Internet address: http://www.bls.gov USDL 06-268 

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

Media contact: (202) 691-5902 Wednesday, February 15, 2006 

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY 

AND UNIT LABOR COST TRENDS, REVISED DATA FOR 2004 

Manufacturing labor productivity increased in 13 of 15 economies in 2004, according 

to the U.S. Department of Labor's Bureau of Labor Statistics. The U.S. increase of 5.2 

percent was the sixth highest. Korea and Sweden had the largest productivity increases 

(12.1 and 9.8 percent respectively). The U.S. productivity increase is a revision from the 

preliminary estimate of 4.7 percent released in October 2005. Australia and Italy were 

the only two economies showing declines in manufacturing productivity in 2004. 

The 2004 growth rate in U.S. manufacturing productivity was less than the increase in 

2003, but above the average annual growth rate since 1979. Seven of the other 13 

economies for which comparisons are available also had productivity growth in 2004 that 

exceeded their annual average increases over the 1979–2004 period. (Average annual 

growth rates for selected measures over various time periods are found in tables A and 

B.) 

Chart 1. Percent change in

 manufacturing output per hour, 2003-2004

5.2

2.9

-0.6

6.9

4.7

3.2

0.9

3.5

4.7

-0.6

5.3

2.3

9.8

5.6

12.1

-2

0

2

4

6

8

10

12

United States

Canada

Australia

Japan

Korea

Taiwan

Belgium

Denmark

France

Germany

Italy

Netherlands

Norway

Sweden

United Kingdom

(Percent)
- 2 -

Manufacturing unit labor costs declined in the United States in 2004 (-2.9 percent), as 

they did in ten other economies, when expressed in national currency units. The steepest 

declines were in Sweden (-7.0 percent) and Japan (-6.0 percent). Among the four 

countries where unit labor costs increased, the largest increases occurred in Denmark and 

Italy (3.4 and 3.2 percent respectively). 

In 2004, the dollar declined in value against the currencies of all the other economies 

in this comparison, although generally less than in 2003. The decline was particularly 

large against the Australian dollar and the British pound. As a result of the dollar's 

devaluation, besides the United States, only Taiwan showed a decrease in dollardenominated unit labor costs. (See chart 2 and table A.) 

Chart 2. Percent change in manufacturing unit labor costs, 

2004

-1.6

-7.0

0.3

-1.4

3.2

-4.0

-1.0

3.4

-1.6

-3.2

-0.9

-6.0

2.6

-3.0

-2.9

10.4

2.2

5.4

8.3

13.4

5.5

8.8

13.6

8.1

-0.2

3.2

0.8

15.9

4.4

-2.9

-9 -7 -5 -3 -1 1 3 5 7 9 11 13 15 17

United Kingdom

Sweden

Norway

Netherlands

Italy

Germany

France

Denmark

Belgium

Taiwan

Korea

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, 2003-2004 

 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 5.2 4.8 -0.4 -1.2 0.8 1.8 2.2 -2.9 -2.9 -- 

 Canada 2.9 3.8 0.8 -1.0 1.8 0.7 -0.1 -3.0 4.4 7.6 

 Australia -0.6 -0.1 0.5 0.6 -0.1 2.5 2.0 2.6 15.9 12.9 

 Japan 6.9 5.5 -1.3 -2.4 1.1 -0.8 0.5 -6.0 0.8 7.2 

 Korea 12.1 11.4 -0.6 0.5 -1.1 10.4 11.1 -0.9 3.2 4.1 

 Taiwan 4.7 9.4 4.5 3.2 1.3 5.9 1.3 -3.2 -0.2 3.1 

 Belgium 3.2 2.3 -0.9 -2.4 1.6 0.7 1.6 -1.6 8.1 9.9 

 Denmark 0.9 -2.8 -3.6 -3.0 -0.6 0.6 4.4 3.4 13.6 9.8 

 France 3.5 1.0 -2.4 -2.4 0.0 0.0 2.5 -1.0 8.8 9.9 

 Germany 4.7 4.6 -0.1 -1.5 1.5 0.5 0.5 -4.0 5.5 9.9 

 Italy -0.6 0.0 0.5 -0.3 0.9 3.2 2.6 3.2 13.4 9.9 

 Netherlands 5.3 1.2 -3.9 -4.0 0.1 -0.2 3.8 -1.4 8.3 9.9 

 Norway 2.3 2.0 -0.3 -2.9 2.7 2.3 2.6 0.3 5.4 5.1 

 Sweden 9.8 9.9 0.0 -1.9 1.9 2.2 2.1 -7.0 2.2 9.9 

 United Kingdom 5.6 1.9 -3.5 -3.7 0.1 0.3 4.0 -1.6 10.4 12.1 

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

 (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 1950-2004 

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

website at address 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 -

 Notes about the measures 

 

The measures in this release are based on data available to BLS as of mid-January 2006. 

Revisions for 2004 and earlier years were made for several economies to incorporate data 

not available at the time of the October 2005 report. 

United States

The U.S. output series in this release is a value-added measure produced by the Bureau of 

Economic Analysis (BEA) as part of the integrated annual GDP-by-industry and inputoutput (I-O) accounts. The latest data were released in December 2005 and begin with 

1947. The data are based on the 1997 North American Industry Classification System 

(NAICS). Additional details are available in Robert E. Yuskavage and Mahnaz FahimNader, “Gross Domestic Product by Industry for 1947–86. New Estimates Based on the 

North American Industry Classification System,” Survey of Current Business, December 

2005. 

From 1987, the employment and hours data series 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 United States. For the period before 1987, these 

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

Employment Statistics (CES) program. 

In previous releases, U.S. manufacturing output data were not available for years prior to 

1977, and output and labor input data for years prior to 1987 were based on the Standard 

Industrial Classification (SIC). The change in classification from SIC to NAICS has 

resulted in revised output and productivity growth estimates. 
- 5 -

Manufacturing productivity, output, and labor input

United States manufacturing productivity increased 5.2 percent in 2004, the sixth 

largest increase among 15 economies compared. Korea and Sweden had the largest 

productivity increases (12.1 and 9.8 percent respectively). Italy and Australia were the 

only two countries showing declines in manufacturing productivity in 2004. 

The U.S. productivity increase is a revision from the preliminary estimate of 4.7 

percent released in October 2005. Although below the strong showing in 2003 (+7.1 

percent), the 5.2 percent gain is in line with the average annual U.S. productivity growth 

rates recorded since 1990. Since 1990, the average annual U.S. productivity increases 

have been in the top third of the 15 economies compared. (See tables A and B.) 

For most countries, the increases in labor productivity in 2004 were a combination of 

greater manufacturing output and fewer aggregate hours worked. In Canada, Taiwan, 

and Sweden hours worked increased less then output or stayed the same. Manufacturing 

hours worked also increased in Australia and Italy, while output declined or remained 

unchanged, resulting in declines in labor productivity in those two countries. 

In 2004, there was an acceleration in manufacturing output and a slowing of the 

declines in manufacturing employment and aggregate hours worked in most of the 

compared economies. Average hours worked tended to increase. Korea, Sweden, and 

Taiwan showed the highest manufacturing output growth rates. U.S. output increased at 

a revised 4.8 percent in 2004, up from a preliminary estimate of 4.3 percent, and was the 

fifth fastest among the 15 economies. 

In 2004, manufacturing output declined in only two countries (Australia and 

Denmark), while output had declined in five countries in 2003. For most economies, the 

2004 increases in output were also above the corresponding average annual increases for 

the period after 2000. 

Hours worked in U.S. manufacturing declined -0.4 percent in 2004, less than the 

decline recorded in 2003 (-4.9 percent) or the average annual declines in the period after 

2000 (-4.8 percent). Total manufacturing hours worked also fell in nine other countries, 

the largest decline occurring in the Netherlands (-3.9 percent). However, there was a 

tendency toward smaller declines in hours worked, or to changes from declines to 

increases, in 2004 compared to 2003. (See tables A and B.) 

Trends and changes in manufacturing employment and hours worked tend to move 

together. U.S. manufacturing employment fell -1.2 percent in 2004, one-fourth the 

decline in 2003. Manufacturing employment also fell in most other economies in 2004, 

increasing in only three: Taiwan, Australia, and Korea. The biggest decline was in the 

Netherlands (-4.0 percent) and the smallest in Italy (-0.3 percent). However, for most 

countries, the declines in employment in 2004 were smaller than in 2003. 

Average hours worked in U.S. manufacturing increased +0.8 percent in 2004, 

following a decline of -0.1 percent in 2003. Average hours worked also increased in 
- 6 -

most of the other 14 economies, declining in only three: Australia, Korea, and Denmark. 

This is in contrast to 2003, when average hours worked declined in 11 countries. This 

also presents a contrast to the entire period after 2000, during which average hours 

declined in 9 of the 15 economies. 

Manufacturing hourly compensation and unit labor costs

Total labor compensation in U.S. manufacturing increased 1.8 percent in 2004, about 

half the 3.0 percent increase recorded in 2003. Total labor compensation also grew in 

most other economies, with Korea (+10.4 percent) and Taiwan (+5.9 percent) showing 

the largest increases. Aggregate manufacturing compensation declined in Japan and in 

the Netherlands. 

The rate of growth in U.S. compensation in 2004 was near the middle of the 

economies compared. It was above the average annual change in U.S. compensation for 

the period following 2000 (no change), but below the average annual increases since 

1979. Compared to the same post-1979 period, all the other 13 economies for which 

comparable data are available also recorded slower 2004 increases, or even declines, in 

labor compensation. (See tables A and B.) 

Hourly compensation in manufacturing increased in 2004 in all the economies except 

Canada, where hourly compensation declined -0.1 percent. The 2.2 percent increase in 

U.S. hourly compensation was in the middle of the results for the other economies. 

Korea reported the largest increase (11.1 percent). All the other increases were less than 

5 percent. 

For most economies, the 2004 hourly compensation increases were smaller than the 

increases in 2003. This continues a tendency for the rate of growth in hourly 

compensation in manufacturing to decline in most of the compared economies over the 

period since 1979. 

Manufacturing unit labor costs declined in the United States in 2004 (-2.9 percent), as 

they did in most other economies, when expressed in national currency units. The 

steepest declines were in Sweden (-7.0 percent) and Japan (-6.0 percent). Among the 

four countries where unit labor costs increased, the largest increases occurred in Denmark 

and Italy (3.4 and 3.2 percent respectively). 

The 2004 decline in U.S. unit labor costs represents a turn-around from the 1.1 

percent increase recorded in 2003, and resumes the average annual reductions in unit 

labor costs that have prevailed during the period following 1990. 

In most economies, unit labor costs declined in 2004 as productivity increased more 

than hourly compensation. However, unit labor costs increased in Denmark and Norway, 

where hourly compensation increased more than productivity, and in Australia and Italy, 

where productivity fell. 
- 7 -

Exchange rate movements are often the dominant influence on the relative changes in 

the unit labor costs of different economies. There were large swings in the U.S. dollar's 

value against other currencies over the last ten years. Following a period of dollar 

strengthening during 1995–2000, the dollar weakened, falling by almost 20 percent 

against the euro in 2003, and even more against some of the other currencies. In 2004 the 

dollar's value declined again against the currencies of all the compared economies, 

although generally at about half the 2003 rate. The largest declines were against the 

Australian dollar and the U.K. pound (over 12 percent in each case), and the smallest 

declines were against the Taiwanese dollar (3.1 percent) and Korean won (4.1 percent). 

The 2.9 percent decline in U.S. manufacturing unit labor costs in 2004 represents the 

best performance among all compared economies when the unit labor costs are expressed 

in U.S. dollars. Taiwan was the only other economy to show a decline in U.S. dollardenominated unit labor costs, as the Taiwanese dollar strengthened relatively little. Unit 

labor costs increased in all the other countries, even those that showed declines in their 

national currencies. The biggest increase was in Australian manufacturing, followed by 

Denmark, Italy, and the United Kingdom. 
 -8- 

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

 Manufacturing, 15 countries or areas, 1979-2004 

 Average annual rates of change(1) 

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

 Country or area 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004 

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

 Output per hour 

 United States r4.1 r2.8 3.7 5.7 r5.9 r7.1 r5.2 

 Canada 2.6 2.0 3.8 3.2 1.8 2.3 2.9 

 Australia r2.9 2.8 2.9 r3.8 r2.4 r3.9 r-0.6 

 Japan 4.0 3.8 3.3 4.1 5.0 11.0 6.9 

 Korea NA NA 9.6 10.8 6.9 7.0 12.1 

 Taiwan 5.7 6.2 5.2 5.5 5.4 3.6 4.7 

 Belgium r3.5 4.2 3.2 r2.7 r3.0 r2.9 3.2 

 Denmark 2.2 2.1 2.7 1.8 2.0 5.0 0.9 

 France 4.2 4.2 4.6 5.1 2.5 0.3 3.5 

 Germany (2) 2.7 2.1 2.9 3.7 r3.1 r3.9 r4.7 

 Italy 1.5 2.2 2.2 1.0 -0.7 -0.9 -0.6 

 Netherlands 3.1 3.5 3.5 2.5 2.3 r1.1 5.3 

 Norway r1.9 2.0 0.5 1.1 r4.2 r8.6 r2.3 

 Sweden r4.7 2.5 r5.8 r7.2 r6.2 r7.2 r9.8 

 United Kingdom r3.6 r4.1 3.3 2.6 r3.8 r4.1 r5.6 

 Output 

 United States r2.9 r2.2 3.6 5.4 r0.9 r1.9 r4.8 

 Canada 2.5 1.8 2.4 5.9 0.5 0.4 3.8 

 Australia 1.6 1.6 r0.8 2.6 r1.4 r1.8 r-0.1 

 Japan 2.9 4.7 0.4 2.0 2.1 9.6 5.5 

 Korea 8.8 10.1 8.4 7.9 6.6 5.5 11.4 

 Taiwan 6.0 7.5 4.9 5.6 3.9 5.7 9.4 

 Belgium r1.9 2.6 0.6 r2.6 r0.5 r-0.8 2.3 

 Denmark 1.0 1.0 2.1 1.7 -1.1 -0.4 -2.8 

 France 2.0 2.0 1.7 3.9 0.3 -0.6 1.0 

 Germany (2) r1.0 1.2 -1.0 2.2 r1.3 r1.0 4.6 

 Italy 1.3 2.0 1.5 1.2 -0.8 -1.3 0.0 

 Netherlands 1.9 2.5 1.8 2.6 -0.3 -1.6 1.2 

 Norway r0.4 -0.4 1.1 1.0 r1.1 r3.0 r2.0 

 Sweden r3.7 1.8 r3.8 7.4 r4.2 r3.7 r9.9 

 United Kingdom 0.6 0.9 0.5 1.3 r-0.6 0.1 r1.9 

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

 Continued on next page 
 -9- 

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

 Manufacturing, 15 countries or areas, 1979-2004 

 Average annual rates of change(1) 

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

 Country or area 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004 

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

 Total hours 

 United States -1.1 -0.6 -0.1 -0.2 -4.8 -4.9 -0.4 

 Canada 0.0 -0.2 -1.3 2.6 -1.3 -1.9 0.8 

 Australia -1.3 -1.2 -2.0 -1.2 -1.0 -2.0 0.5 

 Japan -1.1 0.8 -2.8 -2.0 -2.7 -1.3 -1.3 

 Korea NA NA -1.1 -2.6 -0.3 -1.3 -0.6 

 Taiwan 0.3 1.2 -0.3 0.1 -1.4 2.1 4.5 

 Belgium -1.6 -1.6 -2.5 -0.1 -2.4 -3.7 -0.9 

 Denmark -1.1 -1.1 -0.7 -0.1 -3.0 -5.2 -3.6 

 France -2.1 -2.1 -2.8 -1.1 -2.2 -0.8 -2.4 

 Germany (2) -1.7 -0.9 -3.8 -1.4 r-1.7 r-2.8 r-0.1 

 Italy -0.2 -0.2 -0.7 0.1 -0.1 -0.5 0.5 

 Netherlands -1.2 -1.0 -1.7 0.0 -2.5 r-2.7 -3.9 

 Norway -1.4 -2.3 0.6 -0.1 r-2.9 r-5.1 -0.3 

 Sweden -0.9 -0.7 -1.9 0.3 -1.9 r-3.3 r0.0 

 United Kingdom r-2.9 r-3.1 -2.8 -1.3 r-4.3 r-3.8 r-3.5 

 Employment 

 United States -1.2 -0.8 -0.5 -0.1 -4.5 -4.8 -1.2 

 Canada -0.1 -0.2 -1.5 2.4 -1.3 -1.4 -1.0 

 Australia -1.4 -1.3 -2.3 -1.1 -0.9 -1.9 0.6 

 Japan -0.7 1.0 -1.6 -1.9 -3.0 -2.2 -2.4 

 Korea NA NA -0.8 -2.5 0.8 -1.2 0.5 

 Taiwan 0.8 2.0 -0.3 0.4 -0.4 1.7 3.2 

 Belgium -1.6 -1.6 -2.2 r-0.6 r-2.0 r-2.9 r-2.4 

 Denmark -1.1 -0.5 -1.2 -1.2 -2.5 -4.7 -3.0 

 France -1.5 -1.6 -2.5 -0.3 -1.1 -0.6 -2.4 

 Germany (2) -1.3 -0.1 -4.2 -0.8 -1.5 -2.6 -1.5 

 Italy -0.7 -0.9 -1.6 0.1 0.2 0.2 -0.3 

 Netherlands -1.0 -0.8 -1.6 0.2 -2.5 -3.2 -4.0 

 Norway -1.4 -2.2 0.3 0.1 r-3.0 r-4.6 r-2.9 

 Sweden -1.4 -1.0 -3.5 0.0 -1.6 r-2.6 -1.9 

 United Kingdom r-2.8 r-2.9 -2.6 r-1.3 -4.4 -4.8 -3.7 

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

 Continued on next page 
 -10- 

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

 Manufacturing, 15 countries or areas, 1979-2004 

 Average annual rates of change(1) 

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

 Country or area 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004 

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

 Average hours 

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

 Canada 0.1 0.0 0.3 0.2 0.0 -0.5 1.8 

 Australia 0.1 0.1 0.3 -0.1 0.0 -0.1 -0.1 

 Japan -0.3 -0.2 -1.3 -0.1 0.3 0.9 1.1 

 Korea NA NA -0.2 -0.1 -1.0 -0.1 -1.1 

 Taiwan -0.6 -0.8 0.0 -0.3 -1.0 0.4 1.3 

 Belgium r0.0 0.0 -0.3 r0.5 r-0.4 r-0.8 r1.6 

 Denmark 0.0 -0.6 0.6 1.1 -0.5 -0.5 -0.6 

 France -0.6 -0.5 -0.3 -0.8 -1.0 -0.2 0.0 

 Germany (2) -0.4 -0.9 0.4 -0.6 r-0.2 r-0.1 1.5 

 Italy 0.4 0.6 0.9 0.0 -0.3 -0.7 0.9 

 Netherlands -0.1 -0.2 0.0 -0.2 0.0 r0.5 0.1 

 Norway 0.0 -0.1 0.3 -0.2 0.1 r-0.6 r2.7 

 Sweden 0.5 0.3 1.7 0.2 -0.3 r-0.7 r1.9 

 United Kingdom -0.1 -0.2 -0.2 0.1 r0.2 r1.1 r0.1 

 Total labor compensation in manufacturing(3): National currency basis 

 United States 3.7 4.9 3.4 4.4 0.0 3.0 1.8 

 Canada 4.6 6.5 2.4 5.2 1.2 1.4 0.7 

 Australia NA NA r3.4 r3.0 3.8 r4.2 2.5 

 Japan 1.9 5.5 0.7 -1.1 -2.2 -0.6 -0.8 

 Korea 14.2 19.6 17.6 5.4 7.0 3.5 10.4 

 Taiwan 7.8 13.5 6.8 3.6 -0.3 3.7 5.9 

 Belgium 2.7 4.4 1.3 r1.9 1.1 r-0.9 0.7 

 Denmark 4.2 6.8 2.3 2.8 1.5 -0.4 0.6 

 France 3.5 6.5 1.1 1.1 1.5 3.1 0.0 

 Germany (2) 2.9 4.6 2.4 1.6 0.4 r-0.6 r0.5 

 Italy 6.8 11.4 4.2 2.9 2.9 2.7 3.2 

 Netherlands 2.9 3.1 2.8 3.4 1.8 0.6 -0.2 

 Norway r4.9 6.5 4.0 5.0 r1.4 r-1.1 r2.3 

 Sweden 5.5 8.4 2.0 5.3 r2.5 r1.5 r2.2 

 United Kingdom 4.3 7.1 2.4 3.4 0.1 0.2 0.3 

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

 Continued on next page 
 -11- 

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

 Manufacturing, 15 countries or areas, 1979-2004 

 Average annual rates of change(1) 

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

 Country or area 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004 

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

 Hourly compensation(3): National currency basis 

 United States 4.9 5.5 3.5 4.7 5.0 8.3 2.2 

 Canada 4.6 6.8 3.8 2.5 2.5 3.4 -0.1 

 Australia NA NA r5.5 4.3 4.8 r6.3 2.0 

 Japan 3.0 4.6 3.6 1.0 0.5 0.7 0.5 

 Korea NA NA 18.9 8.1 7.3 5.0 11.1 

 Taiwan 7.5 12.1 7.1 3.4 1.2 1.6 1.3 

 Belgium 4.4 6.1 3.9 r2.1 3.5 r2.9 1.6 

 Denmark 5.4 7.9 2.9 2.9 4.7 5.0 4.4 

 France 5.7 8.8 4.0 2.2 3.7 4.0 2.5 

 Germany (2) 4.7 5.6 6.4 3.1 2.1 2.2 r0.5 

 Italy 7.1 11.7 4.9 2.8 3.0 3.2 2.6 

 Netherlands 4.1 4.1 4.5 3.3 4.4 r3.4 3.8 

 Norway r6.4 9.0 3.4 5.2 r4.5 4.3 r2.6 

 Sweden 6.5 9.1 4.0 5.1 r4.4 r5.0 r2.1 

 United Kingdom r7.4 r10.6 5.4 4.7 r4.5 r4.2 r4.0 

 Unit labor costs(3): National currency basis 

 United States r0.8 r2.7 -0.2 -0.9 r-0.9 r1.1 r-2.9 

 Canada 2.0 4.7 0.0 -0.6 0.7 1.0 -3.0 

 Australia NA NA r2.5 0.4 2.4 r2.3 2.6 

 Japan -0.9 0.8 0.3 -3.0 -4.2 -9.3 -6.0 

 Korea 5.0 8.6 8.5 -2.4 0.3 -1.9 -0.9 

 Taiwan 1.7 5.5 1.9 -1.9 -4.0 -1.9 -3.2 

 Belgium 0.9 1.8 0.7 r-0.6 0.5 r-0.1 -1.6 

 Denmark 3.1 5.7 0.2 1.1 2.6 0.0 3.4 

 France 1.4 4.4 -0.6 -2.7 1.1 3.7 -1.0 

 Germany (2) 1.9 3.3 3.4 -0.5 r-1.0 r-1.7 r-4.0 

 Italy 5.5 9.3 2.6 1.8 3.7 4.1 3.2 

 Netherlands 0.9 0.6 1.0 0.8 2.1 2.3 -1.4 

 Norway r4.4 6.9 2.9 4.0 r0.3 r-4.0 r0.3 

 Sweden 1.8 6.5 r-1.7 -1.9 -1.6 r-2.1 r-7.0 

 United Kingdom 3.6 6.2 2.0 2.0 0.7 0.1 r-1.6 

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

 Continued on next page 
 -12- 

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

 Manufacturing, 15 countries or areas, 1979-2004 

 Average annual rates of change(1) 

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

 Country or area 1979-2004 1979-1990 1990-1995 1995-2000 2000-2004 2002-2003 2003-2004 

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

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

 United States r0.8 r2.7 -0.2 -0.9 r-0.9 r1.1 r-2.9 

 Canada 1.6 4.7 -3.2 -2.2 4.1 13.3 4.4 

 Australia NA NA r1.4 -4.3 8.6 r22.8 15.9 

 Japan 1.9 4.6 9.4 -5.7 -4.3 -2.1 0.8 

 Korea 1.4 4.9 6.7 -9.5 0.0 2.9 3.2 

 Taiwan 2.0 8.4 2.2 -5.1 -5.5 -1.5 -0.2 

 Belgium 0.5 0.6 3.3 r-8.1 8.3 r19.7 8.1 

 Denmark 2.6 4.1 2.2 -6.1 10.7 19.9 13.6 

 France 0.6 2.1 1.2 -9.4 9.0 24.2 8.8 

 Germany (2) 2.5 4.5 5.9 -8.0 r6.7 r17.8 r5.5 

 Italy 2.9 5.7 -3.5 -3.2 11.7 24.6 13.4 

 Netherlands 1.5 1.5 3.6 -6.9 10.0 22.4 8.3 

 Norway r3.3 4.9 2.6 -2.7 r7.3 r8.2 r5.4 

 Sweden -0.4 3.4 r-5.3 -6.7 4.0 r17.9 r2.2 

 United Kingdom 3.0 4.5 -0.5 1.2 5.6 8.9 r10.4 

 Exchange rates(4) 

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

 Canada -0.4 0.0 -3.2 -1.6 3.4 12.1 7.6 

 Australia -1.7 -3.2 -1.1 -4.7 6.1 20.0 12.9 

 Japan 2.8 3.8 9.1 -2.7 -0.1 8.0 7.2 

 Korea -3.4 -3.4 -1.7 -7.3 -0.3 4.9 4.1 

 Taiwan 0.3 2.7 0.3 -3.3 -1.6 0.4 3.1 

 Belgium -0.4 -1.2 2.5 -7.6 7.7 19.7 9.9 

 Denmark -0.5 -1.5 2.0 -7.1 7.8 19.9 9.8 

 France -0.9 -2.2 1.8 -6.8 7.7 19.7 9.9 

 Germany (2) 0.6 1.1 2.5 -7.5 7.7 19.7 9.9 

 Italy -2.5 -3.3 -6.0 -4.9 7.7 19.7 9.9 

 Netherlands 0.5 0.9 2.6 -7.6 7.7 19.7 9.9 

 Norway -1.1 -1.9 -0.3 -6.4 6.9 12.8 5.1 

 Sweden -2.1 -2.9 -3.7 -4.9 5.7 20.4 9.9 

 United Kingdom -0.6 -1.6 -2.4 -0.8 4.9 8.8 12.1 

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

 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. 
- 13 -

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, 1979-2004

65

75

85

95

105

115

125

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

(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 

"competitors" costs 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 to 1998, however, the strength of the U.S. dollar caused relative U.S. 

unit labor costs to rise. After a dip in 1999, the index of relative U.S. unit labor costs 

rose in 2000 and 2001, only to dip again after 2001 with a weakening of the U.S. dollar. 
- 14 -

Table C. U.S. manufacturing unit labor 

costs relative to 13(1) competitors, 1979-2004

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 112.7 112.0 100.6 112.7 110.4 102.1

1981 117.6 122.0 96.4 117.6 110.2 106.8

1982 127.4 131.4 96.9 127.4 109.0 116.8

1983 122.7 133.6 91.8 122.7 107.3 114.3

1984 123.8 134.3 92.2 123.8 101.4 122.0

1985 126.2 135.9 92.9 126.2 98.8 127.7

1986 130.1 141.5 91.9 130.1 118.3 110.0

1987 125.4 144.9 86.5 125.4 135.2 92.7

1988 126.5 147.0 86.1 126.5 147.4 85.9

1989 129.4 150.8 85.8 129.4 149.3 86.7

1990 133.4 158.1 84.4 133.4 162.7 82.0

1991 136.8 165.6 82.6 136.8 171.8 79.6

1992 137.8 169.3 81.4 137.8 176.5 78.1

1993 136.9 169.8 80.6 136.9 169.3 80.8

1994 134.2 167.0 80.3 134.2 166.4 80.7

1995 131.9 168.6 78.2 131.9 175.7 75.1

1996 129.0 171.3 75.3 129.0 172.4 74.9

1997 127.1 167.7 75.8 127.1 157.2 80.9

1998 125.7 168.9 74.4 125.7 146.6 85.8

1999 124.4 165.0 75.4 124.4 146.7 84.8

2000 125.8 160.2 78.5 125.8 138.4 90.9

2001 127.4 165.2 77.1 127.4 134.0 95.0

2002 123.5 164.2 75.2 123.5 134.5 91.8

2003 124.8 162.0 77.0 124.8 148.6 84.0

2004 121.2 157.2 77.1 121.2 155.7 77.9

(1) Data for Australia are not available for 1979. 

 This country has been omitted from this table.
- 15 -

Technical Notes

The comparisons in this release make use of data made available to BLS as of midJanuary 2006 by the national statistical agencies. 

Labor productivity is defined as real output per hour worked. Although the labor 

productivity measure presented in this release relates output to the hours worked of 

persons employed in manufacturing, it does not measure the specific contributions of 

labor as a single factor of production. Rather, it reflects the joint effects of many 

influences, including new technology, capital investment, capacity utilization, energy use, 

and managerial skills, as well as the skills and efforts of the workforce. 

Unit labor costs are defined as the cost of labor input required to produce one unit of 

output. They are computed as compensation in nominal terms divided by real output. 

The Bureau of Labor Statistics constructs trends of manufacturing labor productivity, 

hourly compensation costs, and unit labor costs from three basic aggregate measures – 

output, total labor hours, and total compensation. The hours and compensation measures 

refer to employees (wage and salary earners) in Belgium and Taiwan. For all other 

economies, the measures refer to all employed persons, including employees, selfemployed persons, and unpaid family workers. For all of the economies, the term “hours” 

refers to hours worked. 

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

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

For most countries, the data for the most recent years are based on the United Nations 

System of National Accounts 1993 (SNA 93) or its sub-system, the European System of 

Integrated National Accounts (ESA 95). For other countries and 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 countries, the output measures are real value added in 

manufacturing from national accounts. However, output for Japan prior to 1970 and for 

the Netherlands prior to 1960 are indexes of industrial production. The manufacturing 

value added measures for the United Kingdom are essentially identical to their indexes of 

industrial production. 

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

index of real gross product originating (deflated value added), introduced by the Bureau 

of Economic Analysis (BEA) of the U.S. Department of Commerce in August 1996. 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. 
- 16 -

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. While both series are based on annuallychanging price weights, the international comparisons program uses a value added output 

concept, while the major sector series is on a sectoral output basis. 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 countries' national accounts, whereas 

sectoral output would require a complex estimation procedure. Also, although BLS has 

determined that sectoral output is the correct concept for U.S. measures of productivity, 

there are other considerations that may make value added a better concept for 

international comparisons of labor productivity, such as differences among countries in 

the extent of vertical integration of industries. 

Estimation of manufacturing real output using moving price weights, as 

recommended by SNA 93, is becoming prevalent. However, many earlier time periods 

within the historical real output series have been estimated using fixed price weights, 

with the weights updated periodically (for example, every 5 or 10 years). 

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

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

general, of products that undergo rapid quality change. 

Labor Input. For the United States, the 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. The aggregate hours worked series used for 

France (from 1970 forward), Canada, Denmark, Norway, and Sweden are series 

published with the national accounts. For the former 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. For the United Kingdom from 1992, an annual index of total 

manufacturing hours is used. For all other countries, the U.K. before 1992, and the 

former West Germany before 1959, BLS constructs its own estimates of aggregate hours, 

using employment figures published with the national accounts, or other comprehensive 

employment series, and estimates of average annual hours worked. The Italian hours 

worked series is based on estimates by the Bank of Italy. 

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. 
- 17 -

Labor cost is defined as compensation plus employment taxes minus employment 

subsidies, i.e. the cost to employers of hiring labor. For most countries, 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 calendaryear data for real value added, employment, and hours worked. For compensation, the 

Bureau of Labor Statistics 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 

country or area 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: 

Country Weight Country 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 countries. Each country measures manufacturing output in its own 

currency units. To compare outputs among countries, a common unit of measure is 

needed. Market exchange rates are not suitable as a basis for comparing output levels. 

What is needed are purchasing power parities, which are the number of foreign currency 

units required to buy goods and services equivalent to what can be bought with one unit 

of U.S. currency. 
- 18 -

Purchasing power parities are available for total gross domestic product (GDP) from 

the Organization for Economic Cooperation and Development (OECD). However, these 

parities are derived for expenditures made by consumers, business, and government for 

goods and services – not for value added by industry. Therefore, they do not provide 

purchasing power parities by industry. The parities developed for total GDP are not 

suitable for each component industry, such as manufacturing. 

European exchange rates. On Jan. 1, 1999, 11 European countries joined the 

European Monetary Union (EMU). Greece joined on Jan. 1, 2001. The euro, the official 

currency of the EMU, was established at fixed conversion rates to the previous national 

currencies of EMU members. Data on manufacturing value added and labor 

compensation for euro-area countries are now reported in euros. And exchange rates 

between the previous national currencies of euro-area countries and the U.S. dollar are no 

longer reported; only the exchange rate between the euro and the U.S. dollar is available. 

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

for years before 1999 have been 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.