or output per hour, is calculated by dividing an index of real output by an index of hours of all persons, including employees, proprietors, and
unpaid family workers. Output increased 4.0 percent and hours worked decreased 5.0 percent in the third quarter of 2009.
Unit labor costs in nonfarm businesses fell 5.2 percent in the third quarter of 2009; the increase in productivity outpaced the increase in
hourly compensation. Unit labor costs declined 3.6 percent over the last four quarters - the largest decrease since the series began in 1948 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.
Productivity increased 9.8 percent in the business sector in the third quarter of 2009. This was the largest increase in the series since the second quarter of 1972. Unit labor costs decreased 5.1 percent during the third quarter of 2009.
Manufacturing sector productivity grew 13.6 percent in the third quarter of 2009, as output increased 7.7 percent despite a 5.2 percent decrease in hours worked. This was the largest increase in the quarterly productivity series, which begins in 1987. Over the last four quarters, manufacturing productivity increased 3.1 percent as output and hours declined 10.8 percent and 13.5 percent respectively. Manufacturing sector productivity increased 0.8 percent in 2008, and at an average annual rate of 4.0 percent from 2001 to 2007.
In the third quarter of 2009, changes in productivity, output, and hours were larger in durable goods producing industries than in nondurable goods industries.
Manufacturing unit labor costs fell at a 7.1 percent annual rate in the third quarter of 2009, but increased 2.3 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.
Revised measures
In the second quarter of 2009, nonfarm business productivity growth was revised up to 6.9 percent, reflecting declines in output and hours of 1.1 percent and 7.5 percent, respectively. Unit labor costs were revised down due to the upward revision in productivity. In the manufacturing sector, revised second quarter productivity growth was 6.8 percent, a 1.9 percentage point upward revision. Manufacturing unit labor costs declined 1.6 percent, rather than rising 0.2 percent as reported September 2.
In the nonfinancial corporate sector, revised data for the second quarter of 2009 show that productivity increased 6.6 percent, as output per hour was revised up along with output; hours were unrevised. After revision, unit labor costs fell 4.5 percent in the second quarter, but rose 1.4 percent from the second quarter of 2008 to the second quarter of 2009. Unit profits grew at a 23.0 percent annual rate in the second quarter of 2009.
