Internet address: http://www.bls.gov     USDL 07-1456
Technical information: (202) 691-5654    For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902            Thursday, September 27, 2007

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR 
COST TRENDS 2006

     Manufacturing labor productivity increased in 2006 in 15 of the 16 
economies compared by the U.S. Department of Labor's Bureau of Labor 
Statistics.  (See chart 1.)  The Republic of Korea and Taiwan had the 
largest productivity increases (+10.8 and +6.9 percent, respectively).  
The U.S. productivity increase of 2.4 percent placed it eleventh among 
the 16 economies compared, and was less than the average annual growth 
rate since 2000.  Canada was the only country with no productivity 
growth.
     
     Over the 2000-2006 period, in the 16 economies studied, only Korea, 
Sweden, and Taiwan had greater productivity growth than the United 
States.
     
     The data presented for the United States differ from those appearing 
in BLS Productivity and Costs news releases.  (See technical notes.)  
Average annual growth rates for selected measures are shown in tables A 
and B.
     
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 1. Percent change in 
manufacturing output per hour, 2005-2006
 
-2-

     Manufacturing unit labor costs, expressed in national currency units, 
declined in nine of the economies and increased in seven. The change for 
the United States was near the middle of the range, at +0.1 percent.  
(See chart 2.)
     
     However, expressed in U.S. dollars, unit labor costs declined in six 
of the economies and increased in 10.  Declines in the dollar's exchange 
rate reversed the direction of movement in three countries.  The 
reversal was largest for Korea, from a decline in unit labor costs in 
national currency of 3.6 percent to an increase in unit labor costs 
expressed in U.S. dollars of 3.5 percent.  This difference can be 
explained by the strong appreciation of the won relative to the U.S. 
dollar.

PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2. Percent change in 
manufacturing unit labor costs, 2005-2006
       
-3-

                  Table A. Output per hour, hourly compensation, unit labor costs, and related measures
                                      Manufacturing, 16 countries or areas, 2005-2006

                                                      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           2.4      3.3      0.9     -0.5      1.4      3.4      2.5      0.1      0.1       --

      Canada                  0.0     -1.3     -1.3     -1.5      0.1      1.3      2.6      2.6      9.6      6.8
      Australia               0.3     -1.3     -1.5     -1.2     -0.4      4.9      6.5      6.2      4.9     -1.2
      Japan                   2.3      4.8      2.5      1.7      0.8      3.0      0.5     -1.8     -7.0     -5.3
      Korea, Republic of     10.8      8.4     -2.1     -0.4     -1.7      4.5      6.8     -3.6      3.5      7.3
      Taiwan                  6.9      7.2      0.3      1.1     -0.8      2.5      2.1     -4.4     -5.6     -1.2

      Belgium                 2.1      2.5      0.5     -0.4      0.8      2.6      2.1      0.1      1.0      0.9
      Denmark                 4.0      5.1      1.0      0.2      0.8      3.6      2.5     -1.4     -0.5      0.9
      France                  3.7      1.6     -2.0     -2.0      0.0      0.5      2.6     -1.0     -0.1      0.9
      Germany                 6.7      5.5     -1.1     -1.0     -0.1      1.2      2.4     -4.0     -3.1      0.9
      Italy                   1.4      3.7      2.3      1.2      1.0      4.2      1.8      0.4      1.3      0.9
      Netherlands             3.1      2.3     -0.8     -0.8      0.1      2.0      2.8     -0.3      0.6      0.9
      Norway                  3.3      4.5      1.1      1.3     -0.2      5.7      4.6      1.2      1.7      0.5
      Spain                   3.8      3.3     -0.5      0.0     -0.5      3.0      3.5     -0.3      0.6      0.9
      Sweden                  6.5      5.7     -0.8     -0.7      0.0      2.2      3.0     -3.3     -2.0      1.3
      United Kingdom          4.5      1.3     -3.1     -2.6     -0.4      3.7      7.0      2.4      3.7      1.3
      ---------------------------------------------------------------------------------------------------------------
     
      (1) Value of foreign currency relative to the U.S. dollar.
  
   
Additional data available
     Annual indexes of these variables are estimated for the time period 
1950-2006 and are available at the Bureau of Labor Statistics, Division 
of Foreign Labor Statistics website at http://www.bls.gov/fls/home.htm.  
However, for analytical purposes, the international comparisons in this 
release go back to 1979.
     
     For further information, contact the Office of Productivity and 
Technology by phone at 202-691-5654, by e-mail at flspr@bls.gov, or by 
mail at Bureau of Labor Statistics,  
2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212. 

-4-

Manufacturing productivity, output, and labor input
     In most of the compared economies manufacturing productivity 
increased between 2 and 5 percent in 2006.  The United States, with 2.4 
percent growth, fell within that interval.  However, in Taiwan, Germany, 
and Sweden labor productivity grew by over 6 percent, and in Korea by 
10.8 percent.  Manufacturing productivity increased by only 0.3 percent 
in Australia and by 1.4 percent in Italy.  Canada is the only economy 
that had no manufacturing productivity growth in 2006.  (See tables A 
and B.)
     
     Manufacturing output increased in 14 of the 16 economies in 2006. 
Korea, Sweden, and Taiwan continued to be the leaders in the growth of 
output, as they have been for the last decade.  In 2006, growth in 
manufacturing output in Germany, Norway and Denmark was also noticeably 
higher than their average annual rates of increase over the 1979-2006 
period.  The U.S. increase of 3.3 percent was also above its average 
annual increase since 1979 of 2.9 percent.
     
     While 14 of the economies had increases in output in 2006, 9 
economies had reductions in total hours worked in manufacturing.  The 
United Kingdom had the greatest decline (-3.1 percent) in hours in 2006, 
followed by Korea (-2.1 percent) and France (-2.0 percent).  Total hours 
worked increased in the United States by 0.9 percent, and by over 2 
percent in Japan and Italy.
     
     Manufacturing employment declined in 10 of the 16 economies in 2006.  
The United Kingdom experienced the steepest decline (-2.6 percent), 
followed by France (-2.0 percent).  The decline was 0.5 percent in the 
United States.  
     
     Seven of the sixteen economies experienced decreases in average hours 
worked in 2006, seven registered increases, and two had no change.  This 
compares to thirteen economies with declining average annual 
manufacturing hours over the 2000-2006 period.  Korea and Taiwan had the 
greatest declines in average hours worked in 2006, while the United 
States had the largest increase of 1.4 percent.

Manufacturing hourly compensation and unit labor costs
     Total labor compensation in manufacturing increased in all 16 
economies in 2006, from 0.5 percent in France to 5.7 percent in Norway.  
For most, the increases were between 2 and 4 percent.  Total labor 
compensation in U.S. manufacturing increased by 3.4 percent in 2006, and 
increased at a 3.6 percent average annual rate over the 1979-2006 
period.  (See tables A and B.)
     
     Hourly compensation in manufacturing also increased in all 16 
economies in 2006.  The greatest increases were in the United Kingdom 
(7.0 percent), Korea (6.8 percent), and Australia (6.5 percent).  Japan 
had the lowest rate of increase in 2006 (0.5 percent).  The U.S. 
increase of 2.5 percent in hourly compensation was below its average 
annual increase since 1979.  (See tables A and B.)
     
-5-
     
     Unit labor costs, expressed in national currencies, declined in nine 
countries in 2006, and increased in seven.  The largest increase 
occurred in Australia (+6.2 percent) and the greatest decline was in 
Taiwan (-4.4 percent).  Unit labor costs were about unchanged in U.S. 
manufacturing at +0.1 percent.
     
     Expressed in U.S. dollars, manufacturing unit labor costs increased 
in ten economies in 2006, and declined in six.  The unit labor costs of 
three economies, Korea, the Netherlands, and Spain, went from decreases 
to increases when computed on a U.S. dollar basis.  This reversal 
happened because of the appreciation of their currencies versus the 
dollar.  Korea, with the greatest currency appreciation, experienced the 
greatest reversal, from -3.6 to +3.5 percent.
     
     Movements in exchange rates often are the dominant force behind 
changes in comparative unit labor costs and international 
competitiveness.  In 2006 the U.S. dollar weakened against most of the 
currencies being compared.  The only exceptions were Japan, Australia, 
and Taiwan, where the currencies depreciated against the dollar.  This 
depreciation of the U.S. dollar against most currencies continues a 
trend that began after 2000.  In 2006 the dollar fell by 0.9 percent 
against the euro, following a decline of 0.1 percent in 2005.
     
-6-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                  Output per hour


      United States                4.0         2.8         3.7         5.5         5.1         3.4         2.4

      Canada                       2.3         2.1         3.4         3.8         0.5         3.7         0.0
      Australia                    2.9         2.9         2.9         3.8         2.0         1.0         0.3
      Japan                        3.6         3.8         3.3         3.4         3.5         4.0         2.3
      Korea, Republic of            NA          NA         9.4        10.8         7.4         6.8        10.8
      Taiwan                       5.7         6.1         4.7         5.6         6.0         7.2         6.9

      Belgium                      3.3         4.2         3.1         2.2         2.8         2.8         2.1
      Denmark                      2.4         2.2         2.7         1.8         3.0         2.0         4.0
      France                       3.8         3.6         3.8         4.6         3.4         4.3         3.7
      Germany (2)                  2.9         2.1         2.9         3.7         3.8         5.6         6.7
      Italy                        1.7         2.8         2.7         0.9        -0.6        -0.1         1.4
      Netherlands                  3.4         3.4         3.7         3.3         3.1         3.5         3.1
      Norway                       2.0         1.9         0.1         1.4         4.3         2.4         3.3
      Spain                        2.5         3.3         3.1         0.8         1.8         0.8         3.8
      Sweden                       4.8         2.5         5.8         7.2         6.5         6.2         6.5
      United Kingdom               3.6         4.1         3.1         2.2         4.4         3.6         4.5


                                                       Output


      United States                2.9         2.2         3.6         5.4         1.7         2.2         3.3

      Canada                       2.2         1.9         2.2         6.2        -0.4         0.7        -1.3
      Australia                    1.4         1.6         0.8         2.6         0.7         0.2        -1.3
      Japan                        2.6         4.7         0.4         1.2         1.8         2.6         4.8
      Korea, Republic of           8.9        10.7         8.2         7.9         6.9         7.1         8.4
      Taiwan                       6.0         7.4         4.4         5.8         4.9         6.6         7.2

      Belgium                      1.7         2.6         0.6         2.1         0.6        -0.5         2.5
      Denmark                      1.4         1.3         2.1         1.7         0.7         1.6         5.1
      France                       1.6         1.3         0.9         3.5         1.1         1.3         1.6
      Germany (2)                  1.2         1.2        -1.0         2.2         2.1         3.3         5.5
      Italy                        1.3         2.6         1.6         0.7        -0.8        -2.5         3.7
      Netherlands                  2.1         2.4         2.0         3.3         0.7         0.0         2.3
      Norway                       0.8        -0.5         0.7         1.4         2.6         3.6         4.5
      Spain                        2.2         2.1         0.6         5.0         1.3         0.3         3.3
      Sweden                       3.8         1.8         3.8         7.4         4.5         4.1         5.7
      United Kingdom               0.6         0.9         0.5         1.3        -0.3        -1.2         1.3
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page
                
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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                    Total hours


      United States               -1.0        -0.6        -0.1        -0.1        -3.2        -1.2         0.9

      Canada                      -0.1        -0.2        -1.2         2.3        -0.9        -2.8        -1.3
      Australia                   -1.4        -1.3        -2.0        -1.2        -1.2        -0.8        -1.5
      Japan                       -1.0         0.8        -2.8        -2.2        -1.6        -1.3         2.5
      Korea, Republic of            NA          NA        -1.1        -2.6        -0.5         0.2        -2.1
      Taiwan                       0.2         1.2        -0.3         0.1        -1.0        -0.6         0.3

      Belgium                     -1.6        -1.6        -2.4        -0.1        -2.1        -3.2         0.5
      Denmark                     -1.0        -1.0        -0.7        -0.1        -2.2        -0.4         1.0
      France                      -2.1        -2.2        -2.8        -1.1        -2.2        -2.8        -2.0
      Germany (2)                 -1.7        -0.9        -3.8        -1.4        -1.7        -2.2        -1.1
      Italy                       -0.4        -0.2        -1.0        -0.2        -0.2        -2.4         2.3
      Netherlands                 -1.2        -1.0        -1.7         0.0        -2.3        -3.3        -0.8
      Norway                      -1.2        -2.3         0.6         0.0        -1.6         1.1         1.1
      Spain                       -0.3        -1.2        -2.4         4.1        -0.5        -0.5        -0.5
      Sweden                      -1.0        -0.7        -1.9         0.3        -1.9        -2.0        -0.8
      United Kingdom              -2.9        -3.1        -2.6        -0.9        -4.5        -4.6        -3.1


                                                     Employment


      United States               -1.1        -0.8        -0.5         0.0        -3.2        -0.6        -0.5

      Canada                      -0.2        -0.3        -1.5         2.2        -0.8        -1.6        -1.5
      Australia                   -1.4        -1.3        -2.3        -1.1        -1.1        -1.7        -1.2
      Japan                       -0.7         1.0        -1.6        -2.0        -1.9        -0.8         1.7
      Korea, Republic of            NA          NA        -0.8        -2.5         0.6         0.9        -0.4
      Taiwan                       0.8         2.0        -0.3         0.4         0.0         0.4         1.1

      Belgium                     -1.5        -1.6        -2.2        -0.6        -1.5        -0.9        -0.4
      Denmark                     -1.1        -0.4        -1.2        -1.2        -2.2        -2.0         0.2
      France                      -1.6        -1.7        -2.5        -0.3        -1.8        -2.6        -2.0
      Germany (2)                 -1.3        -0.1        -4.2        -0.8        -1.4        -1.7        -1.0
      Italy                       -0.7        -0.8        -1.9        -0.2         0.0        -1.7         1.2
      Netherlands                 -1.1        -0.8        -1.6         0.1        -2.2        -3.0        -0.8
      Norway                      -1.2        -2.2         0.4         0.2        -1.8         0.5         1.3
      Spain                        0.1        -0.7        -2.0         3.3         0.8         1.0         0.0
      Sweden                      -1.4        -1.0        -3.5         0.0        -1.6        -2.2        -0.7
      United Kingdom              -2.8        -2.9        -2.4        -1.4        -4.3        -4.5        -2.6
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

-8-

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                                    Average hours


      United States                0.1         0.2         0.4        -0.1        -0.1        -0.6         1.4

      Canada                       0.1         0.1         0.3         0.1        -0.2        -1.3         0.1
      Australia                    0.0         0.0         0.3        -0.1        -0.1         0.9        -0.4
      Japan                       -0.3        -0.2        -1.3        -0.2         0.2        -0.5         0.8
      Korea, Republic of            NA          NA        -0.2        -0.1        -1.1        -0.6        -1.7
      Taiwan                      -0.6        -0.8         0.0        -0.3        -1.0        -1.0        -0.8

      Belgium                     -0.1         0.0        -0.2         0.5        -0.5        -2.3         0.8
      Denmark                      0.1        -0.5         0.6         1.1         0.0         1.7         0.8
      France                      -0.5        -0.5        -0.3        -0.8        -0.4        -0.2         0.0
      Germany (2)                 -0.4        -0.9         0.4        -0.6        -0.2        -0.5        -0.1
      Italy                        0.4         0.6         0.9         0.0        -0.2        -0.7         1.0
      Netherlands                 -0.1        -0.2         0.0        -0.1        -0.1        -0.4         0.1
      Norway                       0.0        -0.1         0.2        -0.2         0.1         0.6        -0.2
      Spain                       -0.4        -0.5        -0.4         0.8        -1.3        -1.5        -0.5
      Sweden                       0.4         0.3         1.7         0.2        -0.2         0.2         0.0
      United Kingdom              -0.1        -0.2        -0.1         0.5        -0.2        -0.1        -0.4


                                Total labor compensation(3): National currency basis


      United States                3.6         4.9         3.4         4.5         0.8         3.0         3.4

      Canada                       4.5         6.5         2.4         5.2         1.9         0.9         1.3
      Australia                     NA          NA         3.2         3.1         3.8         4.1         4.9
      Japan                        1.9         5.5         0.7        -1.0        -1.3        -0.1         3.0
      Korea, Republic of          13.7        19.6        17.6         5.4         7.3         8.2         4.5
      Taiwan                       7.5        13.5         6.8         3.6         1.1         3.7         2.5

      Belgium                      2.7         4.4         1.3         1.9         1.4         0.9         2.6
      Denmark                      4.1         7.0         2.3         2.8         1.6         1.7         3.6
      France                       3.6         7.3         1.7         1.7         0.3        -3.4         0.5
      Germany (2)                  2.6         4.6         2.4         1.6         0.3        -1.1         1.2
      Italy                        6.4        11.4         3.9         2.6         2.7         0.5         4.2
      Netherlands                  2.7         3.1         2.7         3.4         1.5        -1.4         2.0
      Norway                       5.0         6.4         4.1         5.1         2.9         5.0         5.7
      Spain                        6.9        10.1         5.5         5.6         3.3         3.5         3.0
      Sweden                       5.2         8.4         2.0         5.3         2.0         0.3         2.2
      United Kingdom               3.9         7.1         1.5         3.3         0.8        -0.5         3.7
      --------------------------------------------------------------------------------------------------------

                                                                                Continued on next page

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                  Hourly compensation(3): National currency basis


      United States                4.7         5.5         3.5         4.7         4.2         4.2         2.5

      Canada                       4.6         6.8         3.6         2.9         2.9         3.9         2.6
      Australia                     NA          NA         5.4         4.3         5.1         5.0         6.5
      Japan                        2.8         4.6         3.6         1.2         0.4         1.1         0.5
      Korea, Republic of            NA          NA        18.9         8.1         7.8         8.0         6.8
      Taiwan                       7.3        12.1         7.1         3.4         2.1         4.4         2.1

      Belgium                      4.3         6.1         3.8         2.0         3.5         4.2         2.1
      Denmark                      5.2         8.1         2.9         2.9         3.9         2.0         2.5
      France                       5.9         9.8         4.6         2.8         2.5        -0.6         2.6
      Germany (2)                  4.4         5.6         6.4         3.1         2.0         1.1         2.4
      Italy                        6.8        11.6         5.0         2.8         2.9         3.0         1.8
      Netherlands                  4.0         4.1         4.5         3.4         3.9         2.0         2.8
      Norway                       6.2         9.0         3.4         5.2         4.6         3.9         4.6
      Spain                        7.2        11.4         8.2         1.4         3.8         4.1         3.5
      Sweden                       6.2         9.1         4.0         5.1         3.9         2.3         3.0
      United Kingdom               7.0        10.6         4.2         4.2         5.5         4.3         7.0


                                    Unit labor costs(3): National currency basis


      United States                0.7         2.6        -0.2        -0.8        -0.8         0.8         0.1

      Canada                       2.2         4.6         0.3        -0.9         2.3         0.2         2.6
      Australia                     NA          NA         2.4         0.5         3.1         4.0         6.2
      Japan                       -0.7         0.8         0.3        -2.2        -3.1        -2.7        -1.8
      Korea, Republic of           4.4         8.1         8.7        -2.4         0.4         1.1        -3.6
      Taiwan                       1.5         5.6         2.3        -2.1        -3.6        -2.7        -4.4

      Belgium                      1.0         1.8         0.7        -0.2         0.7         1.5         0.1
      Denmark                      2.7         5.7         0.2         1.1         0.9         0.1        -1.4
      France                       2.0         5.9         0.7        -1.7        -0.8        -4.7        -1.0
      Germany (2)                  1.5         3.3         3.4        -0.5        -1.8        -4.2        -4.0
      Italy                        5.0         8.5         2.3         1.9         3.6         3.1         0.4
      Netherlands                  0.6         0.7         0.7         0.1         0.7        -1.4        -0.3
      Norway                       4.2         6.9         3.4         3.7         0.3         1.4         1.2
      Spain                        4.6         7.8         4.9         0.5         2.0         3.2        -0.3
      Sweden                       1.3         6.5        -1.7        -1.9        -2.4        -3.6        -3.3
      United Kingdom               3.3         6.2         1.0         2.0         1.0         0.7         2.4
      --------------------------------------------------------------------------------------------------------

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                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 16 countries or areas, 1979-2006

                                          Average annual rates of change(1)

      --------------------------------------------------------------------------------------------------------
      Country or area        1979-2006   1979-1990   1990-1995   1995-2000   2000-2006   2004-2005   2005-2006
      --------------------------------------------------------------------------------------------------------


                                       Unit labor costs(3): U.S. dollar basis


      United States                0.7         2.6        -0.2        -0.8        -0.8         0.8         0.1

      Canada                       2.4         4.6        -2.9        -2.4         7.1         7.6         9.6
      Australia                     NA          NA         1.3        -4.2         7.6         7.6         4.9
      Japan                        1.6         4.6         9.4        -4.8        -4.3        -4.4        -7.0
      Korea, Republic of           1.8         4.4         6.9        -9.5         3.2        13.1         3.5
      Taiwan                       1.8         8.5         2.7        -5.3        -4.2         1.1        -5.6

      Belgium                      0.6         0.6         3.3        -7.7         6.0         1.5         1.0
      Denmark                      2.3         4.1         2.2        -6.1         6.2        -0.1        -0.5
      France                       1.2         3.6         2.5        -8.4         4.4        -4.6        -0.1
      Germany (2)                  2.1         4.5         5.9        -8.0         3.4        -4.1        -3.1
      Italy                        2.6         5.0        -3.8        -3.1         9.0         3.2         1.3
      Netherlands                  1.1         1.6         3.3        -7.6         6.0        -1.3         0.6
      Norway                       3.3         4.9         3.1        -2.9         5.8         6.1         1.7
      Spain                        2.0         3.8         0.8        -6.6         7.3         3.3         0.6
      Sweden                      -0.7         3.4        -5.3        -6.7         1.2        -5.2        -2.0
      United Kingdom               2.7         4.5        -1.4         1.1         4.4         0.0         3.7


                                                  Exchange rates(4)


      United States                 --          --          --          --          --          --          --

      Canada                       0.1         0.0        -3.2        -1.6         4.6         7.4         6.8
      Australia                   -1.5        -3.2        -1.1        -4.7         4.4         3.6        -1.2
      Japan                        2.4         3.8         9.1        -2.7        -1.3        -1.8        -5.3
      Korea, Republic of          -2.5        -3.4        -1.7        -7.3         2.9        11.9         7.3
      Taiwan                       0.4         2.7         0.3        -3.3        -0.6         3.9        -1.2

      Belgium                     -0.3        -1.2         2.5        -7.6         5.3         0.1         0.9
      Denmark                     -0.5        -1.5         2.0        -7.1         5.3        -0.1         0.9
      France                      -0.8        -2.2         1.8        -6.8         5.3         0.1         0.9
      Germany (2)                  0.6         1.1         2.5        -7.5         5.3         0.1         0.9
      Italy                       -2.3        -3.3        -6.0        -4.9         5.3         0.1         0.9
      Netherlands                  0.5         0.9         2.6        -7.6         5.3         0.1         0.9
      Norway                      -0.9        -1.9        -0.3        -6.4         5.5         4.6         0.5
      Spain                       -2.5        -3.7        -3.9        -7.1         5.3         0.1         0.9
      Sweden                      -2.0        -2.9        -3.7        -4.9         3.7        -1.6         1.3
      United Kingdom              -0.5        -1.6        -2.4        -0.8         3.3        -0.7         1.3
      --------------------------------------------------------------------------------------------------------
      NA=data not available
      (1) Rates of change based on the compound rate method.
      (2) Data for years before 1991 pertain to the former West Germany.
      (3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
      (4) Value of foreign currency relative to the U.S. dollar.
     
-11-

Trade-weighted unit labor costs
     BLS constructs indexes of U.S. unit labor cost trends relative to a 
trade-weighted average of unit labor cost trends in the other economies 
to take account of differences in the relative importance of foreign 
economies to U.S. trade in manufactured goods.  Relative trade-weighted 
unit labor cost indexes are calculated on both a national currency and a 
U.S. dollar basis.  
     
     In this release, the relative U.S. trade-weighted indexes are 
estimated against 14 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.
     
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 3. U.S. manufacturing 
unit labor costs relative to 14(1) other economies, 1979-2006
      
     In the chart, the dotted line shows that, on a national currency 
basis, U.S. unit labor costs tended to fall more or increase less than 
unit labor costs in the other economies throughout this period.
     
     The solid line compares the unit labor costs on a U.S. dollar basis.  
From 1979 to 1985, and again from 1995 to 2001, U.S. unit labor costs on 
a U.S. dollar basis generally rose more or declined less than in the 
other economies, due to the appreciation of the dollar.  Since 2001, 
relative U.S. unit labor costs declined with the weakening of the U.S. 
dollar. 

-12-

                              Table C. U.S. manufacturing unit labor
                          costs relative to 14(1) competitors, 1979-2006

                  ----------------------------------------------------------------
                                 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     111.4     101.2     112.7     109.9     102.6
                  1981     117.6     121.0      97.2     117.6     109.1     107.9
                  1982     127.4     131.5      96.9     127.4     108.8     117.1
                  1983     122.7     133.9      91.6     122.7     107.0     114.7
                  1984     123.8     133.8      92.5     123.8     100.4     123.3
                  1985     126.2     136.2      92.7     126.2      98.3     128.3
                  1986     130.1     141.7      91.8     130.1     117.6     110.6
                  1987     125.4     144.9      86.6     125.4     134.3      93.4
                  1988     126.4     147.6      85.6     126.4     146.9      86.1
                  1989     129.4     151.7      85.3     129.4     149.0      86.8
                  1990     133.2     158.2      84.2     133.2     162.0      82.3
                  1991     136.7     166.4      82.1     136.7     171.7      79.6
                  1992     137.8     169.9      81.1     137.8     176.1      78.2
                  1993     136.7     170.7      80.1     136.7     168.7      81.0
                  1994     134.1     168.1      79.8     134.1     165.7      80.9
                  1995     131.6     169.7      77.5     131.6     175.1      75.2
                  1996     129.1     171.5      75.2     129.1     171.0      75.5
                  1997     127.1     169.2      75.1     127.1     157.2      80.8
                  1998     125.7     170.2      73.9     125.7     146.8      85.6
                  1999     124.4     166.8      74.6     124.4     146.9      84.7
                  2000     126.2     162.4      77.7     126.2     138.7      91.0
                  2001     127.7     168.0      76.0     127.7     135.0      94.6
                  2002     123.9     168.4      73.6     123.9     136.6      90.7
                  2003     124.7     167.9      74.2     124.7     152.9      81.6
                  2004     119.1     166.2      71.6     119.1     163.5      72.9
                  2005     120.0     164.6      72.9     120.0     167.1      71.8
                  2006     120.1     164.3      73.1     120.1     170.6      70.4
                  ----------------------------------------------------------------
                  (1) Australia has been omitted from this table because data are 
                      not available before 1990.-13-

Technical Notes

The comparisons in this release are based on data available to the 
Bureau of Labor Statistics as of the end of August 2007 from the 
national statistical offices of the 16 economies compared.

Definitions. Labor productivity is defined as real output per hour 
worked. Although the labor productivity measure presented in this 
release relates output to the hours worked of persons employed in 
manufacturing, it does not measure the specific contributions of labor 
as a single factor of production. Rather, it reflects the joint effects 
of many influences, including new technology, capital investment, 
capacity utilization, energy use, and managerial skills, as well as the 
skills and efforts of the workforce.

Unit labor costs are defined as the cost of labor input required to 
produce one unit of output. They are computed as compensation in nominal 
terms divided by real output. Unit labor costs can also be computed by 
dividing hourly compensation by output per hour, that is, by labor 
productivity.

Methodology. BLS constructs trends of manufacturing labor productivity, 
hourly compensation costs, and unit labor costs from three basic 
aggregate measures: output, total labor hours, and total compensation. 
The hours and compensation measures refer to employees (wage and salary 
earners) in Belgium and Taiwan. For all other economies, the measures 
refer to all employed persons, including employees, self-employed 
persons, and unpaid family workers.

In general, the measures relate to total manufacturing as defined by the 
International Standard Industrial Classification (ISIC). However, the 
measures for France include parts of mining. Data for the United States 
are in accordance with the North American Industry Classification System 
(NAICS 97), except compensation data before 1987. Canadian data are in 
accordance with NAICS 97 starting in 1961.

The data for the most recent years are based on the United Nations 
System of National Accounts 1993 (SNA 93) or its sub-system, the 
European System of Integrated National Accounts (ESA 95). For earlier 
years, data were compiled according to previously used systems.

To obtain historical time series, BLS may link together data series 
which were compiled according to different accounting systems by 
national statistical offices.

Output. For most economies, the output measures are real value added in 
manufacturing from national accounts. However, output for Japan prior to 
1970 and for the Netherlands prior to 1960 are indexes of industrial 
production. The manufacturing value added measures for the United 
Kingdom are essentially identical to their indexes of industrial 
production.

-14-

Most economies now estimate manufacturing real output using moving price 
weights, as recommended by SNA 93. However, many earlier time periods 
within the historical real output series have been estimated using fixed 
price weights, with the weights updated periodically (for example, every 
5 or 10 years). Taiwan and Korea still use fixed price weights to 
estimate real output.

Measures of real output also may differ among economies because of 
different approaches to estimating the prices of high-technology 
products like computers and, in general, of products that undergo rapid 
quality change.

For the United States, the output measure for the manufacturing sector 
is a chain-weighted index of real gross product originating (deflated 
value added) produced by the Bureau of Economic Analysis (BEA) of the 
U.S. Department of Commerce. For more information on the U.S. measure, 
see "Improved Estimates of Gross Product by Industry for 1947-98," 
Survey of Current Business, June 2000, pp. 24-38 and "Gross Domestic 
Product by Industry for 1947-86. New Estimates Based on the North 
American Industry Classification System," Survey of Current Business, 
December 2005, pp. 70-84.

The U.S. output series used for international comparisons differs from 
the manufacturing output series that BLS publishes as part of its major 
sector productivity and costs measures for the United States. The 
international comparisons program uses a value added output concept, 
while the major sector series is on a sectoral output basis. Sectoral 
output is gross output less intrasector sales and transfers. The U.S. 
major sector productivity and costs measures can be found at 
http://www.bls.gov/lpc/home.htm. For information on sectoral output, see 
"Measurement of productivity growth in U.S. manufacturing," Monthly 
Labor Review, July 1995, pp. 13-28.

Value added measures have been used for the international comparisons 
series because the data are more readily available from the economies' 
national accounts, whereas sectoral output would require a complex 
estimation procedure. Even though BLS has determined that sectoral 
output is the correct concept for U.S. measures of productivity, there 
are other considerations that may make value added a better concept for 
international comparisons of labor productivity, such as differences 
among economies in the extent of vertical integration of industries.

Labor Input. For all of the economies for the most recent years, the 
term "hours" refers to hours worked. For some earlier years, BLS uses 
other hours measures. 

For the United States, the employment and hours data series beginning 
with 1987 are taken from the NAICS-based manufacturing all-employed 
series published by BLS as part of the major sector productivity and 
cost measures. For the period before 1987, these series are linked to 
NAICS-based, employees-only data from the Current Employment Statistics 
(CES) program. 

For most other economies, recent years' aggregate hours series are 
obtained from national statistical offices, usually from national 
accounts. However, for some economies and for 

-15-

earlier years, BLS calculates the aggregate hours series using 
employment figures published with the national accounts, or other 
comprehensive employment series, and data on average hours worked.

Compensation (Labor Cost). The compensation measures are from national 
accounts data and are in nominal terms. Compensation includes employer 
expenditures for legally required insurance programs and contractual and 
private benefit plans, in addition to all payments made in cash or in 
kind directly to employees. When data for the self-employed are not 
available, total compensation is estimated by assuming the same average 
compensation for the self-employed as for employees.

Labor cost is defined as compensation plus employment taxes minus 
employment subsidies, i.e. the cost to employers of hiring labor. For 
most economies, labor cost is the same as compensation. However, for 
Australia, Canada, France, and Sweden, compensation is increased to 
account for important taxes on payroll or employment. For the United 
Kingdom, compensation is reduced between 1967 and 1991 to account for 
subsidies.

Data for Germany. German data prior to 1991 pertain to the former West 
Germany. The data series are linked in 1991.

Data for Australia. Australian data are published by fiscal years, which 
run from July 1 through June 30. The Australian Bureau of Statistics 
provides unpublished calendar-year data for real value added, 
employment, and hours worked. For compensation, BLS estimates calendar-
year series using two-year moving averages of the data for fiscal years. 
Manufacturing compensation data are not available for years prior to 
1990.

Data for Recent Years. The measures for recent years may be estimates 
based on various current indicators until national accounts and other 
statistics become available.

Trade-Weighted Measures. The trade weights used to calculate the 
relative unit labor cost indexes of the United States and the other 
economies are based on the relative dollar value of U.S. trade in 
manufactured commodities (exports plus imports) with each economy in 
2005. The trade data are compiled by the U.S. Census Bureau.

The following weights were used for the entire period for which trade-
weighted unit labor cost measures are produced:

-16-

                Weight                          Weight

Canada          36.80           Germany         10.33
Japan           16.59           Italy            3.65
Korea            6.20           Netherlands      3.37
Taiwan           4.89           Norway           0.42
Belgium          2.70           Spain            1.23
Denmark          0.60           Sweden           1.52
France           4.73           United Kingdom   6.97

Level Comparisons. The BLS measures are limited to trend comparisons. 
BLS does not prepare level comparisons of manufacturing productivity and 
unit labor costs because of data limitations and technical problems in 
comparing the levels of manufacturing output among economies. Each 
economy measures manufacturing output in its own currency units. To 
compare outputs among economies, a common unit of measure is needed. 
Market exchange rates are not suitable as a basis for comparing output 
levels. What is needed are purchasing power parities, which are the 
number of foreign currency units required to buy goods and services 
equivalent to what can be bought with one unit of U.S. currency.

Purchasing power parities are available for total gross domestic product 
(GDP) from the Organization for Economic Cooperation and Development 
(OECD). However, these parities are derived for expenditures made by 
consumers, business, and government for goods and services - not for 
value added by industry. Therefore, they do not provide purchasing power 
parities by industry. The parities developed for total GDP are not 
suitable for each component industry, such as manufacturing.

European exchange rates. On Jan. 1, 1999, 11 European countries joined 
the European Monetary Union (EMU). In subsequent years they were joined 
by Greece and Slovenia. 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. 

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      166.386 Spanish pesetas

The currency exchange rates cited in this publication are annual 
averages of daily buying rates in New York City.