USDL 04-2259                                     
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MATERIAL IS EMBARGOED
UNTIL 8:30 A.M. EST,
THURSDAY, NOVEMBER 4, 2004

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  information: 		(202) 691-5606         
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                           PRODUCTIVITY AND COSTS
                       Third Quarter 2004, preliminary


     The Bureau of Labor Statistics of the U.S. Department of Labor today
reported preliminary productivity data--as measured by output per hour of all
persons--for the third quarter of 2004.  The preliminary seasonally-adjusted
annual rates of productivity growth in the third quarter were:

               2.3 percent in the business sector and
               1.9 percent in the nonfarm business sector.

Productivity increased 2.3 percent in the business sector, as output grew 4.2
percent and hours increased 1.9 percent.  The 1.9-percent rise in nonfarm
business productivity occurred as output rose 4.1 percent and hours rose 2.1
percent (table A).

     In manufacturing, productivity increases in the third quarter were:

               4.3 percent in manufacturing,
               5.0 percent in durable goods manufacturing, and
               4.3 percent in nondurable goods manufacturing.

The third-quarter increase in manufacturing productivity is much lower than
the 8.3-percent rise reported for the previous quarter (as revised).  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.  Third-quarter measures
are summarized in table A and appear in detail in tables 1 through 5.

     The data sources and methods used in the preparation of the
manufacturing series differ from those used in preparing the business and
nonfarm business series, and these measures are not directly comparable.
Output measures for business and nonfarm business are based on measures of
gross domestic product prepared by the Bureau of Economic Analysis of the
U.S. Department of Commerce.  Quarterly output measures for manufacturing
reflect indexes of industrial production independently prepared by the Board
of Governors of the Federal Reserve System.  See Technical Notes for further
information on data sources.

------------------------------------------------------------------------------
Table A. Productivity and costs: Preliminary third-quarter 2004 measures
(Seasonally adjusted annual rates)
------------------------------------------------------------------------------                                                            
                                                           Real       
                                                Hourly     hourly     Unit
                   Produc-                      compen-    compen-    labor
  Sector           tivity     Output    Hours   sation     sation     costs
------------------------------------------------------------------------------                   
                      Percent change from preceding quarter
                      
 Business           2.3        4.2       1.9      3.8       2.0        1.5
 Nonfarm business   1.9        4.1       2.1      3.6       1.7        1.6
 Manufacturing      4.3        4.0      -0.3      4.4       2.5        0.1
   Durable          5.0        6.3       1.3      3.9       2.0       -1.0
   Nondurable       4.3        1.3      -2.8      5.1       3.2        0.8
------------------------------------------------------------------------------   
                      Percent change from same quarter a year ago
                      
 Business           2.9        4.4       1.5      3.7        1.0       0.9
 Nonfarm business   3.1        4.7       1.5      3.7        1.0       0.6
 Manufacturing      4.6        5.8       1.1      2.4       -0.3      -2.1
   Durable          5.2        8.0       2.6      1.5       -1.2      -3.5
   Nondurable       4.5        3.1      -1.3      3.7        1.0      -0.7
------------------------------------------------------------------------------

Business

     From the second quarter to the third quarter of 2004, productivity in
the business sector grew at a 2.3 percent seasonally adjusted annual rate.
Output increased 4.2 percent, while hours of all persons engaged in the
sector increased 1.9 percent.  After revisions, productivity in the business
sector rose 2.9 percent in the second quarter of 2004, reflecting a 3.9-
percent rise in output and a 1.0-percent rise in hours (tables B and 1).
     
     Hourly compensation in the business sector increased at an annual rate
of 3.8 percent during the third quarter of 2004, more slowly than the 4.3-
percent rise one quarter earlier (revised). This measure includes wages and
salaries, supplements, employer contributions to employee benefit plans, and
taxes.  Real hourly compensation, which takes into account changes in
consumer prices, grew by 2.0 percent in the third quarter of 2004 after
falling by 0.4 percent in the second quarter and 0.8 percent in the first
quarter of the year.

     Unit labor costs, which reflect changes in both hourly compensation and
productivity, rose 1.5 percent during the third quarter, about the same rate
of increase as the 1.4-percent growth in the second quarter.  The implicit
price deflator for the business sector increased 0.9 percent during the third
quarter of 2004, following a 3.3 percent increase in the previous quarter.

Nonfarm business

     Productivity in the nonfarm business sector grew at a 1.9-percent annual
rate during the third quarter of 2004.  Output grew 4.1 percent in the third
quarter and hours worked in the nonfarm business sector rose 2.1 percent,
reflecting a 1.7-percent gain in employment and a 0.4-percent increase in
average weekly hours at work.  Nonfarm business productivity increased 3.9
percent in the second quarter of 2004 (revised), as output grew 4.2 percent
and hours rose by 0.3 percent (table 2).

     Hourly compensation increased at a 3.6 percent annual rate in the third
quarter of 2004. When the rise in consumer prices is taken into account, real
hourly compensation rose 1.7 percent during the July-September period.
During the second quarter of 2004, real hourly compensation had risen 0.2
percent.
     
     Unit labor costs grew 1.6 percent during the third quarter of 2004.  In
the second quarter, unit labor costs in the nonfarm business sector had risen
1.0 percent.  The implicit price deflator for nonfarm business output rose
1.6 percent in the third quarter of 2004.

Manufacturing

     Productivity increased 4.3 percent in manufacturing in the third quarter
of 2004, as output grew 4.0 percent and hours of all persons fell 0.3 percent
(seasonally adjusted annual rates).  In durable goods, productivity grew 5.0
percent in the third quarter as output increased 6.3 percent and hours of all
persons rose 1.3 percent.  Productivity increased 4.3 percent in nondurable
goods, as a modest output increase of 1.3 percent was combined with a decline
of 2.8 percent in hours of all persons (tables 3, 4, and 5).

     The hourly compensation of manufacturing workers increased an average of
4.4 percent during the third quarter of 2004, reflecting increases of 3.9
percent in durable goods and 5.1 percent in nondurable goods.  When the
increase in consumer prices is taken into account, real hourly compensation
in total manufacturing rose 2.5 percent in the third quarter.  Real hourly
compensation had fallen in both of the previous quarters, 0.9 percent in the
second quarter (as revised) and 7.4 percent in the first quarter.

     Unit labor costs in manufacturing edged up by 0.1 percent in the third
quarter of 2004, after falling in three of the previous four quarters.  In
the durable goods sector, unit labor costs in the third quarter fell 1.0
percent in the third quarter and in the nondurable goods sector, these costs
rose 0.8 percent.


Revised Measures

     Current and previous measures for the first and second quarters of 2004
for the business, nonfarm business, and manufacturing sectors are compared in
table B.  Hours data for the second quarter now reflect more current data on
the ratio of hours worked to hours paid and updated information on the
relative average weekly hours of supervisory (nonproduction) workers to
nonsupervisory (production) workers in private nonfarm businesses.

------------------------------------------------------------------------------
Table B. Previous and revised productivity and related measures
Quarterly percent change at seasonally adjusted annual rate
------------------------------------------------------------------------------                                                          
                                                      Real      
                                             Hourly   hourly     Unit
                   Produc-                   compen-  compen-    labor
Sector             tivity   Output   Hours   sation   sation     costs
------------------------------------------------------------------------------                                                                
                             Second quarter 2004
Business:                                                       
  Previous          1.5       3.2     1.6      3.7     -1.0       2.1
  Current           2.9       3.9     1.0      4.3     -0.4       1.4
  
Nonfarm business:                                               
  Previous          2.5       3.5     1.0      4.3     -0.4       1.8
  Current           3.9       4.2     0.3      4.9      0.2       1.0
  
Manufacturing:                                                  
  Previous          6.9       6.2    -0.6      3.2     -1.5      -3.5
  Current           8.3       6.7    -1.4      3.8     -0.9      -4.2
------------------------------------------------------------------------------     
     
     In the business and nonfarm business sectors, productivity grew more
rapidly than reported on Sept. 2, based on information then available.  In
both sectors, the growth in output was revised up and the growth in hours was
revised down.  Hourly compensation was revised up in both sectors.  Unit
labor costs rose much less than reported earlier.  Productivity also was
revised up in the manufacturing sector, reflecting faster growth in output
and a larger decline in hours than previously reported.  Hourly compensation
rose more rapidly in the second quarter than reported earlier.  Because
productivity was revised up more than hourly compensation, unit labor costs
in manufacturing show more of a decline in the second quarter than reported
on Sept. 2.
     
     On Oct. 13, 2004, a notice regarding corrections to the data released on
Sept. 2 was posted on the BLS web site.  Data for the second quarter 2004 for
business, nonfarm business, manufacturing, and nonfinancial corporations were
not affected.  The Productivity and Costs news release of Aug. 10, 2004,
which included revisions to historical measures, also contained some
incorrect data.  For more information, see www.bls.gov/lpc/note09022004.htm


Revised measures: Nonfinancial Corporations
     
     Productivity and cost measures for nonfinancial corporations for the
second quarter of 2004 also were revised to incorporate more recent
information than was available on Sept. 2.

------------------------------------------------------------------------------
Table C.  Nonfinancial corporations: Previous and revised productivity and
cost measures
Quarterly percent changes at seasonally adjusted annual rates
------------------------------------------------------------------------------                                                           
                                             Real                    
                                    Hourly   hourly  Unit            Implicit
            Produc-                 compen-  compen- labor  Unit     price
            tivity   Output  Hours  sation   sation  costs  profits  deflator
------------------------------------------------------------------------------                                                                     
                            Second quarter 2004
                            
Previous     1.4      3.2     1.8    4.0     -0.7     2.6    16.6     3.7
Current      2.7      3.7     0.9    4.7      0.0     1.9    21.7     3.8
------------------------------------------------------------------------------     
     
     Productivity grew at an annual rate of 2.7 percent in second-quarter
2004, compared with the increase of 1.4 percent published Sept. 2.  This was
the combined result of both an upward revision in output growth, from 3.2
percent to 3.7 percent, and a downward revision to hours growth, from 1.8 to
0.9 percent.  Hourly compensation was revised up.  However, the upward
revision to productivity more than offset the upward revision to hourly
compensation, and unit labor costs grew more slowly than reported previously.
Unit profits also grew more rapidly than reported on Sept. 2. (tables C and
6).
                                      
                               Upcoming change

     Early in 2005, BLS will improve the way it uses data for farm workers,
the nonfarm self employed, and nonfarm unpaid family workers in the
productivity program by accounting for the effects of multiple jobholding.

                              Next release date
     
     The next release of Productivity and Costs is scheduled for 8:30 AM EST,
Tuesday, Dec. 7, 2004.  It will present third-quarter measures for
nonfinancial corporations and revised third-quarter measures for business,
nonfarm business, and manufacturing.

                                      
                               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  em-
ployment  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 years prior to 2001.  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 enter
prises 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.

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
BEA.   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  manufac
turing;  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 manufac-
turing;  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  manu-
facturing; 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,  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.
     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.


  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

  2002       I     122.7      142.2     115.9     143.2       115.2      116.7       113.4      115.5
            II     123.2      142.9     116.0     144.4       115.2      117.2       113.6      115.9
           III     124.7      144.3     115.7     145.0       115.0      116.3       115.7      116.1
            IV     125.0      144.7     115.7     145.5       114.8      116.3       116.8      116.5

        ANNUAL     123.9      143.5     115.8     144.5       115.0      116.6       114.9      116.0

  2003       I     126.2      145.5     115.3     147.4       115.3      116.8       117.7      117.1
            II     128.6      147.5     114.7     149.6       116.8      116.4       119.0      117.3
           III     131.2      150.8     114.9     151.7       117.7      115.6       120.8      117.5
            IV     132.0      152.3     115.4     153.2       118.7      116.0       120.7      117.8

        ANNUAL     129.5      149.0     115.1     150.5       117.1      116.2       119.6      117.4

  2004       I     133.3      154.3     115.8     154.2       118.4      115.7       122.9      118.4
            II    r134.2     r155.8    r116.1    r155.9      r118.3     r116.1      r124.8      119.4
           III     135.0      157.4     116.6     157.3       118.9      116.6       124.8      119.6
  ---------------------------------------------------------------------------------------------------------
                       Percent change from previous quarter at annual rate(5)

  2002       I       5.9        3.5      -2.3       4.9         3.5       -1.0         1.0       -0.3
            II       1.7        2.1       0.4       3.4        -0.1        1.7         1.0        1.4
           III       4.8        3.8      -1.0       1.6        -0.7       -3.1         7.3        0.7
            IV       1.2        1.2       0.0       1.3        -0.6        0.0         3.8        1.4

        ANNUAL       4.3        1.8      -2.4       3.2         1.5       -1.1         4.5        0.9

  2003       I       3.9        2.2      -1.6       5.5         1.7        1.6         3.1        2.1
            II       7.6        5.6      -1.9       6.1         5.4       -1.4         4.5        0.8
           III       8.5        9.3       0.7       5.6         3.1       -2.6         6.3        0.7
            IV       2.4        4.2       1.7       4.0         3.3        1.6        -0.4        0.8

        ANNUAL       4.5        3.8      -0.7       4.1         1.8       -0.4         4.1        1.3

  2004       I       3.9        5.3       1.3       2.8        -0.8       -1.1         7.4        2.1
            II      r2.9       r3.9      r1.0      r4.3       r-0.4       r1.4        r6.4        3.3
           III       2.3        4.2       1.9       3.8         2.0        1.5         0.0        0.9
  ---------------------------------------------------------------------------------------------------------
                      Percent change from corresponding quarter of previous year

  2002       I       4.9        0.8      -3.9       3.2         1.9       -1.6         6.6        1.2
            II       4.0        1.1      -2.8       3.4         2.1       -0.6         3.5        0.9
           III       4.9        2.8      -2.0       3.3         1.6       -1.6         5.0        0.8
            IV       3.4        2.7      -0.7       2.8         0.5       -0.6         3.2        0.8

        ANNUAL       4.3        1.8      -2.4       3.2         1.5       -1.1         4.5        0.9

  2003       I       2.9        2.3      -0.6       2.9         0.1        0.0         3.8        1.4
            II       4.4        3.2      -1.1       3.6         1.4       -0.7         4.7        1.3
           III       5.3        4.5      -0.7       4.6         2.4       -0.6         4.4        1.3
            IV       5.6        5.3      -0.3       5.3         3.4       -0.3         3.4        1.1

        ANNUAL       4.5        3.8      -0.7       4.1         1.8       -0.4         4.1        1.3

  2004       I       5.6        6.1       0.5       4.6         2.7       -0.9         4.4        1.1
            II      r4.4       r5.6      r1.2      r4.2        r1.3      r-0.2        r4.9        1.7
           III       2.9        4.4       1.5       3.7         1.0        0.9         3.3        1.8
  ---------------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                       November 4, 2004 
  r=revised                                                              Source: Bureau of Labor Statistics




  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

  2002       I     122.4      142.6     116.5     142.6       114.7      116.4       115.1      116.0
            II     122.8      143.2     116.7     143.8       114.7      117.1       115.4      116.5
           III     124.1      144.5     116.4     144.3       114.4      116.2       117.7      116.8
            IV     124.6      145.0     116.4     144.7       114.3      116.1       118.9      117.2

        ANNUAL     123.5      143.9     116.5     143.8       114.5      116.5       116.8      116.6

  2003       I     125.8      145.9     116.0     146.6       114.7      116.6       119.6      117.7
            II     127.8      147.8     115.6     148.7       116.1      116.3       120.4      117.8
           III     130.6      151.1     115.7     150.9       117.1      115.5       122.3      118.0
            IV     131.7      152.8     116.1     152.5       118.2      115.9       121.9      118.1

        ANNUAL     129.0      149.4     115.8     149.7       116.5      116.1       121.1      117.9

  2004       I     132.8      155.0     116.7     153.3       117.7      115.4       124.3      118.7
            II    r134.1     r156.5    r116.7    r155.2      r117.8     r115.7      r126.1     r119.6
           III     134.7      158.1     117.4     156.5       118.3      116.2       126.6      120.0
  ---------------------------------------------------------------------------------------------------------
                       Percent change from previous quarter at annual rate(5)

  2002       I       6.9        4.0      -2.7       5.5         4.1       -1.4         1.6       -0.3
            II       1.1        1.7       0.6       3.4        -0.1        2.3         1.0        1.8
           III       4.5        3.6      -0.9       1.5        -0.8       -2.9         8.0        1.0
            IV       1.6        1.4      -0.2       1.2        -0.6       -0.3         4.2        1.3

        ANNUAL       4.4        1.8      -2.5       3.3         1.6       -1.1         4.7        1.0

  2003       I       3.7        2.4      -1.3       5.3         1.5        1.6         2.4        1.9
            II       6.7        5.3      -1.4       5.7         5.0       -1.0         2.9        0.5
           III       9.0        9.3       0.3       6.1         3.6       -2.7         6.3        0.6
            IV       3.1        4.6       1.4       4.4         3.6        1.2        -1.2        0.3

        ANNUAL       4.4        3.8      -0.6       4.1         1.7       -0.4         3.7        1.1

  2004       I       3.7        5.7       2.0       2.0        -1.6       -1.6         8.0        2.0
            II      r3.9       r4.2      r0.3      r4.9        r0.2       r1.0        r6.0        2.9
           III       1.9        4.1       2.1       3.6         1.7        1.6         1.6        1.6
  ---------------------------------------------------------------------------------------------------------
                      Percent change from corresponding quarter of previous year

  2002       I       5.1        0.9      -4.0       3.2         2.0       -1.8         6.7        1.2
            II       4.0        1.0      -2.9       3.5         2.2       -0.5         3.4        0.9
           III       4.8        2.6      -2.1       3.4         1.7       -1.3         5.2        1.0
            IV       3.5        2.7      -0.8       2.9         0.6       -0.6         3.7        1.0

        ANNUAL       4.4        1.8      -2.5       3.3         1.6       -1.1         4.7        1.0

  2003       I       2.7        2.3      -0.5       2.9         0.0        0.1         3.9        1.5
            II       4.1        3.2      -0.9       3.4         1.2       -0.7         4.4        1.2
           III       5.2        4.6      -0.7       4.6         2.4       -0.6         3.9        1.1
            IV       5.6        5.4      -0.2       5.4         3.4       -0.2         2.5        0.8

        ANNUAL       4.4        3.8      -0.6       4.1         1.7       -0.4         3.7        1.1

  2004       I       5.6        6.2       0.6       4.5         2.6       -1.0         3.9        0.8
            II      r4.9       r6.0      r1.0      r4.4        r1.4      r-0.5        r4.7        1.5
           III       3.1        4.7       1.5       3.7         1.0        0.6         3.5        1.7
  ---------------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                       November 4, 2004
  r=revised                                                              Source: Bureau of Labor Statistics



  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

  2002       I            143.8        130.5         90.7        144.1          115.9         100.2
            II            145.7        131.8         90.4        147.0          117.2         100.8
           III            147.8        132.4         89.5        148.6          117.8         100.5
            IV            148.8        131.3         88.2        149.9          118.3         100.7

        ANNUAL            146.5        131.5         89.7        147.4          117.3         100.6

  2003       I            151.0        131.3         87.0        155.7          121.8         103.1
            II            152.1        130.1         85.6        158.5          123.8         104.2
           III            156.0        131.5         84.3        161.6          125.5         103.6
            IV            157.2        133.5         84.9        163.9          127.0         104.2

        ANNUAL            154.1        131.6         85.4        159.9          124.5         103.8

  2004       I            158.3        135.5         85.6        162.2          124.5         102.5
            II           r161.5       r137.8        r85.3       r163.7         r124.3        r101.4
           III            163.2        139.1         85.3        165.5          125.0         101.4
  --------------------------------------------------------------------------------------------------
                         Percent change from previous quarter at annual rate(5)

  2002       I             10.0          2.5         -6.9         14.2           12.7           3.8
            II              5.4          4.0         -1.3          8.2            4.5           2.6
           III              5.9          1.7         -3.9          4.5            2.1          -1.3
            IV              2.8         -3.1         -5.7          3.5            1.6           0.7

        ANNUAL              7.0         -0.6         -7.1          6.7            5.0          -0.3

  2003       I              6.0          0.1         -5.6         16.6           12.3          10.0
            II              2.9         -3.6         -6.3          7.4            6.7           4.4
           III             10.6          4.3         -5.7          8.1            5.6          -2.2
            IV              3.3          6.2          2.8          5.7            4.9           2.3

        ANNUAL              5.1          0.1         -4.8          8.5            6.1           3.2

  2004       I              2.7          6.2          3.4         -4.1           -7.4          -6.6
            II             r8.3         r6.7        r-1.4         r3.8          r-0.9         r-4.2
           III              4.3          4.0         -0.3          4.4            2.5           0.1
  --------------------------------------------------------------------------------------------------
                     Percent change from corresponding quarter of previous year

  2002       I              6.6         -3.4         -9.4          4.1            2.8          -2.4
            II              7.3         -1.1         -7.9          7.0            5.6          -0.3
           III              8.0          0.9         -6.6          8.2            6.5           0.2
            IV              6.0          1.2         -4.5          7.5            5.1           1.4

        ANNUAL              7.0         -0.6         -7.1          6.7            5.0          -0.3

  2003       I              5.0          0.6         -4.2          8.1            5.1           2.9
            II              4.4         -1.3         -5.4          7.9            5.6           3.3
           III              5.5         -0.6         -5.8          8.8            6.5           3.1
            IV              5.6          1.7         -3.8          9.4            7.3           3.5

        ANNUAL              5.1          0.1         -4.8          8.5            6.1           3.2

  2004       I              4.8          3.2         -1.5          4.2            2.3          -0.6
            II             r6.2         r5.9        r-0.3         r3.3           r0.4         r-2.7
           III              4.6          5.8          1.1          2.4           -0.3          -2.1
  --------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                November 4, 2004 
  r=revised                                                       Source: Bureau of Labor Statistics





  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

  2002       I            161.4        152.6         94.6        142.2          114.4          88.1
            II            163.9        154.7         94.4        145.2          115.8          88.6
           III            167.0        155.9         93.4        146.4          116.1          87.7
            IV            170.5        156.1         91.5        147.7          116.6          86.6

        ANNUAL            165.7        154.8         93.5        145.4          115.7          87.7

  2003       I            173.6        156.6         90.2        154.9          121.1          89.2
            II            175.0        155.1         88.7        157.9          123.3          90.2
           III            181.5        158.3         87.2        161.2          125.1          88.8
            IV            183.3        161.9         88.3        163.4          126.5          89.1

        ANNUAL            178.3        158.0         88.6        159.3          124.0          89.3

  2004       I            185.2        165.7         89.5        160.4          123.1          86.6
            II           r188.7       r168.3        r89.2       r162.1         r123.0         r85.9
           III            191.0        170.9         89.5        163.6          123.6          85.7
  --------------------------------------------------------------------------------------------------
                         Percent change from previous quarter at annual rate(5)

  2002       I             11.7          2.8         -8.0          8.4            7.0          -2.9
            II              6.3          5.5         -0.7          8.6            5.0           2.2
           III              7.9          3.3         -4.3          3.5            1.1          -4.1
            IV              8.7          0.4         -7.6          3.6            1.7          -4.7

        ANNUAL              8.3         -0.7         -8.3          5.6            3.9          -2.5

  2003       I              7.4          1.4         -5.6         20.8           16.4          12.5
            II              3.1         -3.9         -6.8          8.0            7.3           4.7
           III             15.8          8.4         -6.3          8.7            6.1          -6.1
            IV              4.1          9.4          5.1          5.5            4.7           1.3

        ANNUAL              7.6          2.0         -5.2          9.6            7.1           1.8

  2004       I              4.3          9.9          5.4         -7.1          -10.4         -10.9
            II             r7.7         r6.3        r-1.3         r4.4          r-0.4         r-3.1
           III              5.0          6.3          1.3          3.9            2.0          -1.0
  --------------------------------------------------------------------------------------------------
                     Percent change from corresponding quarter of previous year

  2002       I              7.1         -4.9        -11.2          3.3            2.0          -3.6
            II              8.3         -1.8         -9.3          6.0            4.7          -2.0
           III              9.2          1.2         -7.3          7.0            5.2          -2.0
            IV              8.6          3.0         -5.2          6.0            3.7          -2.4

        ANNUAL              8.3         -0.7         -8.3          5.6            3.9          -2.5

  2003       I              7.6          2.6         -4.6          8.9            5.9           1.2
            II              6.8          0.3         -6.1          8.7            6.5           1.9
           III              8.7          1.5         -6.6         10.1            7.7           1.3
            IV              7.5          3.7         -3.5         10.6            8.5           2.9

        ANNUAL              7.6          2.0         -5.2          9.6            7.1           1.8

  2004       I              6.7          5.8         -0.8          3.5            1.7          -3.0
            II             r7.9         r8.5         r0.6         r2.7          r-0.2         r-4.8
           III              5.2          8.0          2.6          1.5           -1.2          -3.5
  --------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                November 4, 2004
  r=revised                                                       Source: Bureau of Labor Statistics




  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

  2002       I            126.1        107.2         85.0        146.2          117.6         116.0
            II            127.5        107.8         84.5        148.8          118.7         116.7
           III            128.5        107.7         83.8        151.2          119.9         117.6
            IV            126.9        105.7         83.3        152.5          120.4         120.2

        ANNUAL            127.3        107.1         84.2        149.6          119.1         117.6

  2003       I            128.2        105.3         82.1        155.9          121.9         121.6
            II            129.0        104.4         81.0        158.3          123.6         122.7
           III            130.4        104.3         80.0        161.1          125.0         123.5
            IV            131.5        105.0         79.9        163.3          126.5         124.2

        ANNUAL            129.8        104.8         80.7        159.6          124.2         123.0

  2004       I            132.0        105.5         79.9        163.9          125.9         124.2
            II           r134.8       r107.2        r79.6       r165.0         r125.2        r122.4
           III            136.2        107.6         79.0        167.1          126.2         122.6
  --------------------------------------------------------------------------------------------------
                         Percent change from previous quarter at annual rate(5)

  2002       I              7.4          2.0         -5.1         26.5           24.9          17.7
            II              4.6          2.2         -2.3          7.2            3.6           2.5
           III              3.2         -0.2         -3.3          6.6            4.1           3.2
            IV             -4.9         -7.3         -2.5          3.7            1.8           9.0

        ANNUAL              4.8         -0.6         -5.2          9.3            7.5           4.3

  2003       I              4.2         -1.5         -5.5          9.1            5.1           4.7
            II              2.3         -3.2         -5.5          6.3            5.7           3.9
           III              4.4         -0.4         -4.6          7.2            4.7           2.7
            IV              3.4          2.6         -0.7          5.6            4.8           2.2

        ANNUAL              2.0         -2.2         -4.1          6.7            4.3           4.6

  2004       I              1.6          1.8          0.2          1.5           -2.0           0.0
            II             r8.7         r6.9        r-1.7         r2.6          r-2.1         r-5.7
           III              4.3          1.3         -2.8          5.1            3.2           0.8
  --------------------------------------------------------------------------------------------------
                     Percent change from corresponding quarter of previous year

  2002       I              5.0         -1.7         -6.4          6.2            5.0           1.2
            II              5.3         -0.4         -5.4          9.2            7.9           3.7
           III              6.2          0.5         -5.4         10.9            9.2           4.5
            IV              2.5         -0.9         -3.3         10.6            8.2           8.0

        ANNUAL              4.8         -0.6         -5.2          9.3            7.5           4.3

  2003       I              1.7         -1.8         -3.4          6.6            3.6           4.8
            II              1.2         -3.1         -4.2          6.4            4.2           5.2
           III              1.5         -3.1         -4.5          6.6            4.3           5.0
            IV              3.6         -0.7         -4.1          7.1            5.1           3.3

        ANNUAL              2.0         -2.2         -4.1          6.7            4.3           4.6

  2004       I              2.9          0.2         -2.7          5.2            3.3           2.2
            II             r4.5         r2.7        r-1.7         r4.2           r1.3         r-0.3
           III              4.5          3.1         -1.3          3.7            1.0          -0.7
  --------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                November 4, 2004
  r=revised                                                       Source: Bureau of Labor Statistics




  Table 6. Nonfinancial corporations: 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

  2002       I    126.3    149.7     118.5    139.9     112.6     110.8    114.0    111.6     89.1    109.6
            II    127.9    151.4     118.4    141.3     112.7     110.5    112.9    111.2     94.7    109.7
           III    129.2    152.3     117.9    142.1     112.7     110.0    112.7    110.7     95.7    109.4
            IV    130.2    153.1     117.6    142.9     112.8     109.7    112.3    110.4    101.8    109.6

        ANNUAL    128.4    151.6     118.1    141.5     112.7     110.2    113.0    111.0     95.4    109.6

  2003       I    131.3    153.4     116.8    144.1     112.7     109.8    113.2    110.7     99.2    109.7
            II    134.1    156.1     116.4    146.3     114.2     109.1    111.4    109.7    111.0    109.8
           III    137.2    159.4     116.2    148.5     115.3     108.2    111.1    109.0    118.7    109.9
            IV    138.9    162.0     116.7    150.0     116.2     108.0    110.5    108.7    123.2    110.0

        ANNUAL    135.4    157.7     116.5    147.3     114.6     108.8    111.5    109.5    113.2    109.8

  2004       I    138.9    163.2     117.5    150.9     115.9     108.6    109.5    108.8    128.1    110.6
            II   r139.9   r164.7    r117.7   r152.6    r115.8    r109.1   r110.0   r109.4   r134.5    111.6
  ----------------------------------------------------------------------------------------------------------
                             Percent change from previous quarter at annual rate(5)

  2002       I      7.9      5.7      -2.0      1.7       0.4      -5.8     -7.3     -6.2     90.8     -1.6
            II      4.9      4.8      -0.1      4.0       0.4      -0.9     -3.7     -1.7     27.4      0.2
           III      4.1      2.3      -1.7      2.3       0.0      -1.7     -0.9     -1.5      4.5     -1.0
            IV      3.4      2.1      -1.2      2.2       0.3      -1.1     -1.4     -1.2     28.1      0.9

        ANNUAL      4.4      1.5      -2.8      3.1       1.4      -1.3     -0.2     -1.0     15.4      0.1

  2003       I      3.2      0.6      -2.5      3.6      -0.2       0.4      3.0      1.1    -10.0      0.1
            II      9.1      7.4      -1.5      6.2       5.5      -2.6     -6.2     -3.6     56.4      0.5
           III      9.4      8.8      -0.6      6.2       3.6      -3.0     -1.0     -2.5     30.8      0.2
            IV      5.0      6.7       1.6      4.2       3.4      -0.8     -2.1     -1.2     16.1      0.4

        ANNUAL      5.4      4.0      -1.3      4.0       1.7      -1.3     -1.3     -1.3     18.7      0.2

  2004       I      0.1      2.9       2.8      2.3      -1.3       2.1     -3.5      0.6     16.9      2.1
            II     r2.7     r3.7      r0.9     r4.7      r0.0      r1.9     r1.8     r1.9    r21.7     r3.8
  ----------------------------------------------------------------------------------------------------------
                          Percent change from corresponding quarter of previous year

  2002       I      3.4     -1.1      -4.3      3.2       2.0      -0.2      4.0      0.9      1.5      1.0
            II      4.2      0.8      -3.2      3.4       2.1      -0.8      0.6     -0.4      8.4      0.2
           III      5.0      2.5      -2.4      3.1       1.4      -1.8     -1.7     -1.8     20.6     -0.4
            IV      5.1      3.7      -1.3      2.5       0.3      -2.4     -3.3     -2.7     34.3     -0.4

        ANNUAL      4.4      1.5      -2.8      3.1       1.4      -1.3     -0.2     -1.0     15.4      0.1

  2003       I      3.9      2.5      -1.4      3.0       0.1      -0.9     -0.8     -0.8     11.3      0.1
            II      4.9      3.1      -1.7      3.6       1.4      -1.3     -1.4     -1.3     17.2      0.1
           III      6.2      4.7      -1.5      4.5       2.3      -1.6     -1.4     -1.6     23.9      0.4
            IV      6.6      5.8      -0.8      5.0       3.1      -1.5     -1.6     -1.6     20.9      0.3

        ANNUAL      5.4      4.0      -1.3      4.0       1.7      -1.3     -1.3     -1.3     18.7      0.2

  2004       I      5.9      6.4       0.5      4.7       2.8      -1.1     -3.2     -1.7     29.1      0.8
            II     r4.3     r5.5      r1.2     r4.3      r1.4      r0.0    r-1.2    r-0.3    r21.2      1.6
  ----------------------------------------------------------------------------------------------------------
  See footnotes following Table 6.                                        November 4, 2004 
  r=revised                                                               Source: Bureau of Labor Statistics


                                      
                                      
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 +1.4 index points approximately 95 percent of the time.  This
interval is based on the performance of this measure between the fourth
quarter of 1995 and the first quarter of 2004.
                                      
                                      
                                      
                            Footnotes, Tables 1-6

(1)  Wages and salaries of employees plus employers' contributions for social
     insurance and private benefit plans.  Except for nonfinancial
     corporations, where there are no self-employed, data also include an
     estimate of wages, salaries, and supplemental payments for the self-
     employed.

(2)  The change for recent quarters is based on the Consumer Price Index for
     all urban consumers (CPI-U).  The trend from 1978-2003 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.