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PRODUCTIVITY AND COSTS 

Second Quarter 2006, Revised 

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

productivity data—as measured by output per hour of all persons—for the second quarter of 

2006. The seasonally adjusted annual rates of productivity change in the second quarter were: 

1.5 percent in the business sector and 

1.6 percent in the nonfarm business sector. 

In both sectors increases in productivity were larger than reported on Aug. 8, as output was 

revised up more than hours (See table C). 

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

 2.6 percent in manufacturing, 

3.7 percent in durable goods manufacturing, and 

 2.3 percent in nondurable goods manufacturing. 

In total manufacturing, the change in productivity was revised down from a preliminary 

estimate of 3.0 percent. Output and hours in manufacturing, which includes about 13 percent of 

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

aggregate business and nonfarm business sectors. Second-quarter measures are summarized in 

table A and appear in detail in tables 1 through 5; the differences between these measures and 

the preliminary second-quarter figures issued on Aug. 8 are shown in table C. 

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

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

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

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

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

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

System. See Technical Notes for further information on data sources (page 7). 
2 

Table A. Productivity and costs: Revised second-quarter 2006 measures 

(Seasonally adjusted annual rates)

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

 Percent change from preceding quarter 

Business 1.5 3.2 1.7 6.3 1.3 4.8 

Nonfarm business 1.6 3.1 1.5 6.6 1.6 4.9 

Manufacturing 2.6 5.1 2.4 4.0 -0.9 1.3 

 Durable 3.7 7.7 3.9 4.2 -0.7 0.5 

 Nondurable 2.3 2.1 -0.2 3.4 -1.5 1.1 

Percent change from same quarter a year ago 

Business 2.8 4.1 1.3 7.8 3.7 4.9 

Nonfarm business 2.5 4.1 1.5 7.7 3.6 5.0 

Manufacturing 3.7 5.7 2.0 6.1 2.1 2.4 

 Durable 6.0 8.7 2.6 6.8 2.7 0.7 

 Nondurable 1.1 1.9 0.9 4.8 0.8 3.7 

Business 

From the first quarter to the second quarter of 2006, productivity in the business sector 

grew 1.5 percent as output increased 3.2 percent and hours worked by all persons engaged in the 

sector—employees, proprietors, and unpaid family workers—rose 1.7 percent (tables A and 1). 

Productivity had increased 4.5 percent during the first quarter of 2006, as output increased 6.7 

percent and hours increased 2.1 percent (seasonally adjusted annual rates). 

 

Hourly compensation in the business sector grew at a 6.3 percent annual rate in the 

second quarter of 2006, compared with a 13.6 percent rate of growth one quarter earlier (as 

revised). Hourly compensation includes wages and salaries, supplements, employer 

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

account changes in consumer prices, rose 1.3 percent in the second quarter of 2006 after 

increasing 11.3 percent in the first quarter of the year. 

Unit labor costs, which reflect changes in hourly compensation and productivity, rose 4.8 

percent in the second quarter of 2006. Unit labor costs had increased 8.7 percent in the first 

quarter of 2006, when hourly compensation grew much faster than output per hour. The 

implicit price deflator for business output, which exhibits changes in unit labor costs and unit 

nonlabor payments, rose 3.1 percent in the second quarter and 2.7 percent in the first quarter of 

2006. 
3 

Nonfarm business 

 Productivity in the nonfarm business sector grew at a 1.6 percent annual rate in the 

second quarter of 2006, reflecting increases of 3.1 percent in output and 1.5 percent in hours of 

all persons (tables A and 2). In the first quarter of 2006, productivity gained 4.3 percent, output 

increased 6.7 percent, and hours grew 2.3 percent. 

 

 Hourly compensation rose 6.6 percent in the second quarter of 2006, following a 13.7 

percent advance in the first quarter. When the rise in consumer prices was taken into account, 

real hourly compensation rose 1.6 percent in the second quarter of 2006. 

 Unit labor costs increased 4.9 percent in the second quarter of 2006, somewhat less than 

the 9.0-percent increase posted in the first quarter of the year. The implicit price deflator for 

nonfarm business output increased 3.4 percent in the second quarter of 2006 and 2.9 percent one 

quarter earlier. 

Manufacturing

 Productivity increased 2.6 percent in manufacturing for the second quarter of 2006, as 

output grew 5.1 percent and hours of all persons increased 2.4 percent (seasonally adjusted 

annual rates). In the durable goods sector, productivity grew 3.7 percent in the second quarter of 

2006, reflecting increases in output and hours of 7.7 percent and 3.9 percent, respectively. In 

nondurable goods, output per hour rose 2.3 percent as output increased 2.1 percent and hours 

declined 0.2 percent (tables 3, 4, and 5). 

 The hourly compensation of all manufacturing workers increased 4.0 percent during the 

second quarter of 2006, reflecting a 4.2-percent rise in hourly compensation in durable goods 

industries and a 3.4-percent increase in the nondurable goods sector. Real hourly compensation 

in the total manufacturing sector fell 0.9 percent in the second quarter after increasing 11.0 

percent one quarter earlier. 

 Unit labor costs in manufacturing increased 1.3 percent in the second quarter of 2006. 

The first-quarter 2006 increase in this measure, 9.3 percent, was the largest since the third 

quarter of 2000, when it increased 12.0 percent. Unit labor costs grew 0.5 percent in durable 

goods and 1.1 percent in nondurable goods in the second quarter of 2006. 
4 

Nonfinancial corporations

Preliminary second-quarter 2006 measures of productivity and costs were reported today 

for nonfinancial corporations (tables B and 6). Productivity increased 2.2 percent during the 

second quarter, reflecting a 3.8-percent rise in output and 1.6 percent growth in employee hours 

(seasonally adjusted annual rates). In the first quarter of 2006, output per hour rose 11.1 percent, 

output increased 13.0 percent, and employee hours rose 1.7 percent (as revised). The firstquarter productivity gain was the largest since the first quarter of 1971, when output per hour 

also increased 11.1 percent. Nonfinancial corporations include all corporations doing business in 

the United States except those classified as offices in the finance and insurance sector, offices of 

bank holding companies, or offices of other holding companies. 

Table B. Nonfinancial corporations: Preliminary second-quarter 2006 productivity and cost 

measures 

(Seasonally adjusted annual rates) 

Period 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator 

Percent change from preceding quarter 

2006 II 2.2 3.8 1.6 6.5 1.4 4.2 -1.2 2.8 

Percent change from same quarter a year ago 

2006 II 4.8 6.6 1.7 7.5 3.4 2.6 8.4 2.3 

Hourly compensation rose 6.5 percent in the second quarter of 2006, following a 12.4 

percent gain in the first quarter (as revised). When the rise in consumer prices is taken into 

account, real hourly compensation rose 1.4 percent in the second quarter after increasing 10.1 

percent one quarter earlier. 

 Unit labor costs for nonfinancial corporations increased 4.2 percent in the second quarter 

of 2006. Hourly compensation grew almost twice as fast in the first quarter of 2006 as in the 

second quarter, 12.4 percent. This increase was largely offset by the 11.1-percent productivity 

gain and unit labor costs rose only 1.2 percent in the first quarter. 

Unit profits declined 1.2 percent in second quarter 2006, following a 37.9 percent 

increase in the first quarter. The implicit price deflator for nonfinancial corporate output rose 2.8 

percent in the second quarter of 2006. 
5 

Revised Measures 

 Current and previous measures for the first and second quarters of 2006 for the business, 

nonfarm business, and manufacturing sectors are compared in table C. The quarterly movements 

differ from those reported on Aug. 8 based on information then available. In the business and 

nonfarm business sectors, productivity was revised up in the second quarter, as output was 

revised up by more than hours worked. In both of these sectors upward revisions to hourly 

compensation were larger than those to productivity in the second quarter, so unit labor costs 

were also revised upwards. In the manufacturing sector, a downward revision to productivity in 

the second quarter resulted from a downward revision to output combined with a small upward 

revision to hours. Manufacturing hourly compensation was revised upwards for the second 

quarter, contributing to an increase in unit labor costs rather than the previously reported decline. 

Table C. Business, nonfarm business, and manufacturing: Previous and revised productivity and 

related measures 

(Quarterly percent changes at seasonally adjusted annual rates) 

Sector 

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Second quarter 2006

Business: 

 Previous ....................... 1.1 2.6 1.5 5.1 0.2 4.0 

 Revised......................... 1.5 3.2 1.7 6.3 1.3 4.8 

Nonfarm business: 

 Previous ....................... 1.1 2.5 1.4 5.4 0.4 4.2 

 Revised......................... 1.6 3.1 1.5 6.6 1.6 4.9 

Manufacturing: 

 Previous ....................... 3.0 5.4 2.3 1.7 -3.1 -1.2 

 Revised......................... 2.6 5.1 2.4 4.0 -0.9 1.3 

First quarter 2006 

Business: 

 Previous ....................... 4.5 6.7 2.1 6.9 4.7 2.3 

 Revised......................... 4.5 6.7 2.1 13.6 11.3 8.7 

Nonfarm business: 

 Previous ....................... 4.3 6.7 2.3 6.9 4.7 2.5 

 Revised......................... 4.3 6.7 2.3 13.7 11.3 9.0 

Manufacturing: 

 Previous ....................... 3.7 5.8 2.0 5.2 3.0 1.4 

 Revised......................... 3.7 5.8 2.0 13.3 11.0 9.3 

Hourly compensation growth in the first quarter also was revised to reflect new estimates 

of compensation. In all of the major sectors, hourly compensation grew much faster in the first 

quarter than reported Aug. 8. As a result, unit labor costs in these sectors increased more than in 

preliminary estimates. 
6 

Revised Measures: Nonfinancial Corporations 

Data for the first quarter of 2006 were revised for the nonfinancial corporate sector. 

Productivity was revised up substantially along with output as hours were not revised. Hourly 

compensation was revised up even more than productivity, causing unit labor costs to increase 

1.2 percent rather than decline 0.8 percent, as reported on August 8. The first quarter 2006 

increase in hourly compensation was the largest since the first quarter of 2000, when this 

measure increased 15.6 percent. 

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

(Quarterly percent hanges at seasonall adjuste annual rat s) c y d e

Productivity Output Hours 

Hourly 

compensation 

Real 

hourly 

compensation 

Unit 

labor 

costs 

Unit 

profits 

Implicit 

price 

deflator

First quarter 2006 

Previous ........... 7.2 9.0 1.7 6.3 4.1 -0.8 42.9 3.1 

Revised............. 11.1 13.0 1.7 12.4 10.1 1.2 37.9 3.1

Next release date 

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

November 2, 2006. Preliminary third-quarter measures for business, nonfarm business, and 

manufacturing will be released at that time.
TECHNICAL NOTES 

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

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

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

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

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

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

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

The BLS Hours at Work survey, conducted for this purpose, was used for earlier years. The 

Office of Productivity and Technology estimates average weekly hours at work for 

nonproduction and supervisory workers using information from the Current Population Survey 

(CPS), the CES, and the NCS. 

Data from the CPS are used for farm labor, nonfarm proprietors, and nonfarm unpaid 

family workers. Estimates of labor input for government enterprises are derived from the CPS, 

the CES, and the National Income and Product Accounts (NIPA) prepared by the Bureau of 

Economic Analysis (BEA) of the Department of Commerce. 

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

establishments at each place of employment. In contrast, the CPS features measures of 

employment that count each person only once and classify each person according to his or her 

primary job; hours worked at all jobs by that person accrue to his or her primary job. However, 

the CPS also collects more detailed information on employment and hours worked at primary 

jobs and all other jobs, separately. The BLS productivity measures use the more detailed 

information on employment and hours to assign all hours worked to the correct industrial sector 

and avoid duplicating hours data from the CES. 

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

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

and private households (including owner-occupied housing). Corresponding exclusions also are 

made in labor inputs. Business output accounted for about 78 percent of the value of GDP in 

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

2000. 

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

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

the Census with deflators from the 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 an annual-weighted index calculated on the basis of the 

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

following outputs from GDP: general government; nonprofit institutions; private households; 

unincorporated business; and those corporations classified as offices of bank holding companies, 
8 

offices of other holding companies, or offices in the finance and insurance sector. Nonfinancial 

corporations accounted for about 54 percent of the value of GDP in 2000. 

Productivity: These productivity measures describe the relationship between real output and the 

labor time involved in its production. They show the changes from period to period in the 

amount of goods and services produced per hour. Although these measures relate output to hours 

at work of all persons engaged in a sector, they do not measure the specific contribution of labor, 

capital, or any other factor of production. Rather, they reflect the joint effects of many 

influences, including changes in technology; capital investment; level of output; utilization of 

capacity, energy, and materials; the organization of production; managerial skill; and the 

characteristics and effort of the work force. 

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

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

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

nonprofit institutions and private households are subtracted from compensation of domestic 

employees to derive employee compensation for the business sector. The labor compensation of 

proprietors cannot be explicitly identified and must be estimated. This is done by assuming that 

proprietors have the same hourly compensation as employees in the same sector. The quarterly 

labor productivity and cost measures do not contain estimates of compensation for unpaid family 

workers. 

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

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

indicator of inflationary pressure on producers. Increases in hourly compensation increase unit 

labor costs; labor productivity increases offset compensation increases and lower unit labor 

costs. 

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

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

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

rate. Annual data are presented both as index number series and percent changes from the 

previous year. 

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

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

web site are calculated using index numbers to three decimal places. These index numbers are 

available at the BLS web site, http://www.bls.gov/data/home.htm, or by contacting the BLS 

Division of Major Sector Productivity. (Telephone 202-691-5606 or email 

DPRWEB@BLS.GOV) 

Information in this release will be made available to sensory-impaired individuals upon 

request. Voice phone: 202-691-5606; Federal Relay Service number: 1-800-877-8339.
9 

 Table 1. Business sector: Productivity, hourly compensation, unit labor costs, and prices, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit 

 and hour of of all tion per tion per labor labor pay- price 

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) 

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

 Indexes 1992=100 

 2004 I 131.4 151.7 115.5 154.4 118.5 117.5 122.9 119.5 

 II 132.8 153.5 115.6 155.8 118.3 117.3 126.2 120.6 

 III 133.0 154.8 116.4 157.5 119.1 118.5 125.5 121.1 

 IV 133.5 155.8 116.7 160.1 120.0 119.9 125.8 122.1 

 ANNUAL 132.7 154.0 116.1 157.0 119.0 118.3 125.1 120.8 

 2005 I 134.5 157.4 117.0 161.6 120.4 120.1 127.9 123.0 

 II 134.9 159.0 117.9 162.0 119.5 120.0 130.0 123.7 

 III 136.6 160.9 117.8 165.2 120.3 121.0 131.1 124.7 

 IV 136.7 161.7 118.3 166.5 120.3 121.8 132.3 125.7 

 ANNUAL 135.7 159.8 117.7 163.8 120.2 120.7 130.3 124.3 

 2006 I 138.2 164.3 118.9 r171.9 r123.6 r124.4 r130.2 126.6 

 II r138.7 r165.6 r119.4 r174.6 r124.0 r125.9 r130.3 r127.5 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 3.2 4.5 1.2 2.1 -1.5 -1.1 11.8 3.6 

 II 4.5 4.8 0.3 3.5 -0.5 -0.9 11.1 3.6 

 III 0.5 3.4 2.9 4.7 2.5 4.1 -2.0 1.7 

 IV 1.6 2.6 1.0 6.7 3.0 5.0 0.9 3.4 

 ANNUAL 3.1 4.4 1.3 3.8 1.1 0.7 5.8 2.6 

 2005 I 3.1 4.2 1.0 3.9 1.5 0.7 6.7 3.0 

 II 1.2 4.1 2.9 0.8 -2.9 -0.4 6.6 2.3 

 III 5.0 4.9 -0.1 8.3 2.7 3.2 3.6 3.3 

 IV 0.2 1.8 1.6 3.1 -0.2 2.9 3.6 3.2 

 ANNUAL 2.3 3.7 1.4 4.4 1.0 2.1 4.2 2.9 

 2006 I 4.5 6.7 2.1 r13.6 r11.3 r8.7 r-6.2 2.7 

 II r1.5 r3.2 r1.7 r6.3 r1.3 r4.8 r0.5 3.1 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.5 5.1 0.6 4.3 2.4 -0.1 5.5 1.9 

 II 3.8 5.2 1.3 3.3 0.5 -0.5 8.1 2.7 

 III 1.7 3.5 1.7 3.3 0.6 1.6 4.5 2.7 

 IV 2.5 3.8 1.3 4.2 0.9 1.7 5.3 3.1 

 ANNUAL 3.1 4.4 1.3 3.8 1.1 0.7 5.8 2.6 

 2005 I 2.4 3.8 1.3 4.7 1.6 2.2 4.1 2.9 

 II 1.6 3.6 1.9 4.0 1.0 2.3 3.0 2.6 

 III 2.7 3.9 1.2 4.9 1.1 2.1 4.4 3.0 

 IV 2.4 3.7 1.3 4.0 0.3 1.6 5.1 3.0 

 ANNUAL 2.3 3.7 1.4 4.4 1.0 2.1 4.2 2.9 

 2006 I 2.7 4.4 1.6 r6.4 r2.6 r3.6 r1.8 2.9 

 II r2.8 r4.1 1.3 r7.8 r3.7 r4.9 r0.3 3.1 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
10 

 Table 2. Nonfarm business sector: Productivity, hourly compensation, unit labor costs, and prices, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit Unit non- Implicit 

 and hour of of all tion per tion per labor labor pay- price 

 quarter all persons Output persons hour (1) hour (2) costs ments (3) deflator (4) 

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

 Indexes 1992=100 

 2004 I 130.5 151.9 116.4 153.4 117.8 117.6 123.6 119.8 

 II 132.2 153.9 116.4 154.8 117.6 117.2 126.8 120.7 

 III 132.2 155.1 117.3 156.6 118.3 118.4 126.6 121.4 

 IV 132.4 156.0 117.8 158.7 118.9 119.9 127.0 122.5 

 ANNUAL 131.8 154.2 117.0 155.9 118.2 118.3 126.0 121.1 

 2005 I 133.5 157.6 118.0 160.4 119.5 120.1 129.4 123.5 

 II 134.3 159.4 118.6 161.0 118.9 119.9 131.8 124.3 

 III 135.8 161.3 118.8 164.1 119.5 120.9 133.1 125.3 

 IV 135.8 162.0 119.3 165.3 119.4 121.7 134.3 126.4 

 ANNUAL 134.9 160.0 118.7 162.7 119.3 120.7 132.2 124.9 

 2006 I 137.2 164.6 120.0 r170.6 r122.6 r124.4 r132.2 127.3 

 II r137.7 r165.9 r120.4 r173.4 r123.1 r125.9 r132.5 r128.3 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 1.9 3.6 1.7 1.3 -2.2 -0.5 10.8 3.6 

 II 5.1 5.2 0.1 3.7 -0.4 -1.4 10.6 3.1 

 III 0.2 3.2 3.0 4.5 2.3 4.3 -0.6 2.4 

 IV 0.4 2.4 2.0 5.6 2.0 5.1 1.3 3.7 

 ANNUAL 3.0 4.3 1.3 3.6 0.9 0.7 5.4 2.4 

 2005 I 3.6 4.2 0.6 4.3 1.9 0.7 7.7 3.3 

 II 2.3 4.4 2.1 1.6 -2.0 -0.7 7.8 2.5 

 III 4.4 4.9 0.4 7.8 2.2 3.3 3.9 3.5 

 IV -0.1 1.8 1.8 2.9 -0.4 3.0 3.7 3.3 

 ANNUAL 2.3 3.8 1.5 4.4 1.0 2.0 4.9 3.1 

 2006 I 4.3 6.7 2.3 r13.7 r11.3 r9.0 r-6.2 2.9 

 II r1.6 r3.1 r1.5 r6.6 r1.6 r4.9 r1.0 3.4 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.3 5.1 0.7 4.2 2.3 -0.1 4.5 1.6 

 II 4.1 5.3 1.2 3.4 0.6 -0.7 7.3 2.3 

 III 1.6 3.4 1.7 3.2 0.4 1.5 4.2 2.5 

 IV 1.9 3.6 1.7 3.8 0.4 1.8 5.4 3.2 

 ANNUAL 3.0 4.3 1.3 3.6 0.9 0.7 5.4 2.4 

 2005 I 2.3 3.8 1.4 4.5 1.5 2.2 4.7 3.1 

 II 1.6 3.6 1.9 4.0 1.0 2.3 4.0 3.0 

 III 2.7 4.0 1.3 4.8 1.0 2.1 5.1 3.3 

 IV 2.5 3.8 1.2 4.1 0.4 1.6 5.7 3.2 

 ANNUAL 2.3 3.8 1.5 4.4 1.0 2.0 4.9 3.1 

 2006 I 2.7 4.4 1.7 r6.4 r2.6 r3.6 r2.2 3.0 

 II r2.5 r4.1 1.5 r7.7 r3.6 r5.0 r0.5 3.3 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
11 

 Table 3. Manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

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

 Indexes 1992=100 

 2004 I 161.8 138.1 85.4 157.5 120.8 97.3 

 II 163.3 138.9 85.0 159.8 121.4 97.8 

 III 164.0 139.3 84.9 163.0 123.2 99.4 

 IV 166.1 140.3 84.4 165.5 124.0 99.6 

 ANNUAL 163.8 139.1 84.9 161.4 122.3 98.5 

 2005 I 168.1 141.7 84.3 166.1 123.7 98.8 

 II 169.7 142.2 83.8 167.8 123.8 98.9 

 III 171.2 143.1 83.6 170.7 124.3 99.7 

 IV 173.2 146.3 84.5 170.9 123.4 98.7 

 ANNUAL 170.5 143.3 84.0 168.8 123.8 99.0 

 2006 I 174.8 148.4 84.9 r176.3 r126.7 r100.9 

 II r175.9 r150.3 r85.4 r178.0 r126.4 r101.2 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I -2.1 0.1 2.2 -10.6 -13.7 -8.7 

 II 3.9 2.2 -1.6 5.9 1.8 2.0 

 III 1.7 1.2 -0.4 8.3 6.0 6.5 

 IV 5.2 2.8 -2.3 6.3 2.7 1.0 

 ANNUAL 1.9 1.3 -0.5 2.0 -0.7 0.1 

 2005 I 4.8 4.2 -0.5 1.5 -0.8 -3.2 

 II 3.9 1.2 -2.5 4.0 0.3 0.2 

 III 3.7 2.6 -1.0 7.1 1.5 3.2 

 IV 4.7 9.4 4.6 0.5 -2.7 -4.0 

 ANNUAL 4.1 3.0 -1.1 4.6 1.2 0.5 

 2006 I 3.7 5.8 2.0 r13.3 r11.0 r9.3 

 II r2.6 r5.1 r2.4 r4.0 r-0.9 r1.3 

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

 Percent change from corresponding quarter of previous year 

 2004 I 2.4 0.6 -1.8 1.9 0.0 -0.5 

 II 2.3 1.7 -0.6 1.6 -1.1 -0.7 

 III 0.6 1.5 0.9 2.3 -0.4 1.7 

 IV 2.1 1.6 -0.6 2.2 -1.1 0.0 

 ANNUAL 1.9 1.3 -0.5 2.0 -0.7 0.1 

 2005 I 3.9 2.6 -1.2 5.5 2.4 1.5 

 II 3.9 2.4 -1.5 5.0 2.0 1.1 

 III 4.4 2.7 -1.6 4.7 0.9 0.3 

 IV 4.3 4.3 0.1 3.2 -0.5 -1.0 

 ANNUAL 4.1 3.0 -1.1 4.6 1.2 0.5 

 2006 I 4.0 4.7 0.7 r6.1 r2.4 r2.1 

 II r3.7 r5.7 r2.0 r6.1 r2.1 r2.4 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
12 

 Table 4. Durable manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

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

 Indexes 1992=100 

 2004 I 184.0 164.2 89.2 153.6 117.9 83.5 

 II 185.0 164.6 89.0 156.4 118.9 84.6 

 III 185.5 165.7 89.3 159.8 120.8 86.1 

 IV 188.2 167.3 88.9 161.7 121.2 85.9 

 ANNUAL 185.7 165.4 89.1 157.9 119.7 85.0 

 2005 I 191.3 170.1 88.9 161.7 120.5 84.5 

 II 193.2 171.1 88.6 162.8 120.2 84.3 

 III 196.3 174.0 88.7 165.8 120.8 84.5 

 IV 201.0 180.3 89.7 165.8 119.8 82.5 

 ANNUAL 195.4 173.9 89.0 164.1 120.3 83.9 

 2006 I 202.9 182.6 90.0 r172.1 r123.6 r84.8 

 II r204.7 r186.1 r90.9 r173.8 r123.4 r84.9 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I -3.9 0.1 4.2 -16.1 -19.0 -12.7 

 II 2.1 0.8 -1.2 7.5 3.3 5.3 

 III 1.1 2.7 1.5 8.9 6.6 7.6 

 IV 6.0 4.0 -1.9 5.0 1.4 -1.0 

 ANNUAL 1.1 1.8 0.6 0.7 -1.9 -0.4 

 2005 I 6.6 6.8 0.1 0.0 -2.3 -6.3 

 II 4.0 2.6 -1.4 2.8 -1.0 -1.2 

 III 6.5 7.0 0.4 7.5 1.9 0.9 

 IV 9.9 15.2 4.8 0.0 -3.2 -9.0 

 ANNUAL 5.3 5.1 -0.1 3.9 0.5 -1.3 

 2006 I 3.8 5.3 1.4 r15.9 r13.5 r11.6 

 II r3.7 r7.7 3.9 r4.2 r-0.7 r0.5 

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

 Percent change from corresponding quarter of previous year 

 2004 I 2.2 1.3 -1.0 0.4 -1.4 -1.8 

 II 1.8 2.2 0.4 0.5 -2.3 -1.3 

 III -0.7 1.8 2.5 1.2 -1.5 1.9 

 IV 1.3 1.9 0.6 0.8 -2.5 -0.5 

 ANNUAL 1.1 1.8 0.6 0.7 -1.9 -0.4 

 2005 I 3.9 3.5 -0.4 5.3 2.2 1.3 

 II 4.4 4.0 -0.4 4.1 1.1 -0.3 

 III 5.8 5.1 -0.7 3.8 0.0 -1.9 

 IV 6.8 7.8 1.0 2.5 -1.2 -4.0 

 ANNUAL 5.3 5.1 -0.1 3.9 0.5 -1.3 

 2006 I 6.0 7.4 1.3 r6.4 r2.6 r0.3 

 II 6.0 r8.7 2.6 r6.8 r2.7 r0.7 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
13 

 Table 5. Nondurable manufacturing sector: Productivity, hourly compensation, and unit labor costs, 

 seasonally adjusted 

 Real 

 Year Output per Hours Compensa- compensa- Unit 

 and hour of of all tion per tion per labor 

 quarter all persons Output persons hour (1) hour (2) costs 

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

 Indexes 1992=100 

 2004 I 139.4 110.9 79.6 163.0 125.1 116.9 

 II 141.6 112.0 79.1 164.2 124.8 116.0 

 III 142.7 111.9 78.4 166.9 126.2 117.0 

 IV 144.2 112.2 77.8 170.5 127.8 118.2 

 ANNUAL 142.0 111.8 78.7 166.1 125.9 117.0 

 2005 I 145.2 112.5 77.5 172.3 128.4 118.7 

 II 146.7 112.4 76.6 175.0 129.1 119.3 

 III 147.0 111.6 75.9 177.5 129.3 120.8 

 IV 146.3 112.2 76.7 178.1 128.7 121.8 

 ANNUAL 146.3 112.2 76.7 175.7 128.9 120.1 

 2006 I 147.4 114.0 77.3 r181.9 r130.7 r123.4 

 II r148.3 r114.5 r77.3 r183.4 r130.2 r123.7 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 1.2 0.1 -1.1 0.3 -3.2 -0.8 

 II 6.5 4.0 -2.3 3.1 -0.9 -3.2 

 III 3.2 -0.6 -3.6 6.8 4.5 3.5 

 IV 4.4 1.4 -2.8 8.8 5.1 4.3 

 ANNUAL 3.3 0.8 -2.4 4.2 1.5 0.9 

 2005 I 2.7 0.9 -1.7 4.3 1.9 1.5 

 II 4.2 -0.4 -4.4 6.3 2.5 2.0 

 III 0.7 -2.8 -3.5 5.9 0.4 5.2 

 IV -1.9 2.3 4.2 1.4 -1.9 3.3 

 ANNUAL 3.0 0.4 -2.6 5.8 2.3 2.6 

 2006 I 3.2 6.4 3.1 r8.8 r6.5 r5.4 

 II r2.3 r2.1 r-0.2 r3.4 r-1.5 r1.1 

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

 Percent change from corresponding quarter of previous year 

 2004 I 2.9 -0.3 -3.1 4.6 2.7 1.6 

 II 3.4 1.2 -2.2 3.6 0.8 0.2 

 III 3.0 1.2 -1.7 4.0 1.2 0.9 

 IV 3.8 1.2 -2.5 4.7 1.3 0.9 

 ANNUAL 3.3 0.8 -2.4 4.2 1.5 0.9 

 2005 I 4.2 1.4 -2.6 5.7 2.6 1.5 

 II 3.6 0.3 -3.2 6.5 3.5 2.8 

 III 3.0 -0.3 -3.1 6.3 2.5 3.2 

 IV 1.4 0.0 -1.4 4.5 0.7 3.0 

 ANNUAL 3.0 0.4 -2.6 5.8 2.3 2.6 

 2006 I 1.5 1.3 -0.2 r5.6 r1.8 r4.0 

 II 1.1 r1.9 r0.9 r4.8 r0.8 r3.7 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
14 

 Table 6. Nonfinancial corporate sector: Productivity, hourly compensation, unit labor costs, unit profits, 

 and prices, seasonally adjusted 

 

 Output Hourly Real Unit Total Unit Implicit 

 Year per all- compen- hourly Unit non- unit pro- price 

 and employee Employee sation compen- labor labor costs fits deflator 

 quarter hour Output hours (1) sation(2) costs costs(6) (7) (8) (4) 

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

 Indexes 1992=100 

 2004 I 137.6 159.6 116.1 151.8 116.5 110.4 109.1 110.0 131.2 111.9 

 II 138.6 161.1 116.2 153.2 116.4 110.5 109.3 110.2 139.2 112.8 

 III 140.5 164.0 116.8 155.0 117.1 110.3 109.2 110.0 142.3 112.9 

 IV 141.0 165.3 117.2 157.1 117.7 111.4 109.3 110.8 142.4 113.7 

 ANNUAL 139.4 162.5 116.6 154.3 116.9 110.7 109.2 110.3 138.8 112.8 

 2005 I 142.8 167.5 117.4 158.6 118.2 111.1 110.3 110.9 148.5 114.2 

 II 144.5 170.6 118.1 159.3 117.6 110.2 110.2 110.2 159.0 114.6 

 III 145.6 172.3 118.3 162.4 118.3 111.6 112.6 111.9 149.9 115.3 

 IV 146.7 174.7 119.1 163.6 118.2 111.5 110.5 111.3 159.6 115.6 

 ANNUAL 144.9 171.3 118.2 161.0 118.1 111.1 110.9 111.1 154.3 114.9 

 2006 I r150.6 r180.1 119.6 r168.5 r121.1 r111.9 r108.3 r110.9 r172.9 r116.5 

 II 151.4 181.8 120.1 171.2 121.5 113.0 108.6 111.8 172.4 117.3 

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

 Percent change from previous quarter at annual rate(5) 

 2004 I 2.9 5.6 2.7 -0.5 -3.9 -3.3 -3.6 -3.4 53.5 1.2 

 II 3.1 3.6 0.5 3.7 -0.3 0.6 1.1 0.7 27.1 3.3 

 III 5.5 7.6 2.0 4.7 2.5 -0.8 -0.5 -0.7 9.2 0.4 

 IV 1.6 3.2 1.5 5.6 2.0 4.0 0.3 3.0 0.2 2.7 

 ANNUAL 3.7 5.1 1.3 3.2 0.5 -0.4 -1.8 -0.8 26.2 1.6 

 2005 I 5.0 5.5 0.5 4.0 1.6 -1.0 3.6 0.2 18.1 2.1 

 II 4.9 7.4 2.4 1.6 -2.1 -3.2 -0.1 -2.4 31.5 1.2 

 III 3.0 4.1 1.0 8.2 2.6 5.0 9.1 6.1 -21.0 2.4 

 IV 3.2 5.8 2.6 3.0 -0.3 -0.1 -7.4 -2.1 28.5 1.1 

 ANNUAL 3.9 5.4 1.4 4.4 1.0 0.4 1.5 0.7 11.1 1.9 

 2006 I r11.1 r13.0 1.7 r12.4 r10.1 r1.2 r-7.7 r-1.2 r37.9 3.1 

 II 2.2 3.8 1.6 6.5 1.4 4.2 1.2 3.4 -1.2 2.8 

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

 Percent change from corresponding quarter of previous year 

 2004 I 4.3 4.9 0.6 3.8 2.0 -0.4 -3.3 -1.2 27.3 1.2 

 II 3.7 5.0 1.2 2.9 0.1 -0.8 -1.6 -1.0 31.5 1.8 

 III 3.5 5.3 1.8 2.8 0.0 -0.7 -1.5 -0.9 26.1 1.5 

 IV 3.3 5.0 1.7 3.4 0.0 0.1 -0.7 -0.1 20.9 1.9 

 ANNUAL 3.7 5.1 1.3 3.2 0.5 -0.4 -1.8 -0.8 26.2 1.6 

 2005 I 3.8 5.0 1.1 4.5 1.5 0.7 1.1 0.8 13.2 2.1 

 II 4.3 5.9 1.6 4.0 1.0 -0.3 0.8 0.0 14.2 1.6 

 III 3.6 5.0 1.4 4.8 1.0 1.1 3.1 1.7 5.3 2.1 

 IV 4.0 5.7 1.6 4.2 0.4 0.1 1.1 0.4 12.0 1.7 

 ANNUAL 3.9 5.4 1.4 4.4 1.0 0.4 1.5 0.7 11.1 1.9 

 2006 I r5.5 r7.5 1.9 r6.2 r2.5 r0.7 r-1.8 r0.0 r16.5 1.9 

 II 4.8 6.6 1.7 7.5 3.4 2.6 -1.4 1.5 8.4 2.3 

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

 See footnotes following Table 6. September 6, 2006 

 r=revised Source: Bureau of Labor Statistics 
15 

SOURCES: Output data are from the Bureau of Economic Analysis and the Census Bureau of 

the U.S. Department of Commerce; the Bureau of Labor Statistics, U.S. Department of Labor; 

and the Federal Reserve Board. Compensation and hours data are from the Bureau of Labor 

Statistics and the Bureau of Economic Analysis. 

RELIABILITY: Productivity and cost measures are regularly revised as more complete 

information becomes available. The measures are first published within 40 days of the close of 

the reference period; revisions appear 30 days later, and second revisions after an additional 60 

days. In the business sector, the third publication (second revision) of a quarterly index of 

output per hour of all persons has differed from the initial value by between –1.4 and +1.3 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 first quarter of 2006. 

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 selfemployed, data also include an estimate of wages, salaries, and supplemental payments 

for the self-employed. 

(2) The change for recent quarters is based on the Consumer Price Index for all urban consumers 

(CPI-U). The trend from 1978-2005 is based on the Consumer Price Index research 

series (CPI-U-RS). 

(3) Unit nonlabor payments include profits, consumption of fixed capital, taxes on production 

and imports less subsidies, net interest and miscellaneous payments, business current 

transfer payments, rental income of persons, and the current surplus of government 

enterprises. 

(4) Current dollar output divided by the output index. 

(5) Quarterly changes: Percent change compounded at annual rate from the original data rather 

than index numbers. Annual changes: Percent change between annual average levels. 

(6) Unit nonlabor costs include consumption of fixed capital, taxes on production and imports 

less subsidies, net interest and miscellaneous payments, and business current transfer 

payments. 

(7) Total unit costs are the sum of unit labor and nonlabor costs. 

(8) Unit profits include corporate profits before tax with inventory valuation and capital 

consumption adjustments.