August Productivity Report

The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised productivity data--as measured by output per hour of all persons--for the second quarter of 2008. The seasonally adjusted annual rates of productivity change in the second quarter were: 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.

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 (tables A and 1). 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 (tables A and 2). 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.