The Bureau of Labor Statistics revised its productivity numbers for the past few years based on new benchmarking data. As a result, the revision to fourth quarter manufacturing labor productivity was more significant than just a normal tweak. Labor productivity in the sector rose 0.5 percent, according to the original estimate, but this was revised sharply higher to 2.1 percent.
Output was also pushed higher, up from 0.7 percent growth as previously outlined to 2.5 percent now. The average number of hours increased, helping to push average hourly compensation lower. The result was a decline in manufacturing unit labor costs of 1.9 percent in the fourth quarter, which is much better than the 0.4 percent gain as reported earlier.
These changes carried through to the durable and nondurable goods industries, as well. Labor productivity in the durable goods sectors rose 2.7 percent in the fourth quarter, up from the original estimate of 1.6 percent. Unit labor costs for durable goods firms declined 2.9 percent on average, helping to make them more competitive. For nondurable goods businesses, labor productivity was changed from a decline of 0.5 percent to an increase of 1.7 percent, with unit labor costs down 0.8 percent.
In 2012, manufacturing labor productivity rose 2.2 percent. This was lower than the 6.5 percent and 2.6 percent growth rates of 2010 and 2011, respectively.
For the larger economy, the productivity change revisions were less dramatic. Labor productivity in the nonfarm business sector declined 1.9 percent in the fourth quarter (only slightly different than the 2.0 percent decline as originally estimated). Output was up 0.5 percent, but the average number of hours worked increased 2.5 percent. Therefore, unit labor costs jumped 4.6 percent for the quarter.
Chad Moutray is chief economist, National Association of Manufacturers.
Latest posts by Chad Moutray (see all)
- Richmond Fed: Manufacturers Report Continued Strong Growth - April 25, 2017
- Dallas Fed: Manufacturers Continued to Express Expanding Activity - April 24, 2017
- Markit: Eurozone Manufacturing Activity Rose Again in April to another Six-Year High - April 21, 2017