Unit labor costs increased 3.1 percent in both the business and nonfarm sectors in 2007--more than in any year since 2000, when unit labor costs increased 4.1 percent and 4.2 percent in the business and nonfarm business sectors, respectively.

Manufacturing

In manufacturing, labor productivity rose 2.9 percent in 2007, less than the 4.2 percent average annual rate from 2000 through 2006. Output increased 2.0 percent and hours decreased 1.0 percent in 2007 (table B). There was a 4.3 percent increase in durable goods manufacturing productivity in 2007, as output rose 2.9 percent and hours fell 1.4 percent. In nondurable goods manufacturing, output per hour increased 1.1 percent; output rose 0.9 percent and hours edged down 0.2 percent.

The hourly compensation of manufacturing workers increased 4.6 percent in 2007, slightly more than the average annual growth rate of 4.2 percent for the 2000-2006 time period. In 2007, hourly compensation rose 4.9 percent in durable goods manufacturing and 4.1 percent in nondurable goods manufacturing. Taking into account the rise in consumer prices, real hourly compensation in total manufacturing rose 1.7 percent in 2007 after decreasing 0.8 percent the previous year.

Unit labor costs in manufacturing increased 1.6 percent in 2007, a reversal from the 1.5 percent decline in 2006. In the durable goods manufacturing sector unit labor costs edged up 0.6 percent in 2007 following a 2.9 percent decline in 2006. Unit labor costs in nondurable goods industries rose 3.0 percent in 2007 after declining 0.5 percent in 2006.

Revised Measures

In both the business and nonfarm business sectors, productivity growth was lower than reported on Dec. 5. In the business sector, productivity growth was revised down from 6.7 percent to 6.5 percent due to an upward revision to hours; output was unchanged. Nonfarm business sector productivity was also revised down--from 6.3 percent to 6.0 percent--reflecting both a downward revision to output and an upward revision to hours.

In both the business and nonfarm business sectors, hourly compensation grew less than previously reported. Unit labor costs were similar to those previously reported for both the business and nonfarm business sectors, as downward revisions to productivity were coupled with downward revisions to hourly compensation.


Available at:

http://stats.bls.gov/news.release/prod2.nr0.htm