Research >> Economics
4Q2016 Productivity Growth Increased 1.3%
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Nonfarm business sector labor productivity increased at a 1.3-percent annual rate during the fourth quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 2.2 percent and hours worked increased 0.9 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2015 to the fourth quarter of 2016, productivity increased 1.0 percent, reflecting increases in output and hours worked of 2.2 percent and 1.1 percent, respectively. Annual average productivity increased 0.2 percent from 2015 to 2016.
Unit labor costs in the nonfarm business sector increased 1.7 percent in the fourth quarter of 2016, reflecting a 3.0-percent increase in hourly compensation and a 1.3-percent increase in productivity. Unit labor costs increased 1.9 percent over the last four quarters.
Manufacturing sector labor productivity increased 0.7 percent in the fourth quarter of 2016, as output increased 0.8 percent and hours worked were unchanged. Output per hour increased 0.1 percent in the durable goods manufacturing sector and 1.8 percent in the nondurable goods sector. Over the last four quarters, manufacturing sector productivity increased 0.4 percent, output increased 0.2 percent, and hours worked decreased 0.2 percent. Unit labor costs in manufacturing increased 3.3 percent in the fourth quarter of 2016 and rose 2.2 percent from the same quarter a year ago. Hourly compensation increased 4.1 percent in the fourth quarter of 2016.
Annual averages
Table C1 presents annual average changes for the most recent 5 years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 0.2 percent in 2016, as output and hours increased 1.7 percent and 1.5 percent, respectively. The increase in hours was the smallest since a 0.1-percent decrease in 2010. Productivity has increased at an annual rate of less than 1.0 percent in each of the last 6 years. The average annual rate of nonfarm business sector productivity growth from 2007 to 2016--corresponding to the current business cycle--is 1.1 percent, well below the long-term rate from 1947 to 2016 of 2.1 percent.
Unit labor costs in the nonfarm business sector rose 2.6 percent in 2016, reflecting increases of 2.8 percent in hourly compensation and 0.2 percent in productivity. The increase in unit labor costs is the largest since 2007, when unit labor costs rose 2.7 percent. Real hourly compensation, which takes into account changes in consumer prices, increased 1.5 percent in 2016.
In the manufacturing sector, productivity increased 0.6 percent in 2016, as output increased 0.2 percent and hours worked decreased 0.4 percent. The decrease in the annual hours series was the first since a 12.9-percent annual decrease in 2009. Manufacturing sector productivity has increased at an annual rate of less than 1.0 percent in each of the last 4 years. The average annual rate of manufacturing productivity growth from 2007 to 2016 is 1.7 percent, which is below the long-term rate from 1987 to 2016 of 3.2 percent. Unit labor costs increased 2.6 percent in 2016.
Revised measures
Revised and previously published measures for the third quarter of 2016 are shown in tables A2 and B1 and cover the following major sectors: nonfarm business, business, manufacturing, and nonfinancial corporations.
In the third quarter of 2016, nonfarm business productivity was revised up 0.4 percentage point, to an increase of 3.5 percent. Unit labor costs in the nonfarm business sector increased 0.2 percent in the third quarter--rather than 0.7 percent as previously reported.
In the manufacturing sector, productivity was revised down 0.4 percentage point to show no change in the third quarter of 2016. Manufacturing unit labor costs increased 3.3 percent, the same rate as previously reported.
In the nonfinancial corporate sector, productivity was revised down 0.6 percentage point in the third quarter of 2016, to an increase of 6.5 percent. This downward revision to productivity is due primarily to a 0.5-percentage point downward revision to output.
Posted: February 2, 2017 Thursday 08:30 AM