PRODUCTIVITY AND COSTS: Second Quarter 2004
The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data-as measured by output per hour of all persons-for the second quarter of 2004. The seasonally adjusted annual rates of productivity change in the second quarter were:
- 1.5 percent in the business sector and
2.5 percent in the nonfarm business sector.
In manufacturing, the revised productivity changes in the second quarter were:
- 6.9 percent in manufacturing,
4.9 percent in durable goods manufacturing, and
9.7 percent in nondurable goods manufacturing.
Business
From the first quarter to the second quarter of 2004, productivity in the business sector grew at a 1.5 percent annual rate, as output increased 3.2 percent and hours worked by all persons engaged in the sector rose 1.6. The productivity increase marks a deceleration from the increases posted during the four quarters of 2003 and the first quarter of 2004; it is the smallest increase since a 1.2-percent rise was posted in the fourth quarter of 2002 (seasonally adjusted annual rates).Hourly compensation in the business sector increased 3.7 percent in the second quarter of 2004, a faster rise than the 2.8 percent increase one quarter earlier (as revised). Hourly compensation includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, fell 1.0 percent in the second quarter of 2004, after falling 0.8 percent in the first quarter of the year. The second-quarter decline was the largest since real hourly compensation fell 1.6 percent in the second quarter of 2000.
Unit labor costs rose 2.1 percent in the second quarter of 2004, after dropping 1.1 percent in the first quarter. The second-quarter rise was the fastest since the first quarter of 2001, when unit labor costs rose 7.4 percent. The implicit price deflator for the business sector rose 3.3 percent in the second quarter, up from a 2.1-percent rise in the first quarter. The second-quarter increase also was the fastest in recent years; the last comparable increase in the implicit price deflator occurred when it rose 3.4 percent in the first quarter of 2000.
Nonfarm business
Productivity in the nonfarm business sector grew at a 2.5 percent annual rate in the second quarter of 2004, as output grew 3.5 percent and hours of all persons increased 1.0 percent. In the first quarter of 2004, output per hour in the nonfarm business sector had risen 3.7 percent, as output and hours rose 5.7 and 2.0 percent, respectively. As in the larger business sector, the second-quarter increase in labor productivity was the smallest since the fourth quarter of 2002.Hourly compensation rose 4.3 percent in the second quarter of 2004, following a 2.0 percent advance in the first quarter. When the rise in consumer prices was taken into account, real hourly compensation declined by 0.4 percent in the second quarter of 2004.
Unit labor costs increased 1.8 percent in the second quarter of 2004; they had fallen 1.6 percent in the first quarter. The implicit price deflator for nonfarm business output rose 2.9 percent in the second quarter of 2004 and 2.0 percent one quarter earlier. The second quarter increase was the biggest since the first quarter of 2000, when it rose 3.3 percent (seasonally adjusted annual rates).
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