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Productivity increases 2.3% in third quarter 2011; unit labor costs fall 2.5%

PRODUCTIVITY AND COSTS
                     Third Quarter 2011, Revised


Nonfarm business sector labor productivity increased at a 2.3 percent 
annual rate during the third quarter of 2011, the U.S. Bureau of Labor 
Statistics reported today, with output and hours worked rising 3.2 percent 
and 0.8 percent, respectively. (All quarterly percent changes in this 
release are seasonally adjusted annual rates.) From the third quarter of 
2010 to the third quarter of 2011, output increased 2.4 percent as hours 
rose 1.4 percent, resulting in a 0.9 percent increase in productivity. 
(See tables A and 2.) Labor productivity, or output per hour, is calculated by 
dividing an index of real output by an index of hours worked of all 
persons, including employees, proprietors, and unpaid family workers. 

The productivity measures released today are based on more recent and more 
complete data than were available for the preliminary report issued 
November 3. (See Revised measures.)

Unit labor costs in nonfarm businesses fell 2.5 percent in the third 
quarter of 2011, reflecting the 2.3 percent increase in output per hour 
combined with a 0.2 percent decline in hourly compensation. Unit labor 
costs rose 0.4 percent over the last four quarters. (See tables A and 2.) BLS 
defines unit labor costs as the ratio of hourly compensation to labor 
productivity; increases in hourly compensation tend to increase unit labor 
costs and increases in output per hour tend to reduce them.

Nonfarm business real hourly compensation decreased 3.2 percent in the 
third quarter of 2011, reflecting a 0.2 percent decline in hourly 
compensation combined with a 3.1 percent increase in consumer prices 
(seasonally adjusted annual rates). Real hourly compensation is the ratio 
of hourly compensation to consumer prices. This measure declined 2.3 
percent from the same quarter a year ago; this is the largest decline in 
this series which begins in 1948.

Manufacturing sector productivity grew 5.0 percent in the third quarter of 
2011, as output rose 4.6 percent and hours decreased 0.4 percent. 
Productivity jumped 9.5 percent in the durable goods sector and edged up 
0.1 percent in the nondurable goods sector. (See tables A, 3, 4, and 5.) 
From the third quarter of 2010 to the third quarter of 2011, manufacturing 
sector productivity increased 2.9 percent. Unit labor costs in 
manufacturing fell 5.1 percent in the third quarter of 2011 and decreased 
1.9 percent over the last four quarters.

The data sources and methods used in the preparation of the 
manufacturing output series differ from those used in preparing the 
business and nonfarm business output series, and these measures are not 
directly comparable. See Technical Notes for further information on 
data sources.

Third quarter data for the nonfinancial corporate sector was released 
today. Output per hour decreased 2.6 percent as output declined 0.8 
percent and hours grew 1.9 percent. Unit labor costs rose 3.0 percent. 
(See table C.)


Revised measures


Previous and revised productivity and related measures for the second and 
third quarters for the nonfarm business, business, and manufacturing 
sectors and for the second quarter for nonfinancial corporations are 
presented in tables B and C, respectively.

In the third quarter of 2011, nonfarm business sector productivity growth 
was 2.3 percent reflecting a downward revision to output combined with a 
slight upward revision to hours worked.  Unit labor costs were little 
changed, as the downward revision to productivity was offset by a downward 
revision to hourly compensation. In the manufacturing sector, productivity 
growth was 5.0 percent rather than 5.4 percent as previously reported. 
Unit labor costs declined 5.1 percent.

In the second quarter of 2011, nonfarm business sector productivity, 
output, and hours were unrevised. Unit labor costs fell 0.1 percent rather 
than increasing 2.8 percent due solely to a downward revision to hourly 
compensation. Manufacturing sector productivity declined 2.2 percent in 
the second quarter, slightly less than reported November 3. Unit labor 
costs increased 0.1 percent, much less than the 5.5 percent preliminary 
estimate, due to a steep downward revision to hourly compensation and the 
slight upward revision to productivity.  The large downward revision to 
manufacturing hourly compensation was concentrated in durable goods 
manufacturing industries.

Nonfinancial corporate sector productivity grew 3.2 percent in the second 
quarter of 2011, as revised. (See tables C and 6.) 


__________
The preliminary Productivity and Costs press release for the fourth quarter
of 2011 is scheduled to be released on Thursday, February 2, 2012 at 
8:30 a.m. (EST)



======================================================================================================
Table A. Revised third-quarter 2011 measures: percent change from previous quarter at annual rate 
(Q to Q) and from same quarter a year ago (Y to Y)

Sector                    Nonfarm                                        Durable         Nondurable
                          Business         Business      Manufacturing   Manufacturing   Manufacturing
                       Q to Q   Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y  Q to Q  Y to Y
------------------------------------------------------------------------------------------------------

Productivity            2.3      0.9     1.9     0.6     5.0     2.9     9.5     4.5     0.1     2.2
Output                  3.2      2.4     3.0     2.0     4.6     4.1     8.3     7.3     1.0     1.0
Hours                   0.8      1.4     1.0     1.5    -0.4     1.2    -1.1     2.6     0.9    -1.2
Hourly
 compensation          -0.2      1.4    -0.5     1.3    -0.4     0.9     0.2     0.4    -1.3     1.6
Real hourly 
 compensation          -3.2     -2.3    -3.5    -2.4    -3.4    -2.7    -2.8    -3.3    -4.2    -2.1
Unit labor
 costs                 -2.5      0.4    -2.4     0.7    -5.1    -1.9    -8.5    -4.0    -1.4    -0.6
======================================================================================================
Table B. Revised and previous measures: third quarter and second quarter 2011

Sector            Nonfarm                                             Durable           Nondurable
                  Business         Business         Manufacturing     Manufacturing     Manufacturing
              Revised Previous  Revised Previous  Revised Previous  Revised Previous  Revised Previous
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, third quarter 2011
                                
Productivity    2.3     3.1       1.9     2.8       5.0      5.4       9.5     9.9      0.1      0.7
Output          3.2     3.8       3.0     3.6       4.6      4.7       8.3     8.3      1.0      1.0
Hours           0.8     0.6       1.0     0.8      -0.4     -0.8      -1.1    -1.4      0.9      0.4
Hourly
 compensation  -0.2     0.6      -0.5     0.3      -0.4      0.6       0.2     1.7     -1.3     -1.4
Real hourly 
 compensation  -3.2    -2.4      -3.5    -2.7      -3.4     -2.4      -2.8    -1.3     -4.2     -4.3
Unit labor
 costs         -2.5    -2.4      -2.4    -2.4      -5.1     -4.6      -8.5    -7.4     -1.4     -2.1
------------------------------------------------------------------------------------------------------
                                Percent change, annual rate, second quarter 2011
                                
Productivity   -0.1    -0.1       0.1     0.1      -2.2     -2.3      -3.1    -3.2      0.0     -0.1
Output          1.8     1.8       1.7     1.7       0.4      0.4       1.8     1.7     -0.9     -1.0
Hours           2.0     2.0       1.6     1.6       2.7      2.7       5.0     5.0     -0.9     -0.9
Hourly
 compensation  -0.2     2.7       0.2     3.1      -2.1      3.0      -4.9     2.3      2.8      3.9
Real hourly 
 compensation  -4.1    -1.3      -3.8    -1.0      -6.0     -1.0      -8.6    -1.7     -1.2     -0.2
Unit labor
 costs         -0.1     2.8       0.1     3.0       0.1      5.5      -1.9     5.7      2.8      4.0
======================================================================================================
Table C. Nonfinancial corporations: preliminary third quarter and revised second quarter 2011

                                                        Real 
                                           Hourly       hourly        Unit                    Implicit
             Produc-                       compen-      compen-       labor       Unit        price
             tivity    Output     Hours    sation       sation        costs       profits     deflator
------------------------------------------------------------------------------------------------------ 
                                Percent change, annual rate, third quarter 2011
                                
Q to Q        -2.6     -0.8        1.9      0.3         -2.6          3.0          7.5          3.7
Y to Y        -0.1      2.1        2.2      1.3         -2.4          1.4          9.3          2.4

                                Percent change, annual rate, second quarter 2011
                                
Revised        3.2      6.1        2.9      0.8         -3.2         -2.3         28.9          1.8
Previous       4.2      7.3        2.9      2.5         -1.5         -1.7         27.5          1.8
======================================================================================================

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