Internet address: http://www.bls.gov USDL 06-1655 

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

Media contact: (202) 691-5902 Tuesday, September 26, 2006 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, 2005 

Manufacturing labor productivity increased in 14 of the 15 economies covered by the 

U.S. Department of Labor’s Bureau of Labor Statistics in 2005. Denmark, which 

experienced no change in productivity, was the lone exception. 

The U.S. increase of 5.1 percent continued a more than decade-long trend of 

relatively high productivity growth in manufacturing. Since 1995, only the Republic of 

Korea and Sweden had greater productivity growth. 

The data presented here differ from those appearing in the BLS Productivity and 

Costs news releases. (See technical notes.) Average annual growth rates for selected 

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

Chart 1. Percent change in

 manufacturing output per hour, 2004-2005

5.1

5.7

1.9

2.4

6.4

2.8

3.9

5.3

0.1

4.1

2.8

4.8

2.5

0.0

8.5

0

2

4

6

8

United States

Canada

Australia

Japan

Korea, Rep. of

Taiwan

Belgium

Denmark

France

Germany

Italy

Netherlands

Norway

Sweden

United Kingdom

(Percent)
- 2 -

Manufacturing unit labor costs, expressed in national currency units, declined in nine 

of the economies and increased in six. The change for the United States was near the 

middle of the range, at -0.4 percent. 

Expressed in U.S. dollars, unit labor costs declined in six of the countries and 

increased in nine. This shift from a decline in unit labor costs in national currency to an 

increase in unit labor costs expressed in U.S. dollars can be accounted for by the relative 

appreciation of the currencies of the Republic of Korea, Canada, and Taiwan. (See chart 

2 and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2004-2005

1.7

-0.8

0.5

-0.8

3.0

-3.4

-1.2

2.3

1.4

-2.4

-2.2

-0.8

3.8

-0.6

-0.4

1.0

-2.4

5.2

-0.7

3.1

-3.3

-1.1

2.2

1.5

1.4

9.5

-2.6

7.5

6.7

-0.4

-5 -3 -1 2 4 6 8 10

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Belgium

Taiwan

Korea, Rep. of

Japan

Australia

Canada

United States

National currency basis U.S. dollar basis
- 3 -

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

 Manufacturing, 15 countries or areas, 2004-2005 

 Percent change 

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

 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 5.1 4.0 -1.1 -0.5 -0.6 3.5 4.6 -0.4 -0.4 -- 

 Canada 5.7 2.2 -3.4 -2.2 -1.3 1.5 5.1 -0.6 6.7 7.4 

 Australia 1.9 -0.1 -1.9 -1.7 -0.3 3.8 5.8 3.8 7.5 3.6 

 Japan 2.4 1.1 -1.3 -0.7 -0.6 0.3 1.6 -0.8 -2.6 -1.8 

 Korea, Republic of 8.5 7.0 -1.4 -0.8 -0.6 4.7 6.2 -2.2 9.5 11.9 

 Taiwan 6.4 5.8 -0.6 0.4 -1.0 3.2 3.8 -2.4 1.4 3.9 

 Belgium 2.8 -0.4 -3.2 -1.6 -1.6 0.9 4.3 1.4 1.5 0.1 

 Denmark 0.0 0.0 0.0 -1.5 1.5 2.3 2.3 2.3 2.2 -0.1 

 France 3.9 1.5 -2.4 -2.3 0.0 0.3 2.7 -1.2 -1.1 0.1 

 Germany 5.3 3.0 -2.2 -1.7 -0.5 -0.5 1.8 -3.4 -3.3 0.1 

 Italy 0.1 -2.1 -2.2 -1.4 -0.8 0.8 3.0 3.0 3.1 0.1 

 Netherlands 4.1 0.2 -3.8 -2.3 -1.5 -0.6 3.3 -0.8 -0.7 0.1 

 Norway 2.8 2.6 -0.3 -0.8 0.5 3.1 3.4 0.5 5.2 4.6 

 Sweden 4.8 2.6 -2.2 -2.5 0.3 1.8 4.0 -0.8 -2.4 -1.6 

 United Kingdom 2.5 -1.1 -3.5 -3.4 -0.1 0.6 4.3 1.7 1.0 -0.7 

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

 

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

Additional data available

Annual indexes of these variables also are estimated for the time period 1950-2005 

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

website at http://www.bls.gov/fls/home.htm. 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 -

Manufacturing productivity, output, and labor input

The U.S. manufacturing productivity increase of 5.1 percent was fifth greatest among 

the 15 economies compared, behind Korea, Taiwan, Canada, and Germany. Italy, which 

along with Denmark has shown the lowest productivity growth over the last five years, 

was also the only economy comparable to Denmark in its virtual lack of productivity 

growth in 2005. (See tables A and B.) 

Korea and Taiwan continued to be among the leaders in the growth of manufacturing 

output, as they have been for the last decade. Sweden, also a leader in manufacturing 

output growth over the decade, had more modest output growth in 2005. U.S. 

manufacturing output growth, like that of most of the economies, also slowed in 2005. 

Decline in total hours worked, the other factor responsible for productivity growth, 

was also strongly evident in 2005. While 10 of the economies had increases in output, 14 

had reductions in hours. The Netherlands had the greatest decline in hours in 2005, 

followed closely by the United Kingdom, Canada, and Belgium. 

For most countries, the pace of decline in hours worked accelerated from 1995-2000 

to 2000-2005. The United States and the United Kingdom experienced the most rapid 

declines. 

Manufacturing employment and hours worked tend to move together, and, as with 

hours, employment declined in 14 of the 15 economies in 2005. Only Taiwan 

experienced employment growth, which is consistent with its long-term trend. 

Generally, 2005 was a year of decreases in average hours worked. Eleven of the 

fifteen economies experienced decreases in 2005 compared to only three in 2004. The 

U.S. decrease of 0.6 was below its trend over the 1979-2005 period, which is a 0.1 

percent average annual increase. 

Manufacturing hourly compensation and unit labor costs

Total labor compensation in U.S. manufacturing increased by 3.5 percent in 2005. 

This was notably higher than the annual rate of increase in recent years, but almost the 

same as the rate of increase over the 1979-2005 period. Of the 14 economies for which 

comparable data are available, the United States is the only one that did not have a 

considerably smaller increase in 2005 than its average for the entire period since 1979. 

(See tables A and B.) 

Like total compensation, the increase in hourly compensation in U.S. manufacturing 

in 2005 was more than twice the increase in 2004, yet about the same as over the past 

decade. In 2005, the U.S. rate of increase was fourth highest among the economies 

compared. Among the economies with comparable data, Canada, the United States, and 

Belgium were the only ones without a rate of increase that was substantially less than the 

average for the 1979-2005 period. 
- 5 -

The relatively large increase in U.S. manufacturing productivity in 2005 might be 

expected to translate into a similar relative decrease in manufacturing unit labor costs. 

Unit labor costs did fall, but only by 0.4 percent, as hourly compensation increased. 

Eight other countries, led by Germany, had greater declines in unit labor costs, expressed 

in national currency units. 

In 2005, the U.S. dollar depreciated less against the major European currencies than it 

had over the past two years. Consequently, manufacturing unit labor costs did not 

uniformly rise on a dollar basis. In 2005, besides the United States, five countries had 

decreases in their unit labor costs on a dollar basis, all of which were greater than the 

U.S. decline. Germany was the leader among economies experiencing a fall in unit labor 

costs, followed by Japan and Sweden. 

The influence of exchange rate changes was not entirely absent from the unit labor 

cost changes, however. The currencies of Korea, Canada, Norway, Taiwan, and 

Australia all appreciated against the dollar to more than a negligible degree. They all 

experienced increases in dollar-denominated unit labor costs as well. 
- 6 -

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

 Manufacturing, 15 countries or areas, 1979-2005 

 Average annual rates of change(1) 

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

 Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005 

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

 Output per hour 

 United States 4.1 2.8 3.7 5.7 5.8 r5.3 5.1 

 Canada 2.5 2.0 3.8 r2.9 2.1 r4.1 5.7 

 Australia 2.9 2.8 2.9 3.8 2.3 r-0.7 1.9 

 Japan 3.5 3.8 3.3 r3.5 3.2 r5.7 2.4 

 Korea, Republic of NA NA r9.4 10.8 7.1 r11.5 8.5 

 Taiwan 5.6 r6.1 r4.7 r5.6 5.2 4.7 6.4 

 Belgium 3.5 4.2 3.2 2.7 3.0 3.2 2.8 

 Denmark 1.9 r2.2 2.7 1.8 0.4 0.9 0.0 

 France 4.3 4.2 4.6 r5.0 3.6 r3.6 3.9 

 Germany (2) 2.8 2.1 2.9 3.7 3.5 4.7 5.3 

 Italy 1.8 r2.9 r2.6 r0.9 -0.6 r0.9 0.1 

 Netherlands 3.4 3.5 3.5 r3.4 2.9 r5.0 4.1 

 Norway 2.0 2.0 0.5 1.1 4.4 r5.1 2.8 

 Sweden 4.7 2.5 5.8 7.2 5.9 9.8 4.8 

 United Kingdom 3.5 4.1 r2.8 2.6 3.7 5.6 2.5 

 Output 

 United States 2.9 2.2 3.6 5.4 1.5 4.8 4.0 

 Canada 2.5 1.8 2.4 5.9 0.7 r4.6 2.2 

 Australia 1.5 1.6 0.8 r2.5 1.1 r-0.2 -0.1 

 Japan 2.4 4.7 0.4 r1.2 0.7 r4.6 1.1 

 Korea, Republic of 8.9 r10.7 r8.2 7.9 6.6 r11.1 7.0 

 Taiwan 5.8 r7.4 r4.4 r5.8 3.9 9.4 5.8 

 Belgium 1.8 2.6 0.6 2.6 0.3 2.3 -0.4 

 Denmark 0.9 r1.2 2.1 1.7 -1.8 r-2.6 0.0 

 France 2.1 2.0 1.7 3.9 1.2 r1.7 1.5 

 Germany (2) 1.1 1.2 -1.0 2.2 1.7 4.6 3.0 

 Italy 1.3 r2.6 r1.6 r0.7 -1.2 r0.8 -2.1 

 Netherlands 2.0 2.5 1.8 r3.3 0.1 r1.6 0.2 

 Norway 0.6 -0.4 1.1 1.0 1.9 r4.7 2.6 

 Sweden 3.6 1.8 3.8 7.4 3.9 9.9 2.6 

 United Kingdom 0.6 0.9 0.5 1.3 -0.6 r2.0 -1.1 

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

 Continued on next page 
- 7 -

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

 Manufacturing, 15 countries or areas, 1979-2005 

 Average annual rates of change(1) 

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

 Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005 

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

 Total hours 

 United States -1.1 -0.6 -0.1 -0.2 -4.1 r-0.5 -1.1 

 Canada 0.0 -0.2 -1.3 r2.9 -1.3 r0.6 -3.4 

 Australia -1.3 -1.2 -2.0 -1.2 -1.2 0.5 -1.9 

 Japan -1.1 0.8 -2.8 r-2.2 -2.4 r-1.0 -1.3 

 Korea, Republic of NA NA -1.1 -2.6 -0.5 r-0.4 -1.4 

 Taiwan 0.2 1.2 -0.3 0.1 -1.3 4.5 -0.6 

 Belgium -1.7 -1.6 -2.5 -0.1 -2.5 -0.9 -3.2 

 Denmark -1.0 r-1.0 -0.7 -0.1 -2.2 r-3.5 0.0 

 France -2.1 -2.1 -2.8 -1.1 -2.3 r-1.8 -2.4 

 Germany (2) -1.7 -0.9 -3.8 -1.4 -1.8 -0.1 -2.2 

 Italy -0.4 -0.2 r-0.9 r-0.2 -0.6 r-0.2 -2.2 

 Netherlands -1.3 -1.0 -1.7 r-0.1 -2.7 r-3.2 -3.8 

 Norway -1.4 -2.3 0.6 -0.1 -2.4 -0.3 -0.3 

 Sweden -1.0 -0.7 -1.9 0.3 -1.9 0.0 -2.2 

 United Kingdom -2.8 -3.1 r-2.3 -1.3 -4.1 r-3.4 -3.5 

 Employment 

 United States -1.2 -0.8 -0.5 -0.1 -3.7 r-1.3 -0.5 

 Canada -0.1 -0.2 -1.5 r2.5 -1.1 r-1.3 -2.2 

 Australia -1.4 -1.3 -2.3 -1.1 -1.1 0.6 -1.7 

 Japan -0.8 1.0 -1.6 r-2.0 -2.5 r-2.1 -0.7 

 Korea, Republic of NA NA -0.8 -2.5 0.5 r0.8 -0.8 

 Taiwan 0.8 2.0 -0.3 0.4 -0.3 3.2 0.4 

 Belgium -1.6 -1.6 -2.2 -0.6 -1.9 -2.4 -1.6 

 Denmark -1.1 r-0.4 -1.2 -1.2 -2.2 r-2.7 -1.5 

 France -1.6 -1.6 -2.5 -0.3 -1.8 r-3.1 -2.3 

 Germany (2) -1.3 -0.1 -4.2 -0.8 -1.5 -1.5 -1.7 

 Italy -0.8 -0.9 r-1.8 r-0.2 -0.2 r-1.1 -1.4 

 Netherlands -1.1 -0.8 -1.6 r0.1 -2.6 r-4.2 -2.3 

 Norway -1.3 -2.2 0.3 0.1 -2.6 -2.9 -0.8 

 Sweden -1.4 -1.0 -3.5 0.0 -1.7 -1.9 -2.5 

 United Kingdom -2.8 -2.9 -2.6 r-1.4 -4.2 r-4.1 -3.4 

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

 Continued on next page 
- 8 -

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

 Manufacturing, 15 countries or areas, 1979-2005 

 Average annual rates of change(1) 

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

 Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005 

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

 Average hours 

 United States 0.1 0.2 0.4 -0.2 -0.3 0.8 -0.6 

 Canada 0.1 0.0 0.3 r0.4 -0.2 r1.9 -1.3 

 Australia 0.1 0.1 0.3 -0.1 -0.1 -0.1 -0.3 

 Japan -0.3 -0.2 -1.3 r-0.2 0.1 1.1 -0.6 

 Korea, Republic of NA NA -0.2 -0.1 -1.0 r-1.2 -0.6 

 Taiwan -0.6 -0.8 0.0 -0.3 -1.0 1.3 -1.0 

 Belgium -0.1 0.0 -0.3 0.5 -0.6 1.6 -1.6 

 Denmark 0.1 r-0.5 0.6 1.1 0.0 r-0.7 1.5 

 France -0.5 -0.5 -0.3 -0.8 -0.5 r1.3 0.0 

 Germany (2) -0.5 -0.9 0.4 -0.6 -0.3 1.5 -0.5 

 Italy 0.4 0.6 0.9 0.0 -0.3 0.9 -0.8 

 Netherlands -0.2 -0.2 0.0 -0.2 -0.2 r1.0 -1.5 

 Norway 0.0 -0.1 0.3 -0.2 0.2 2.7 0.5 

 Sweden 0.5 0.3 1.7 0.2 -0.2 1.9 0.3 

 United Kingdom 0.0 -0.2 r0.3 0.1 0.1 r0.7 -0.1 

 Total labor compensation(3): National currency basis 

 United States 3.6 4.9 3.4 4.4 0.4 r1.5 3.5 

 Canada 4.5 6.5 2.4 5.2 1.7 r1.4 1.5 

 Australia NA NA 3.4 3.0 3.8 2.5 3.8 

 Japan 1.8 5.5 0.7 r-1.0 -2.1 r-0.6 0.3 

 Korea, Republic of 13.9 19.6 17.6 5.4 7.2 r13.8 4.7 

 Taiwan 7.5 13.5 6.8 3.6 -0.3 r2.1 3.2 

 Belgium 2.7 4.4 1.3 1.9 1.0 0.7 0.9 

 Denmark 4.2 r7.0 2.3 2.8 1.4 r-0.6 2.3 

 France 3.8 r7.3 r1.7 r1.7 0.8 r0.5 0.3 

 Germany (2) 2.7 4.6 2.4 1.6 0.2 0.5 -0.5 

 Italy 6.5 11.4 r4.1 r2.6 2.5 r3.0 0.8 

 Netherlands 2.8 3.1 2.8 3.4 1.3 r0.1 -0.6 

 Norway 4.8 6.5 4.0 5.0 1.8 2.3 3.1 

 Sweden 5.4 8.4 2.0 5.3 2.3 2.2 1.8 

 United Kingdom 4.0 7.1 r1.3 3.4 0.4 r1.2 0.6 

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

 Continued on next page 
- 9 -

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

 Manufacturing, 15 countries or areas, 1979-2005 

 Average annual rates of change(1) 

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

 Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005 

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

 Hourly compensation(3): National currency basis 

 United States 4.8 5.5 3.5 4.7 4.6 r2.0 4.6 

 Canada 4.6 6.8 3.8 r2.2 3.1 r0.8 5.1 

 Australia NA NA 5.5 4.3 5.0 2.0 5.8 

 Japan 2.9 4.6 3.6 r1.2 0.4 0.5 1.6 

 Korea, Republic of NA NA 18.9 8.1 7.7 r14.2 6.2 

 Taiwan 7.2 12.1 7.1 3.4 1.0 r-2.3 3.8 

 Belgium 4.4 6.1 3.9 2.1 3.7 1.6 4.3 

 Denmark 5.2 r8.1 2.9 2.9 3.7 r2.9 2.3 

 France 6.1 r9.6 r4.6 r2.8 3.2 r2.3 2.7 

 Germany (2) 4.5 5.6 6.4 3.1 2.0 0.5 1.8 

 Italy 7.0 11.7 r5.0 2.8 3.1 r3.2 3.0 

 Netherlands 4.1 4.1 4.5 r3.5 4.2 r3.5 3.3 

 Norway 6.3 9.0 3.4 5.2 4.3 2.6 3.4 

 Sweden 6.4 9.1 4.0 5.1 4.3 2.1 4.0 

 United Kingdom 7.0 10.6 r3.7 r4.8 4.7 r4.7 4.3 

 Unit labor costs(3): National currency basis 

 United States 0.7 2.7 -0.2 -0.9 -1.1 r-3.2 -0.4 

 Canada 2.0 4.7 0.0 r-0.7 1.0 r-3.1 -0.6 

 Australia NA NA 2.5 r0.5 2.7 r2.7 3.8 

 Japan -0.6 0.8 0.3 r-2.2 -2.7 r-5.0 -0.8 

 Korea, Republic of 4.6 r8.1 r8.7 -2.4 0.5 r2.4 -2.2 

 Taiwan 1.6 r5.6 r2.3 r-2.1 -4.0 r-6.7 -2.4 

 Belgium 0.9 1.8 0.7 -0.6 0.7 -1.6 1.4 

 Denmark 3.3 5.7 0.2 1.1 3.3 r2.0 2.3 

 France 1.7 r5.2 r0.0 r-2.1 -0.4 r-1.2 -1.2 

 Germany (2) 1.7 3.3 3.4 -0.5 -1.5 -4.0 -3.4 

 Italy 5.1 r8.5 r2.4 r1.9 3.7 r2.3 3.0 

 Netherlands 0.7 0.6 1.0 r0.1 1.2 r-1.5 -0.8 

 Norway 4.2 6.9 2.9 4.0 -0.1 r-2.3 0.5 

 Sweden 1.7 6.5 -1.7 -1.9 -1.5 -7.0 -0.8 

 United Kingdom 3.3 6.2 r0.8 r2.1 1.0 r-0.8 1.7 

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

 Continued on next page 
- 10 -

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

 Manufacturing, 15 countries or areas, 1979-2005 

 Average annual rates of change(1) 

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

 Country or area 1979-2005 1979-1990 1990-1995 1995-2000 2000-2005 2003-2004 2004-2005 

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

 Unit labor costs(3): U.S. dollar basis 

 United States 0.7 2.7 -0.2 -0.9 -1.1 r-3.2 -0.4 

 Canada 1.9 4.7 -3.2 -2.2 5.2 r4.3 6.7 

 Australia NA NA r1.5 -4.3 8.4 r16.0 7.5 

 Japan 2.1 4.6 9.4 r-4.9 -3.2 r1.9 -2.6 

 Korea, Republic of 1.6 r4.4 r6.9 -9.5 2.5 r6.6 9.5 

 Taiwan 2.0 r8.5 r2.7 r-5.3 -4.5 r-3.8 1.4 

 Belgium 0.5 0.6 3.3 -8.1 6.9 8.1 1.5 

 Denmark 2.8 r4.2 2.2 -6.1 9.7 r12.0 2.2 

 France 0.8 r2.9 r1.8 r-8.8 5.8 r8.6 -1.1 

 Germany (2) 2.3 4.5 5.9 -8.0 4.6 5.5 -3.3 

 Italy 2.6 r5.0 r-3.7 r-3.1 10.1 r12.4 3.1 

 Netherlands 1.2 1.5 3.6 r-7.6 7.5 8.3 -0.7 

 Norway 3.2 4.9 2.6 -2.7 6.3 r2.6 5.2 

 Sweden -0.5 3.4 -5.3 -6.7 2.7 2.2 -2.4 

 United Kingdom 2.7 4.5 r-1.6 r1.3 4.7 r11.2 1.0 

 Exchange rates(4) 

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

 Canada -0.1 0.0 -3.2 -1.6 4.2 7.6 7.4 

 Australia -1.5 -3.2 -1.1 -4.7 5.6 12.9 3.6 

 Japan 2.7 3.8 9.1 -2.7 -0.4 7.2 -1.8 

 Korea, Republic of -2.8 -3.4 -1.7 -7.3 2.0 4.1 11.9 

 Taiwan 0.4 2.7 0.3 -3.3 -0.5 3.1 3.9 

 Belgium -0.4 -1.2 2.5 -7.6 6.2 9.9 0.1 

 Denmark -0.5 -1.5 2.0 -7.1 6.2 9.8 -0.1 

 France -0.8 -2.2 1.8 -6.8 6.2 9.9 0.1 

 Germany (2) 0.6 1.1 2.5 -7.5 6.2 9.9 0.1 

 Italy -2.4 -3.3 -6.0 -4.9 6.2 9.9 0.1 

 Netherlands 0.5 0.9 2.6 -7.6 6.2 9.9 0.1 

 Norway -0.9 -1.9 -0.3 -6.4 6.5 5.1 4.6 

 Sweden -2.1 -2.9 -3.7 -4.9 4.2 9.9 -1.6 

 United Kingdom -0.6 -1.6 -2.4 -0.8 3.7 12.1 -0.7 

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

 r=revised NA=data not available 

 (1) Rates of change based on the compound rate method. 

 (2) Data for years before 1991 pertain to the former West Germany. 

 (3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers. 

 (4) Value of foreign currency relative to the U.S. dollar. 
- 11 -

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 13 

economies for which comparable data are available over the period of comparison; 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 13(1) competitors, 1979-2005

70

80

90

100

110

120

130

1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

(1979 = 100)

 U.S. dollar

basis

National 

currency basis

(1) Australia has been omitted from this chart because data for 1979 are not available.

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

of “competitors” from 1979 to 1985 on a U.S. dollar basis. In most years from 1986 to 

1996, U.S. costs either rose at a slower rate than the "competitors" costs or fell at a faster 

rate. From 1997, 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 decline again after 2001 with the weakening of the U.S. dollar. 
- 12 -

 Table C. U.S. manufacturing unit labor 

 costs relative to 13(1) competitors, 1979-2005 

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

 Unit Labor Costs Unit Labor Costs 

 National Currency Basis U.S. Dollar Basis 

 Year Own Competitors' Own Competitors' 

 Index Index Ratio Index Index Ratio 

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

 1979 100.0 100.0 100.0 100.0 100.0 100.0 

 1980 112.7 112.0 100.7 112.7 110.4 102.1 

 1981 117.6 121.8 96.6 117.6 110.0 106.9 

 1982 127.4 131.2 97.1 127.4 108.9 117.0 

 1983 122.7 133.3 92.1 122.7 107.0 114.6 

 1984 123.8 134.0 92.4 123.8 101.2 122.3 

 1985 126.2 135.5 93.1 126.2 98.6 128.0 

 1986 130.1 141.0 92.2 130.1 117.8 110.4 

 1987 125.4 144.4 86.8 125.4 134.8 93.1 

 1988 126.5 146.6 86.3 126.5 147.0 86.1 

 1989 129.4 150.5 86.0 129.4 149.0 86.9 

 1990 133.4 157.7 84.6 133.4 162.4 82.1 

 1991 136.8 165.3 82.7 136.8 171.6 79.7 

 1992 137.8 168.8 81.7 137.8 176.0 78.3 

 1993 136.9 169.4 80.8 136.9 169.0 81.0 

 1994 134.2 166.6 80.6 134.2 165.9 80.9 

 1995 131.9 168.1 78.5 131.9 175.1 75.3 

 1996 129.0 170.6 75.6 129.0 171.7 75.2 

 1997 127.1 167.6 75.9 127.1 157.2 80.9 

 1998 125.7 169.0 74.4 125.7 146.7 85.7 

 1999 124.4 165.1 75.4 124.4 146.8 84.8 

 2000 125.8 160.9 78.2 125.8 139.0 90.5 

 2001 127.4 166.5 76.5 127.4 135.2 94.2 

 2002 123.5 166.4 74.2 123.5 136.3 90.6 

 2003 123.4 165.2 74.7 123.4 151.5 81.4 

 2004 119.5 160.5 74.4 119.5 158.9 75.2 

 2005 118.9 159.2 74.7 118.9 162.8 73.0 

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

 (1) Australia has been omitted from this table because data for 

 1979 are not available. 
- 13 -

Technical Notes

The comparisons in this release are based on data available to the Bureau of Labor 

Statistics as of mid-August 2006 from the national statistical agencies of the 15 

economies compared. 

Definitions. 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. 

Unit labor costs can also be computed by dividing hourly compensation by output per 

hour, that is, by labor productivity. 

Methodology . BLS constructs trends of manufacturing labor productivity, hourly 

compensation costs, and unit labor costs from three basic aggregate measures: output, 

total labor hours, and total compensation. The hours and compensation measures refer to 

employees (wage and salary earners) in Belgium and Taiwan. For all other economies, 

the measures refer to all employed persons, including employees, self-employed persons, 

and unpaid family workers. 

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

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

of mining. Data for the United States are in accordance with the North American Industry 

Classification System (NAICS 97), except compensation data before 1987. Canadian 

output, employment, and hours data are in accordance with NAICS 97 beginning in 1997 

while compensation data are also in accordance with NAICS 1997 starting in 1961. 

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 earlier years, data were compiled according to previously used 

systems. 

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

according to different accounting systems by national statistical agencies. 

Output. For most economies, 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. 
- 14 -

Most economies now estimate manufacturing real output using moving price weights, as 

recommended by SNA 93. 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). Taiwan and Korea still use fixed price 

weights to estimate real output. 

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

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

general, of products that undergo rapid quality change. 

For the United States, the output measure for the manufacturing sector is a chainweighted index of real gross product originating (deflated value added) produced by the 

Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce. For more 

information on the U.S. measure, see "Improved Estimates of Gross Product by Industry 

for 1947-98," Survey of Current Business, June 2000, pp. 24-38 and "Gross Domestic 

Product by Industry for 1947-86. New Estimates Based on the North American Industry 

Classification System," Survey of Current Business, December 2005, pp. 70-84. 

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

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

measures for the United States. The international comparisons program uses a value 

added output concept, while the major sector series is on a sectoral output basis. Sectoral 

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

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

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

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

Value added measures have been used for the international comparisons series because 

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

sectoral output would require a complex estimation procedure. Even though 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 economies in 

the extent of vertical integration of industries. 

Labor Input. For all of the economies for the most recent years, the term "hours" refers to 

hours worked. For some earlier years, BLS uses other hours measures. 

For the United States, the employment and hours data series beginning with 1987 are 

taken from the NAICS-based manufacturing all-employed series published by BLS as 

part of the major sector productivity and cost measures. For the period before 1987, 

these series are linked to NAICS-based, employees-only data from the Current 

Employment Statistics (CES) program. 

For France (from 1970 forward), Canada, Denmark, Norway, and Sweden, the aggregate 

hours worked series used are series published with the national accounts. For the former 
- 15 -

West Germany after 1959 and Germany from 1991, BLS uses a measure of aggregate 

hours worked that was developed by a research institute of the German Ministry of Labor 

for use with the national accounts employment figures. The Italian hours worked series is 

based on estimates by the Bank of Italy. For the United Kingdom from 1991, an annual 

index of total manufacturing hours worked is used. 

For all other economies, 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. 

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

data and are in nominal terms. Compensation includes employer expenditures for legally 

required insurance programs and contractual and private benefit plans, in addition to all 

payments made in cash or in kind directly to employees. When data for the self-employed 

are not available, total compensation is estimated by assuming the same average 

compensation for the self-employed as for employees. 

Labor cost is defined as compensation plus employment taxes minus employment 

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

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

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

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

subsidies. 

Data for Germany. German data prior to 1991 pertain to the former West Germany. The 

data series are linked in 1991. 

Data for Australia. Australian data are published by fiscal years, which run from July 1 

through June 30. The Australian Bureau of Statistics provides unpublished calendar-year 

data for real value added, employment, and hours worked. For compensation, BLS 

estimates calendar-year series using two-year moving averages of the data for fiscal 

years. Manufacturing compensation data are not available for years prior to 1990. 

Data for Recent Years. 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 used to calculate the relative unit labor cost 

indexes of the United States and the other economies are based on the relative dollar 

value of U.S. trade in manufactured commodities (exports plus imports) with each 

economy in 2004. The trade data are compiled by the U.S. Census Bureau. 

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

labor cost measures are produced: 
- 16 -

Weight Weight 

 Canada 36.50 Germany 10.25 

 Japan 17.10 Italy 3.65 

 Korea 6.82 Netherlands 3.31 

 Taiwan 5.30 Norway 0.41 

 Belgium 2.75 Sweden 1.51 

 Denmark 0.55 United Kingdom 7.00 

 France 4.85 

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 economies. Each economy measures manufacturing output in its own currency 

units. To compare outputs among economies, 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 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 euroarea countries are now reported in euros. 

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

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

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

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

conversion rates are used: 

1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire 

 6.55957 French francs 2.20371 Netherlands guilders 

 1.95583 German marks 

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

rates in New York City.