Manufacturing productivity up; overall productivity down

The Bureau of Labor Statistics of the U.S. Department of Labor today reported preliminary productivity data—as measured by output per hour of all persons—for the fourth quarter and for the full year 2005. In the fourth quarter, productivity declined 0.2 percent in the business sector and 0.6 percent in the nonfarm business sector. In both sectors, the fourth-quarter productivity decline was the first since the first quarter of 2001. When the annual averages for 2005 were compared with annual averages for 2004, productivity rose 2.6 percent in the business sector and 2.7 percent in nonfarm businesses.

Manufacturing productivity grew 3.9 percent in the fourth quarter. On an annual average basis, output per hour in the manufacturing sector posted a 4.8 percent increase in 2005. Output and hours in manufacturing, which includes about 13 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.

In the fourth quarter manufacturing output increased 8.4 percent and hours increased 4.4 percent. The output increase was the largest since the fourth quarter of 1997 (9.3 percent) and the hours increase was the first since the first quarter of 2004, when hours increased 2.4 percent. In the third quarter, manufacturing productivity had increased 3.7 percent, reflecting a 2.6 percent rise in output and a 1.0 percent decline in hours. In durable goods manufacturing, productivity rose 8.2 percent in the fourth quarter as output grew 13.7 percent and hours increased 5.1 percent. Among nondurable goods manufacturers, productivity decreased 1.0 percent in the fourth quarter as output rose 2.1 percent and hours at work increased 3.2 percent.

Average hourly compensation of manufacturing workers increased 1.9 percent in the fourth quarter of 2005, reflecting increases in hourly compensation of 1.2 percent in durable goods manufacturing and 2.9 percent in nondurable goods manufacturing. When the increase in consumer prices was taken into account, real hourly compensation in total manufacturing fell 1.3 percent.

Unit labor costs for the manufacturing sector fell 1.9 percent in fourth-quarter 2005. In durable goods manufacturing, unit labor costs fell 6.4 percent, and in nondurable goods manufacturing unit labor costs increased 4.0 percent.

More information can be found here.