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


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 first quarter of 2007. The seasonally adjusted annual rates of productivity change in the first quarter were:

1.3 percent in the business sector and
1.7 percent in the nonfarm business sector.

In the business sector, output increased 1.2 percent while hours were unchanged. In nonfarm businesses, output rose 1.4 percent and hours declined 0.3 percent. In both sectors, productivity grew more slowly than in the fourth quarter of 2006, when output per hour rose 1.5 percent in the business sector and 2.1 percent in the nonfarm business sector (seasonally adjusted annual rates).

In manufacturing, productivity changes in the first quarter were:

2.7 percent in manufacturing,
2.7 percent in durable goods manufacturing, and
2.0 percent in nondurable goods manufacturing.

Manufacturing productivity growth in the first quarter of 2007 reflected a 1.5% increase in output and a 1.1% decrease in hours worked in the sector. Output per hour had increased 1.9 percent in the fourth quarter of 2006, as both output and hours fell, by 2.1 percent and 3.9 percent, respectively. 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.

Business

Productivity in the business sector rose 1.3 percent in the first quarter of 2007, as output grew 1.2 percent (seasonally adjusted annual rate) and hours of all persons at work in the sector were unchanged. Revised data for the fourth quarter of 2006 showed that output per hour increased 1.5 percent, reflecting a 2.9-percent rise in output and a 1.4-percent increase in hours at work.

When the first quarter of 2007 is compared to the first quarter of 2006, productivity in the business sector grew 0.9 percent. This was the smallest four-quarter change since a 0.7-percent increase for the period from the fourth quarter of 1994 to the fourth quarter of 1995.

Hourly compensation increased 1.9 percent during the first quarter of 2007. This measure includes wage and salary accruals, supplements, employer contributions to employee benefit plans, and taxes. Hourly compensation had risen 7.7 percent in the previous quarter. Real hourly compensation, which takes into account changes in consumer prices, decreased 1.9 percent in the first quarter of 2007, after rising 10.0 percent in the fourth quarter of 2006.

Unit labor costs rose 0.7 percent in the first quarter of 2007, compared to a 6.2-percent increase in the fourth quarter. Growth in unit labor costs is roughly equivalent to the change in hourly compensation minus the change in output per hour.

The implicit price deflator for the business sector, which reflects changes in both unit labor costs and unit nonlabor payments, grew at a 3.7% rate in the first quarter, faster than the 1.0% rate in the final quarter of 2006.

Nonfarm business

Productivity rose 1.7 percent in the nonfarm business sector in first-quarter 2007, as output grew 1.4 percent and hours of all persons decreased by 0.3 percent (seasonally adjusted annual rates). From the first quarter of 2006 to the first quarter of 2007 output per hour grew 1.1 percent. In the fourth quarter of 2006, productivity had risen 2.1 percent, reflecting increases in output and hours of 2.9 percent and 0.8 percent, respectively.

Hourly compensation increased 2.3 percent in the first quarter of 2007, less rapidly than in the fourth quarter, when it grew 8.5 percent. When the rise in consumer prices was taken into account, real hourly compensation fell 1.5 percent in the first quarter, in contrast to a 10.8-percent increase in the fourth quarter of 2006.

Unit labor costs grew 0.6 percent in the first quarter of 2007, following a 6.2-percent rise one quarter earlier. The implicit price deflator for nonfarm business output rose 3.2 percent in the first quarter of 2007 and 0.5 percent in the fourth quarter of 2006.

Manufacturing

Productivity increased 2.7 percent in manufacturing in the first quarter of 2007, as output increased 1.5 percent and hours of all persons fell 1.1 percent (seasonally adjusted annual rates). After revisions, manufacturing productivity increased 1.9 percent in the fourth quarter of 2006, as output and hours decreased 2.1 percent and 3.9 percent, respectively.

A 2.7% increase in durable goods manufacturing productivity in the first quarter was the smallest since a 1.1- percent rise in the third quarter of 2004. Output edged up 0.4 percent and hours fell 2.3 percent in the durable goods industries during the first quarter of 2007. Productivity in nondurable goods manufacturing posted a 2.0-percent gain in the first quarter, as output increased 2.9 percent and hours of all persons rose 0.8 percent.

The hourly compensation of all manufacturing workers increased 5.5 percent during the first quarter of 2007, and real hourly compensation rose 1.6 percent (seasonally adjusted annual rates). The 5.5-percent hourly compensation increase reflected a 6.6-percent jump in durable goods hourly compensation and a 3.6 percent gain in compensation per hour in nondurable goods industries.

Because hourly compensation of manufacturing workers rose more rapidly than productivity, unit labor costs increased in the first quarter, by 2.7 percent. Unit labor costs increased 3.8 percent in durable goods manufacturing; more than in the nondurable goods subsector, where these costs rose 1.6 percent.