In manufacturing, the preliminary productivity changes in the second quarter were:
-1.4 percent in manufacturing,
-3.5 percent in durable goods manufacturing, and
0.7 percent in nondurable goods manufacturing.
Productivity in the total manufacturing sector fell 1.4 percent in the second quarter of 2008, as both output and hours worked decreased. The decline in productivity was concentrated in the durable goods subsector. Output and hours in manufacturing, which includes about 12 percent of U.S. business-sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors.
Business
Business sector output per hour increased 2.3 percent from the first quarter to the second quarter of 2008, as output increased 1.5 percent and hours of all persons engaged in the sector--employees, proprietors, and unpaid family workers--fell 0.7 percent (seasonally adjusted annual rates). The increase in output was greater and the decline in hours was smaller than
in the first quarter, when productivity rose 2.2 percent, as revised. Historically, from 2000 through 2007, business sector productivity had grown at an average annual rate of 2.5 percent.
Hourly compensation increased 3.8 percent in the second quarter of 2008, less than the 5.0 percent gain in the first quarter. This measure of 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 1.2 percent during the second quarter of 2008 as consumer prices increased 5.0 percent (seasonally adjusted annual rates).
Unit labor costs, which reflect changes in both hourly compensation and productivity, increased at an annual rate of 1.5 percent during the second quarter of 2008. The implicit price deflator for the business sector, which reflects changes in both unit labor costs and unit nonlabor payments, increased 0.6 percent in the second quarter of 2008 and 2.0 percent one quarter earlier.
Nonfarm Business
Productivity increased 2.2 percent in the nonfarm business sector during the second quarter of 2008 as output grew 1.7 percent and hours at work declined 0.5 percent. Revised results for first-quarter 2008 show that productivity increased 2.6 percent, output rose 0.9 percent, and hours fell 1.6 percent. Nonfarm business output per hour had increased at an average annual rate of 2.5 percent from 2000 through 2007.
Hourly compensation in the nonfarm business sector increased 3.6 percent in the second quarter of 2008, compared to a 5.2 percent rise one quarter earlier. When the 5.0 percent annual rate of increase in consumer prices is taken into account, real hourly compensation fell 1.4 percent in the second quarter of 2008. This measure rose 0.8 percent in the first quarter.
Unit labor costs increased 1.3 percent in the second quarter of 2008 and 1.5 percent over the last four quarters. The implicit price deflator for nonfarm business output rose 0.5 percent in the second quarter of 2008 and 2.1 percent in the first quarter.
Manufacturing
Productivity decreased 1.4 percent in manufacturing in the second quarter, as output fell 3.5 percent and hours of all persons declined 2.0 percent. In durable goods industries, productivity fell 3.5 percent--the largest drop since fourth-quarter 1990, when output per hour fell 4.6 percent. In nondurable goods industries, productivity grew 0.7 percent in the second quarter as hours fell faster than output. In total manufacturing, output per hour increased 2.6 percent from the second quarter of 2007 to the second quarter of 2008; output declined slightly over the four quarters, 0.1 percent, whereas hours fell by 2.7 percent. For the entire 2000-2007 period manufacturing productivity increased at a 3.7 percent annual rate.
During the second quarter of 2008, hourly compensation grew 4.6 percent in total manufacturing, 5.0 percent in durable manufacturing and 3.8 percent in nondurable manufacturing (seasonally adjusted annual rates). Manufacturing hourly compensation also increased 4.6 percent over the last four quarters. When the increase in consumer prices is taken into account, the real hourly compensation of all manufacturing workers fell 0.4 percent in the second quarter.
Unit labor costs in manufacturing jumped 6.1 percent in the second quarter of 2008. The growth in unit labor costs from the second quarter of 2007 was 1.9 percent, reversing the 0.8 percent decline from the first quarter of 2007 to the first quarter of 2008. The 2000-2007 long-term average annual rate of growth for unit labor costs is 0.3 percent.
