The following is the unedited transcript of the news release from the Bureau of Labor Statistics of the U.S. Department of Labor.


PRODUCTIVITY AND COSTS
Third Quarter 2005, preliminary


The Bureau of Labor Statistics of the U.S. Department of Labo today reported preliminary productivity data--as measured by output per hour of allpersons--for the third quarter of 2005. The preliminary seasonally-adjusted annual rates of productivity growth in the third quarter were:


4.8 percent in the business sector and
4.1 percent in the nonfarm business sector.


Productivity increased 4.8 percent in the business sector, as output grew 4.3 percent and hours declined 0.4 percent. The 4.1-percent rise in nonfarm business productivity occurred as output rose 4.2 percent and hours rose 0.1 percent (table A).

The effects of Hurricanes Katrina and Rita, which struck the Gulf Coast during the third quarter, could not be separately identified in the productivity and costs measures. The measures reported in this news release reflect both these effects and ongoing trends in ouput, hours, and compensation.

In manufacturing, productivity increases in the third quarter were:


4.5 percent in manufacturing,
7.5 percent in durable goods manufacturing, and
1.7 percent in nondurable goods manufacturing.


The third-quarter increase in manufacturing productivity followed a 3.6- percent increase in the second quarter of 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.

The data sources and methods used in the preparation of the manufacturing series differ from those used in preparing the business and nonfarm business series, and these measures are not directly comparable. Output measures for business and nonfarm business are based on measures of gross domestic product prepared by the Bureau of Economic Analysis of the U.S. Department of Commerce. Quarterly output measures for manufacturing reflect indexes of industrial production independently prepared by the Board of Governors of the Federal Reserve System.

From the second quarter to the third quarter of 2005, productivity in the business sector grew at a 4.8 percent seasonally adjusted annual rate. Output increased 4.3 percent, while hours of all persons engaged in the sector declined 0.4 percent. The third-quarter productivity increase was much faster than the 0.8-percent gain recorded in the second quarter of 2005 (as revised), which reflected a 4.0-percent rise in output and a 3.1-percent rise in hours.

Hourly compensation in the business sector increased at an annual rate of 4.2 percent during the third quarter of 2005, faster than the 3.0-percent rise one quarter earlier ( as revised). This measure includes wages and salaries, supplements, employer contributions to employee benefit plans, and taxes. Real hourly compensation, which takes into account changes in consumer prices, fell by 0.9 percent in the third quarter of 2005 after falling by 1.1 percent in the second quarter. It had increased 2.3 percent in the first quarter of the year.

Unit labor costs, which reflect changes in both hourly compensation and productivity, declined 0.6 percent during the third quarter. By contrast, this measure had increased 2.2 percent in the second quarter. The implicit price deflator for the business sector increased 3.0 percent during the third quarter of 2005, following a 2.6 percent increase in the previous quarter.


Nonfarm business


Productivity in the nonfarm business sector grew 4.1 percent during the third quarter of 2005 as output grew 4.2 percent. Hours of all persons in the nonfarm business sector edged up 0.1 percent, reflecting a 0.4-percent gain in employment and a 0.4-percent decline in average weekly hours at work. In the previous quarter, nonfarm business productivity increased 2.1 percent, as output grew 4.4 percent and hours worked increased by 2.2 percent.

Hourly compensation increased at a 3.6 percent annual rate in the third quarter of 2005. When the rise in consumer prices is taken into account, real hourly compensation fell 1.4 percent during the July-September period. During the second quarter of 2005, real hourly compensation had declined 0.1 percent.

Unit labor costs in the nonfarm business sector fell 0.5 percent during the third quarter of 2005, after rising 1.8 percent in the second quarter. The implicit price deflator for nonfarm business output rose 3.3 percent in the third quarter of 2005.