6.7 percent in the business sector and
6.3 percent in the nonfarm business sector.
In both sectors, changes in productivity are higher than the preliminary estimates published November 7, and represent the largest productivity gains since the third quarter of 2003. The upward revisions to productivity resulted from upward revisions to output-which grew 5.7 percent in both sectors-and small downward revisions to hours, which fell 1.0 percent in the business sector and 0.6 percent in the nonfarm business sector in the third quarter.
In manufacturing, revised productivity increases in the third quarter were:
5.0 percent in manufacturing,
6.1 percent in durable goods manufacturing, and
4.3 percent in nondurable goods manufacturing.
Business
Business sector productivity grew at an annual rate of 6.7 percent during the third quarter of 2007, the largest gain since a 9.1 percent
increase in the third quarter of 2003 (seasonally adjusted annual rates). Output rose 5.7 percent, the largest increase since a 10.4 percent rise in the third quarter of 2003. Hours of all persons engaged in the sector fell 1.0 percent, the first decline in the series since the second quarter of 2003, when hours fell 2.2 percent. When the third quarter of 2007 is compared to the third quarter of 2006, productivity rose 2.9 percent. This is the largest four-quarter increase since output per hour grew 3.4 percent from the second quarter of 2003 to the second quarter of 2004.
Hourly compensation in the business sector increased 4.7 percent during the third quarter of 2007. A downward revision reduced hourly compensation growth to 2.4 percent in the second quarter, lower than the 5.8 percent increase reported on November 7. From the third quarter of 2006 to the third quarter of 2007, hourly compensation increased 5.9 percent, the largest four-quarter gain since an increase of 6.7 percent from the fourth quarter of 1999 to the fourth quarter of 2000. Hourly compensation includes accrued wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, grew 2.7 percent in the third quarter and fell 3.3 percent in the second quarter.
Unit labor costs fell 2.0 percent in the third quarter of 2007, a larger decline than previously reported, reflecting the upward revision to
productivity and the downward revision to hourly compensation. In the second quarter, unit labor costs declined 1.1 percent, in contrast to the 2.2 percent increase reported on Nov. 7. The implicit price deflator for the business sector, which reflects changes both in unit labor costs and in unit nonlabor payments, grew 0.2 percent in the third quarter of 2007.
Nonfarm business
Output per hour of all persons in the nonfarm business sector rose 6.3 percent during the third quarter of 2007, the largest gain since a 10.4
percent increase in the third quarter of 2003. Output increased 5.7 percent and hours of all persons engaged in the sector declined 0.6 percent, as revised. Hours growth was the lowest since the second quarter of 2003, when hours fell 1.3 percent. In the second quarter of 2007, productivity had increased 2.2 percent,reflecting gains of 4.2 percent in output and 2.0 percent in hours.
Hourly compensation in the nonfarm business sector rose 4.2 percent in the third quarter of 2007. After a downward revision, second-quarter hourly compensation increased 1.0 percent; lower than a 4.4 percent rise reported on November 7. From the third quarter of 2006 to the third quarter of 2007, hourly compensation increased 5.8 percent, the largest four-quarter gain since an increase of 6.5 percent from the fourth quarter of 1999 to the fourth quarter of 2000. When the rise in consumer prices is taken into account, real hourly compensation rose 2.3 percent in the third quarter of 2007 and fell 4.7 percent in the second quarter.
As in the business sector, nonfarm business unit labor costs decreased 2.0 percent in the third quarter of 2007 due to the upward revision to
productivity and the downward revision to hourly compensation. Nonfarm business unit labor costs also declined 1.1 percent in the second quarter. The implicit price deflator for the nonfarm business sector, which reflects changes both in unit labor costs and in unit nonlabor payments, edged down 0.1 percent in the third quarter of 2007.
Manufacturing
Productivity increased 5.0 percent in manufacturing in the third quarter of 2007, as output increased 4.5 percent and hours of all persons decreased 0.5 percent (seasonally adjusted annual rates). When the third quarter of 2007 is compared with the third quarter of 2006, productivity increased 2.8 percent, less than during any four-quarter period since the period ending with the fourth quarter of 2004, when productivity also increased 2.8 percent. In durable goods industries, productivity increased 6.1 percent in the third quarter of 2007. Output grew 6.7 percent and hours rose 0.6 percent. Productivity grew more slowly in the nondurable goods industries, 4.3 percent, reflecting an increase of 1.9 percent in output and a decrease of 2.3 percent in hours.
The average hourly compensation of all manufacturing workers rose 1.5 percent in the third quarter of 2007. Hourly compensation was revised down substantially in the second quarter, from the 3.7 percent increase reported previously to a 1.4 percent decrease. In durable goods industries, hourly compensation increased 0.7 percent in the third quarter, compared with a 3.0 percent rise in nondurable goods manufacturing. When the increase in consumer prices is taken into account, real hourly compensation for all manufacturing workers declined 0.3 percent in the third quarter of 2007.
Unit labor costs in manufacturing fell 3.3 percent in the third quarter of 2007 and fell 3.7 percent in the second quarter, as revised. Unit labor costs declined 5.1 percent in durable goods industries and fell 1.3 percent in nondurable goods manufacturing during the third quarter.
Nonfinancial Corporations
Third-quarter 2007 measures of productivity and costs also were released for nonfinancial corporations. Output per all-employee hour
grew at a 4.2 percent annual rate. This was the largest increase since the third quarter of 2004 when productivity increased 5.2 percent. Output increased 4.7 percent in the third quarter of 2007, and hours of all employees rose 0.5 percent (seasonally adjusted annual rates). The nonfinancial corporate sector includes 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 in nonfinancial corporations rose 4.4 percent in the third quarter. When consumer prices are taken into account, real hourly compensation rose 2.5 percent in the third quarter, a reversal from the 3.5 percent decrease in the second quarter, as revised.
In the nonfinancial corporate sector, unit labor costs increased 0.2 percent, unit nonlabor costs declined by 1.8 percent, and unit profits fell 10.1 percent in the third quarter of 2007 (seasonally adjusted annual rates). As a result of these movements, the implicit price deflator for the output of nonfinancial corporations-which reflects a weighted average of these three measures-fell 1.5 percent.
