persons - for the second quarter of 2008.
4.3 percent in the business sector and
4.3 percent in the nonfarm business sector.
In both sectors, the second-quarter productivity gains were larger than the preliminary estimates reported on August 8.
In manufacturing, the revised productivity changes in the second quarter were:
-2.2 percent in manufacturing,
-4.5 percent in durable goods manufacturing, and
0.2 percent in nondurable goods manufacturing.
Manufacturing productivity decreased faster in the second quarter of 2008 than was reported on August 8, reflecting downward revisions to output per hour in both durable and nondurable manufacturing. 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
Labor productivity in the business sector grew 4.3 percent from the first quarter to the second quarter of 2008, as output increased 3.2 percent and hours worked by all persons engaged in the sector - employees, proprietors, and unpaid family workers - fell 1.0 percent (seasonally adjusted annual rates). Output per hour increased 3.2 percent over the past four quarters, reflecting a 2.2 percent increase in output and a 1.0 percent decrease in hours. The four-quarter decline in hours was the largest since a 1.3 percent decline for the period ending with the second quarter of 2003.
Hourly compensation in the business sector grew at a 4.0 percent annual rate in the second quarter of 2008. 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, declined 1.0 percent in the second quarter of 2008 after falling 0.6 percent in the first quarter of the year.
Unit labor costs, which reflect changes in hourly compensation and productivity, decreased 0.4 percent in the second quarter of 2008. From the second quarter of 2007 to the second quarter of 2008 these costs increased 0.7 percent. The implicit price deflator for business output, which exhibits changes in unit labor costs and unit nonlabor payments, rose 0.9 percent in the second quarter of 2008.
Nonfarm business
Productivity in the nonfarm business sector grew at a 4.3 percent annual rate in the second quarter of 2008, reflecting an increase of 3.4 percent in output and a decrease of 0.8 percent in hours of all persons. From the second quarter of 2007 to the second quarter of 2008, nonfarm
business productivity grew 3.4 percent, faster than the 2.5 percent average rate from 2000 to 2007. Hours decreased 1.1 percent over the past four quarters--the largest four-quarter decline since a 2.1 percent decline for the period ending in the third quarter of 2002.
Hourly compensation increased 3.7 percent in the second quarter of 2008, but when the 5.0 percent increase in consumer prices was taken into account, real hourly compensation declined 1.3 percent.
Unit labor costs declined 0.5 percent in the second quarter of 2008, but rose 0.6 percent over the last four quarters. The implicit price deflator for nonfarm business output rose 0.9 percent in the second quarter.
Manufacturing
Productivity decreased 2.2 percent in manufacturing in the second quarter of 2008, as output fell 3.7 percent and hours of all persons fell 1.5 percent (seasonally adjusted annual rates). This was the largest quarterly decline in manufacturing productivity since a 2.5 percent decrease in the second quarter of 1989; it was concentrated in the durable goods sector, where productivity declined 4.5 percent. In nondurable goods, productivity edged up 0.2 percent as output and hours fell 1.3 percent and 1.6 percent, respectively.
The hourly compensation of all manufacturing workers increased 3.9 percent during the second quarter of 2008, reflecting increases in hourly compensation of 4.1 percent in durable goods industries and 3.3 percent in the nondurable goods sector. Real hourly compensation in the total manufacturing sector fell 1.1 percent in the second quarter after consumer prices were taken into account.
Unit labor costs in manufacturing increased 6.2 percent in the second quarter of 2008, as unit labor costs jumped 9.0 percent in durable goods industries and increased 3.1 percent in nondurable goods industries.
Nonfinancial corporations
Preliminary second-quarter 2008 measures of productivity and costs were reported today for nonfinancial corporations. Productivity increased 5.6 percent during the second quarter, reflecting a 3.8 percent rise in output and a 1.7 percent fall in employee hours. Over the last four quarters output per hour increased 2.3 percent, output increased 1.7 percent, and hours worked declined 0.5 percent - the first decline in hours since the four quarters ending with fourth-quarter 2003, when hours declined 0.9 percent. Nonfinancial corporations include all corporations doing business in the United States except those classified as depository institutions, nondepository institutions, security and commodity brokers, insurance carriers, regulated investment offices, small business investment offices, and real estate investment trusts.
Hourly compensation rose 3.7 percent in the second quarter of 2008, but when the rise in consumer prices is taken into account, real hourly compensation fell 1.2 percent. Unit labor costs for nonfinancial corporations decreased 1.8 percent in the second quarter of 2008.
Unit profits fell 24.7 percent in the second quarter of 2008. This was the fourth consecutive double-digit decline in this measure. The implicit price deflator for nonfinancial corporate output fell 3.6 percent in the second quarter and 0.9 percent over the past four quarters.
Revised Measures
In the second quarter of 2008, productivity was revised up in the business and nonfarm business sectors, as output was revised up significantly and hours decreased more than previously reported. In both of these sectors the upward revisions to productivity were much larger than those to hourly compensation, and unit labor costs were revised down.
Productivity was revised down in the manufacturing sector in the second quarter of 2008 due to both a downward revision to output and an upward revision to hours. The downward revision to productivity was largely offset by a downward revision to hourly compensation, so unit labor costs rose only slightly more than previously reported. In the first quarter of 2008, hourly compensation was updated to reflect revised estimates of compensation released by the Bureau of Economic Analysis of the U.S. Department of Commerce August 28. As revised, hourly compensation increased 3.6 percent in the business sector, and 3.8 percent in both the nonfarm business and manufacturing sectors. In all of the major sectors, hourly compensation grew more slowly in the first quarter than BLS reported August 8, therefore unit labor costs in these sectors rose less than in preliminary estimates.
