A Stern Glance ? Productivity Up At 0.9 Percent Rate In Q4

Nonfarm business sector labor productivity increased at a 0.9 percent annual rate during the fourth quarter of 2011, the U.S. Bureau of Labor Statistics reported today. The gain in productivity reflects increases of 3.7 percent in output and 2.7 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the fourth quarter of 2010 to the fourth quarter of 2011, productivity grew 0.3 percent, as output rose 2.3 percent and hours rose 1.9 percent. Annual average productivity increased 0.4 percent from 2010 to 2011.

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 measures released today were based on more recent source data than were available for the preliminary report.

Unit labor costs in nonfarm businesses increased 2.8 percent in the fourth quarter of 2011, as productivity grew at a slower rate (+0.9 percent) than hourly compensation (+3.7 percent). Unit labor costs rose 3.1 percent over the last four quarters. (See table A.) Annual average unit labor costs increased 2.0 percent from 2010 to 2011.

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.

Manufacturing sector productivity edged down 0.1 percent in the fourth quarter of 2011, as output rose 4.8 percent and hours worked increased 4.9 percent; this is the largest quarterly gain in hours worked since the second quarter of 1996 (6.2 percent). Over the last four quarters, manufacturing productivity increased 1.7 percent. Annual average productivity grew 2.6 percent from 2010 to 2011. Unit labor costs in manufacturing increased 2.0 percent in the fourth quarter of 2011 but were unchanged from the same quarter a year ago.

Annual Average productivity growth for 2011 in both the nonfarm business and manufacturing sectors was slightly less than previously reported, due to upward revisions to hours worked; output increased at the same rates reported February 2. The 0.4 percent increase in nonfarm business productivity was the smallest annual gain in the series since a 0.4 percent gain in 1995. In both the nonfarm business and manufacturing sectors, unit labor costs were revised upward for 2011; this was due both to upward revisions to hourly compensation and downward revisions to productivity. Unit labor costs rose 2.0 percent in the nonfarm business sector and declined 0.8 percent in the manufacturing sector. Real hourly compensation, which takes into account changes in consumer prices, decreased 0.7 percent in 2011 in the nonfarm business sector.? This is the largest annual decline in the measure since a 1.7 percent decline in 1989.

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Source: http://asternglance.com/2012/03/07/productivity-up-at-0-9-percent-rate-in-q4/

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