U.S. Productivity Slips for First Time Since 2001

The Bureau of Labor Statistics of the U.S. Department of Labor today reported revised fourth-quarter seasonally-adjusted annual rates of productivity change?as measured by output per hour of all persons?and revised changes for calendar year 2005.

In the business sector, output per hour was unchanged from the third quarter to the fourth quarter of 2005, compared to the preliminary estimate of a 0.2 percent decline published February 2. In nonfarm businesses, productivity fell 0.5 percent, slightly less than the 0.6 percent decline reported previously (seasonally adjusted annual rates). Nonfarm business productivity last declined during the first quarter of 2001, when it fell 0.6 percent. On an annual average basis, productivity rose 2.7 percent in the business sector, 0.1 percentage point more than previously reported, and increased 2.9 percent in nonfarm businesses, compared to the preliminary estimate of 2.7 percent.

Productivity in total manufacturing grew at a 4.7 percent annual rate in the fourth quarter of 2005, more than the 3.9 percent preliminary estimate, as a downward revision to fourth-quarter productivity growth in nondurable goods manufacturing partially offset an upward revision to output per hour in the durable goods subsector.

Hourly compensation increased 1.8 percent during the fourth quarter in total manufacturing and in both subsectors. When the increase in consumer prices was taken into account, real hourly compensation fell 1.4 percent in the fourth quarter for workers in total, durable, and nondurable manufacturing.

Unit labor costs in manufacturing fell 2.8 percent in the fourth quarter of 2005, after increasing 1.8 percent in the third quarter. These costs declined 7.7 percent in durable goods industries and rose 3.9 percent in nondurable goods industries during the fourth quarter of 2005.