6 125.7 119.0 

 III 149.0 115.4 77.4 177.8 125.3 119.3 

 IV 150.3 115.1 76.6 180.4 127.6 120.0 

 ANNUAL 148.9 115.1 77.2 178.2 126.6 119.6 

2007 I 151.2 115.6 76.5 181.9 127.5 120.3 

 II 151.4 116.0 76.6 181.4 125.8 119.9 

 III 152.7 116.4 76.3 181.8 125.2 119.1 

 IV 152.9 116.1 75.9 185.3 126.0 121.2 

 ANNUAL 152.0 116.0 76.3 182.6 126.1 120.1 

2008 I r155.0 r115.7 74.6 188.0 126.5 r121.3 

 II r155.2 r115.4 r74.3 r189.6 r126.1 r122.2 

 III 152.3 113.3 74.4 191.3 125.2 125.6 

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

 Percent change from previous quarter at annual rate(5) 

2006 I 1.0 3.6 2.6 15.5 13.4 14.4 

 II 1.1 -0.9 -1.9 -3.1 -6.5 -4.1 

 III 1.5 2.2 0.6 2.6 -1.4 1.1 

 IV 3.5 -1.1 -4.4 6.1 7.7 2.5 

 ANNUAL 0.2 0.3 0.1 4.5 1.1 4.3 

2007 I 2.5 2.0 -0.5 3.3 -0.3 0.8 

 II 0.4 1.3 0.9 -1.0 -5.3 -1.4 

 III 3.5 1.6 -1.9 0.7 -2.0 -2.7 

 IV 0.6 -1.1 -1.7 7.9 2.8 7.3 

 ANNUAL 2.1 0.9 -1.2 2.5 -0.3 0.4 

2008 I r5.8 -1.3 -6.7 6.0 1.7 0.3 

 II r0.5 r-1.2 r-1.7 r3.5 r-1.5 r3.0 

 III -7.3 -7.0 0.4 3.7 -2.9 11.8 

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

 Percent change from corresponding quarter of previous year 

2006 I 0.2 -0.1 -0.3 6.2 2.4 6.0 

 II -0.7 -0.6 0.1 3.5 -0.4 4.2 

 III -0.4 1.0 1.4 3.1 -0.2 3.6 

 IV 1.8 0.9 -0.8 5.1 3.0 3.2 

 ANNUAL 0.2 0.3 0.1 4.5 1.1 4.3 

2007 I 2.1 0.5 -1.6 2.2 -0.2 0.0 

 II 2.0 1.1 -0.9 2.7 0.1 0.7 

 III 2.5 0.9 -1.5 2.3 -0.1 -0.2 

 IV 1.7 0.9 -0.8 2.7 -1.2 1.0 

 ANNUAL 2.1 0.9 -1.2 2.5 -0.3 0.4 

2008 I 2.5 0.1 -2.4 3.4 -0.8 0.8 

 II r2.6 r-0.5 -3.0 4.5 0.2 1.9 

 III -0.2 -2.7 -2.5 5.3 0.0 5.5 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics 

 
13 

 

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 

2006 I 146.3 176.2 120.4 164.5 118.1 112.4 112.9 112.5 182.5 118.8 

 II 146.0 176.5 120.9 164.5 117.0 112.6 114.4 113.1 183.1 119.4 

 III 147.0 178.5 121.5 165.1 116.3 112.3 114.2 112.8 193.0 120.0 

 IV 146.0 177.8 121.8 167.8 118.7 114.9 116.2 115.3 173.9 120.5 

 ANNUAL 146.3 177.3 121.1 165.5 117.5 113.1 114.4 113.4 183.1 119.7 

2007 I 146.2 177.8 121.7 170.3 119.4 116.5 117.2 116.7 171.8 121.6 

 II 147.4 179.7 121.9 171.3 118.7 116.2 117.4 116.5 172.5 121.5 

 III 148.1 180.9 122.1 172.5 118.7 116.5 117.8 116.8 166.8 121.3 

 IV 148.8 181.7 122.1 175.0 119.0 117.6 118.9 117.9 155.9 121.3 

 ANNUAL 147.6 180.0 122.0 172.3 119.0 116.7 117.9 117.0 166.7 121.4 

2008 I 148.7 181.1 121.8 176.2 118.6 118.5 119.0 118.6 150.3 121.5 

 II r151.8 r184.2 r121.3 r177.8 r118.2 r117.1 r119.1 r117.7 r147.0 r120.3 

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

 Percent change from previous quarter at annual rate(5) 

2006 I 4.4 7.0 2.4 8.3 6.3 3.7 -0.6 2.5 12.1 3.7 

 II -0.9 0.8 1.7 0.0 -3.5 0.9 5.3 2.1 1.4 2.0 

 III 2.7 4.7 1.9 1.5 -2.5 -1.2 -0.5 -1.0 23.3 2.1 

 IV -2.6 -1.6 1.0 6.9 8.5 9.7 6.9 9.0 -34.1 1.7 

 ANNUAL 2.1 4.4 2.2 3.6 0.3 1.5 1.4 1.4 12.2 2.8 

2007 I 0.4 0.0 -0.3 6.1 2.4 5.7 3.6 5.1 -4.7 3.8 

 II 3.4 4.3 0.8 2.2 -2.3 -1.2 0.8 -0.7 1.7 -0.4 

 III 1.8 2.6 0.7 2.8 0.1 1.0 1.3 1.0 -12.5 -0.8 

 IV 1.9 1.9 0.0 5.9 0.9 3.9 3.9 3.9 -23.7 0.2 

 ANNUAL 0.9 1.6 0.7 4.1 1.3 3.2 3.0 3.2 -9.0 1.5 

2008 I -0.2 -1.4 -1.1 2.9 -1.3 3.2 0.3 2.4 -13.6 0.5 

 II r8.6 r6.9 r-1.6 3.7 r-1.3 r-4.6 r0.3 r-3.3 r-8.4 r-3.9 

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

 Percent change from corresponding quarter of previous year 

2006 I 3.2 5.9 2.6 4.1 0.4 0.9 1.4 1.0 17.1 3.0 

 II 1.6 3.9 2.3 3.7 -0.2 2.0 2.7 2.2 9.8 3.2 

 III 2.9 5.2 2.2 2.6 -0.7 -0.3 -1.3 -0.6 26.8 2.6 

 IV 0.9 2.7 1.8 4.1 2.1 3.2 2.7 3.1 -2.0 2.4 

 ANNUAL 2.1 4.4 2.2 3.6 0.3 1.5 1.4 1.4 12.2 2.8 

2007 I -0.1 1.0 1.1 3.6 1.1 3.7 3.8 3.7 -5.9 2.4 

 II 1.0 1.8 0.8 4.1 1.4 3.1 2.7 3.0 -5.8 1.8 

 III 0.7 1.3 0.6 4.5 2.1 3.7 3.1 3.6 -13.6 1.1 

 IV 1.9 2.2 0.3 4.3 0.3 2.3 2.4 2.3 -10.3 0.7 

 ANNUAL 0.9 1.6 0.7 4.1 1.3 3.2 3.0 3.2 -9.0 1.5 

2008 I 1.7 1.8 0.1 3.5 -0.7 1.7 1.6 1.7 -12.5 -0.1 

 II r3.0 r2.5 -0.5 3.8 -0.4 r0.8 r1.4 r1.0 r-14.8 r-1.0 

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

See footnotes following Table 6. November 6, 2008 

r=revised Source: Bureau of Labor Statistics
14 

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 –1.5 and +1.4 index points approximately 95 percent of the time. This interval is 

based on the performance of this measure between the fourth quarter of 1995 and the second quarter of 2008. 

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 1978-2007 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 is calculated using index numbers to 

three decimal places. Indexes published in the news release are rounded to one decimal place for 

convenience. Annual changes: Percent change is calculated using annual average indexes to three 

decimal places. 

(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.