Research >> Economics
4Q2015 Productivity Growth Decreased 3.0%
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Nonfarm business sector labor productivity decreased at a 3.0-percent annual rate during the fourth quarter of 2015, the U.S. Bureau of Labor Statistics reported today, as output increased 0.1 percent and hours worked increased 3.3 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2014 to the fourth quarter of 2015, productivity increased 0.3 percent. Annual average productivity increased 0.6 percent from 2014 to 2015.
Unit labor costs in the nonfarm business sector increased 4.5 percent in the fourth quarter of 2015, reflecting a 1.3-percent increase in hourly compensation and a 3.0-percent decrease in productivity. Unit labor costs increased 2.8 percent over the last four quarters.
Manufacturing sector labor productivity decreased 0.4 percent in the fourth quarter of 2015, as output increased 0.5 percent and hours worked increased 0.9 percent. Productivity decreased 1.0 percent in the durable goods manufacturing sector and increased 0.3 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.5 percent, as output increased 1.1 percent and hours decreased 0.4 percent. Unit labor costs in manufacturing increased 3.6 percent in the fourth quarter of 2015 and increased 1.9 percent from the same quarter a year ago.
Table C presents annual average changes for the most recent five years for the nonfarm business sector and the total manufacturing sector. Nonfarm business sector productivity grew 0.6 percent in 2015, as output and hours increased 2.8 percent and 2.2 percent, respectively. The increase in hours was due solely to an increase in employment of 2.3 percent, which was the largest employment gain since a 2.3-percent increase in 1998. Productivity increased at an annual rate of less than 1.0 percent in each of the last five years, reflecting steady growth in both output and hours during these years. The average annual rate of productivity growth from 2007 to 2015--corresponding to the current business cycle--is 1.2 percent, well below the long-term rate from 1947 to 2015 of 2.1 percent.
Unit labor costs in the nonfarm business sector rose 2.4 percent in 2015, reflecting increases of 3.0 percent in hourly compensation and 0.6 percent in productivity. The increases in unit labor costs and hourly compensation are the largest since 2007, when these series rose 2.7 percent and 4.3 percent, respectively. Real hourly compensation, which takes into account changes in consumer prices, increased 2.8 percent in 2015. This is the largest annual increase in real hourly compensation since a 3.9-percent increase in 2000.
In the manufacturing sector, productivity increased 1.3 percent in 2015, which is the same rate of increase as in 2014. The average annual rate of productivity growth from 2007 to 2015 is 2.1 percent, which is below the long-term rate from 1987 to 2015 of 3.4 percent. Unit labor costs increased 1.3 percent in 2015, which is similar to a 1.4-percent increase in 2014. Real hourly compensation in manufacturing increased 2.4 percent in 2015.
Revised measures
In the third quarter of 2015, nonfarm business productivity was revised down 0.1 percentage point, to an increase of 2.1 percent. Unit labor costs in the nonfarm business sector increased 1.9 percent in the third quarter--rather than 1.8 percent as previously reported.
In the manufacturing sector, productivity was revised down 0.1 percentage point, to an increase of 5.0 percent. Manufacturing unit labor costs increased 2.3 percent, the same rate as previously reported.
In the nonfinancial corporate sector, productivity was revised down 1.2 percentage points in the third quarter of 2015, to an increase of 1.7 percent. This downward revision to productivity is due solely to a 1.2 percentage point downward revision to output.
Posted: February 4, 2016 Thursday 08:30 AM