Productivity and Costs, Second Quarter 2004, Corrected

                                      
USDL 04-1727
TRANSMISSION OF THIS
MATERIAL IS EMBARGOED
UNTIL 8:30 A.M. EDT,
THURSDAY, SEPTEMBER 2, 2004.



Internet address:  http://www.bls.gov/lpc/
       
Historical,                           
technical                  
information:	   (202) 691-5606 
Current data:      (202) 691-5200         
Media contact:     (202) 691-5902                
      



     (This release was reissued on Wednesday, October 13, 2004, to correct
some errors in the data.  Data for the second quarter 2004 for business,
nonfarm business, and manufacturing were not affected.  The Productivity and
Costs news release of August 10, 2004, which included revisions to historical
measures, also contained some incorrect data.  For more information, see
www.bls.gov/lpc/note09022004.htm.)


                           PRODUCTIVITY AND COSTS
                             Second Quarter 2004

     The Bureau of Labor Statistics of the U.S. Department of Labor today
reported revised productivity data-as measured by output per hour of all
persons-for the second quarter of 2004.  The seasonally adjusted annual rates
of productivity change in the second quarter were:

               1.5 percent in the business sector and
               2.5 percent in the nonfarm business sector.

In both sectors, increases in productivity were smaller than reported on
Aug. 10, as output was revised down and hours were revised up.  (See
table C.)

     In manufacturing, the revised productivity changes in the second quarter
were:

               6.9 percent in manufacturing,
               4.9 percent in durable goods manufacturing, and
               9.7 percent in nondurable goods manufacturing.

     In total manufacturing, the change in productivity was revised down from
a preliminary estimate of 7.5 percent.  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.  Second-quarter measures are summarized in table A
and appear in detail in tables 1 through 5; the differences between these
measures and the preliminary second-quarter figures issued on Aug. 10 are
shown in table C.

     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.  See Technical Notes for further
information on data sources.

-----------------------------------------------------------------------------
Table A. Productivity and costs: Revised second-quarter 2004 measures
(Seasonally adjusted annual rates)
-----------------------------------------------------------------------------                                                            
                                                          Real       
                                               Hourly     hourly     Unit
                   Produc-                     compen-    compen-    labor
Sector             tivity    Output   Hours    sation     sation     costs
-----------------------------------------------------------------------------
                      Percent change from preceding quarter
                      
Business            1.5       3.2      1.6       3.7       -1.0       2.1
Nonfarm business    2.5       3.5      1.0       4.3       -0.4       1.8
Manufacturing       6.9       6.2     -0.6       3.2       -1.5      -3.5
  Durable           4.9       5.9      1.0       2.3       -2.3      -2.5
  Nondurable        9.7       6.3    c-3.1      c4.4      c-0.3      -4.8
-----------------------------------------------------------------------------  
                      Percent change from same quarter a year ago
                      
Business            4.0       5.4      1.3       4.0        1.1       0.0
Nonfarm business    4.6       5.8      1.2       4.2        1.3      -0.3
Manufacturing       5.8       5.7     -0.1       3.1        0.3      -2.5
  Durable          c7.1       8.4     c1.2      c2.1       -0.7      -4.7
  Nondurable        4.7       2.6     -2.1       4.7       c1.8       0.0
-----------------------------------------------------------------------------  
c=corrected 



Business

     From the first quarter to the second quarter of 2004, productivity in
the business sector grew at a 1.5 percent annual rate, as output increased
3.2 percent and hours worked by all persons engaged in the sector rose 1.6
percent (tables A and 1).  The productivity increase marks a deceleration
from the increases posted during the four quarters of 2003 and the first
quarter of 2004; it is the smallest increase since a 1.2-percent rise was
posted in the fourth quarter of 2002 (seasonally adjusted annual rates).

     Hourly compensation in the business sector increased 3.7 percent in the
second quarter of 2004, a faster rise than the 2.8 percent increase one
quarter earlier (as revised).  Hourly compensation 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 1.0 percent in the second quarter of 2004, after
falling 0.8 percent in the first quarter of the year.  The second-quarter
decline was the largest since real hourly compensation fell 1.6 percent in
the second quarter of 2000.

     Unit labor costs rose 2.1 percent in the second quarter of 2004, after
dropping 1.1 percent in the first quarter.  The second-quarter rise was the
fastest since the first quarter of 2001, when unit labor costs rose 7.4
percent.  The implicit price deflator for the business sector rose 3.3
percent in the second quarter, up from a 2.1-percent rise in the first
quarter.  The second-quarter increase also was the fastest in recent years;
the last comparable increase in the implicit price deflator occurred when it
rose 3.4 percent in the first quarter of 2000.



Nonfarm business

     Productivity in the nonfarm business sector grew at a 2.5 percent annual
rate in the second quarter of 2004, as output grew 3.5 percent and hours of
all persons increased 1.0 percent (table A).  In the first quarter of 2004,
output per hour in the nonfarm business sector had risen 3.7 percent, as
output and hours rose 5.7 and 2.0 percent, respectively (table 2).  As in the
larger business sector, the second-quarter increase in labor productivity was
the smallest since the fourth quarter of 2002.

     Hourly compensation rose 4.3 percent in the second quarter of 2004,
following a 2.0 percent advance in the first quarter.  When the rise in
consumer prices was taken into account, real hourly compensation declined by
0.4 percent in the second quarter of 2004.

     Unit labor costs increased 1.8 percent in the second quarter of 2004;
they had fallen 1.6 percent in the first quarter.  The implicit price
deflator for nonfarm business output rose 2.9 percent in the second quarter
of 2004 and 2.0 percent one quarter earlier.  The second quarter increase was
the biggest since the first quarter of 2000, when it rose 3.3 percent
(seasonally adjusted annual rates).



Manufacturing

     In the second quarter of 2004, productivity increased 6.9 percent in
manufacturing, as output grew 6.2 percent and hours of all persons fell 0.6
percent (seasonally adjusted annual rates).  In the durable goods sector,
productivity grew 4.9 percent in the second quarter of 2004, reflecting an
increase in output of 5.9 percent and growth in hours of 1.0 percent.  In
nondurable goods, output per hour rose 9.7 percent, reflecting an output
increase of 6.3 percent and a 3.1 percent drop in hours at work (tables 3, 4,
and 5).  The 9.7-percent increase in nondurable goods manufacturing
productivity was the largest reported since a 12.6 percent rise in the fourth
quarter of 1999.

     The hourly compensation of all manufacturing workers increased 3.2
percent during the second quarter of 2004, reflecting a 2.3-percent rise in
hourly compensation in durable goods industries and a 4.4-percent increase in
the nondurable goods sector.  Real hourly compensation in the total
manufacturing sector fell 1.5 percent in the second quarter, after decreasing
7.4 percent one quarter earlier.

     Unit labor costs in manufacturing dropped 3.5 percent in the second
quarter of 2004, less than the 6.6 percent decline in the first quarter.
Unit labor costs fell 2.5 percent in durable goods and 4.8 percent in
nondurable goods in the second quarter of 2004.



Nonfinancial corporations

     Preliminary second quarter 2004 measures of productivity and costs were
reported today for nonfinancial corporations (tables B and 6).  Productivity
increased 1.4 percent during the second quarter, as output increased 3.2
percent and hours grew 1.8 percent (seasonally adjusted annual rates).  In
the first quarter of 2004, output per hour rose 0.1 percent (as revised),
reflecting increases of 2.9 percent in output and 2.8 percent in hours of all
employees.  Nonfinancial corporations include all corporations doing business
in the United States except those classified as offices in the finance and
insurance sector, offices of bank holding companies, or offices of other
holding companies.

-----------------------------------------------------------------------------
Table B.  Nonfinancial corporations: Preliminary second-quarter 2004
productivity and cost measures
(Seasonally adjusted annual rates)
-----------------------------------------------------------------------------                                                                  
                                         Real                     
                                Hourly   hourly   Unit             Implicit
        Produc-                 compen-  compen-  labor   Unit     price
Period  tivity   Output  Hours  sation   sation   costs   profits  deflator
-----------------------------------------------------------------------------

                 Percent change from preceding quarter

2004 II   1.4     3.2     1.8    4.0     -0.7      2.6     16.6      3.7
-----------------------------------------------------------------------------

                Percent change from same quarter a year ago
                                      
2004 II   3.9     5.4     1.4    4.1      1.2      0.2     20.0      1.6
-----------------------------------------------------------------------------

     Hourly compensation rose 4.0 percent in the second quarter of 2004,
following a 2.3 percent gain in the first quarter.  When the rise in consumer
prices is taken into account, real hourly compensation fell in both the first
and second quarters of 2004, 0.7 percent in the second quarter and 1.3
percent one quarter earlier.

     Unit labor costs for nonfinancial corporations rose 2.6 percent in the
second quarter of 2004 and 2.1 percent in the first quarter, following
declines in seven of the previous eight quarters.  Unit profits grew at a
16.6 percent annual rate in the second quarter of 2004, similar to the 16.9-
percent growth in the first quarter.  The implicit price deflator for
nonfinancial corporate output grew 3.7 percent in the second quarter of 2004.



Revised Measures

     Current and previous measures for the second quarter of 2004 for the
business, nonfarm business, and manufacturing sectors are compared in table
C.  The quarterly movements differ from those reported on Aug. 10 based on
information then available.  In the business and nonfarm business sectors,
productivity and hourly compensation were revised down; unit labor costs also
grew less than reported last month.  In the manufacturing sector,
productivity and hourly compensation were revised down, and unit labor costs
declined more than reported last month.

-----------------------------------------------------------------------------
Table C. Business, nonfarm business, and manufacturing: Previous and
revised productivity and related measures
(Quarterly percent changes at seasonally adjusted annual rates)
-----------------------------------------------------------------------------                                                          
                                                            Real      
                                                  Hourly    hourly     Unit
                       Produc-                    compen-   compen-    labor
Sector                 tivity    Output   Hours   sation    sation     costs
-----------------------------------------------------------------------------

                             Second quarter 2004

Business:                                                           
  Previous              1.9       3.5      1.5      4.2      -0.5       2.2
  Current               1.5       3.2      1.6      3.7      -1.0       2.1
Nonfarm business:                                                   
  Previous              2.9       3.8      0.8      4.9       0.1       1.9
  Current               2.5       3.5      1.0      4.3      -0.4       1.8
Manufacturing:                                                      
  Previous              7.5       6.6     -0.9      5.2       0.5      -2.2
  Current               6.9       6.2     -0.6      3.2      -1.5      -3.5
  
                             First quarter 2004

Business:                                                           
  Previous              3.9       5.3      1.3      4.8       1.1       0.8
  Current               3.9       5.3      1.3      2.8      -0.8      -1.1
Nonfarm business:                                                   
  Previous              3.7       5.7      2.0      4.0       0.3       0.3
  Current               3.7       5.7      2.0      2.0      -1.6      -1.6
Manufacturing:                                                      
  Previous              2.8       6.2      3.3      4.8       1.2       2.0
  Current              c2.7       6.2     c3.4    c-4.1     c-7.4      -6.6
-----------------------------------------------------------------------------  
c=corrected

     
     Hourly compensation growth in the first quarter also was revised to
reflect revised estimates of compensation.  In the business and nonfarm
business sectors, hourly compensation grew much more slowly in the first
quarter than reported on Aug. 10.  As a result, unit labor costs in these
sectors now show declines in the first quarter of 1.1 and 1.6 percent,
respectively.  In the manufacturing sector, revised data show that hourly
compensation fell 4.1 percent in the first quarter, and unit labor costs
dropped 6.6 percent.

      Measures of hours for all of the major sectors were revised on Aug. 10,
2004, to incorporate new estimates of average weekly hours at work for
supervisory and nonproduction workers.  Ratios of the average weekly hours at
work for these employees relative to those of nonsupervisory and production
workers were developed from data in the Current Population Survey.  These
ratios were applied to average weekly hours at work for nonsupervisory and
production workers developed from data in the Current Employment Statistics
and Employment Cost Index programs.

     An article discussing these new measures and the effects of this change
was published in the April 2004 issue of the Monthly Labor Review.  A link to
a technical note describing the methodology will be posted shortly on the BLS
labor productivity home page (www.bls.gov/lpc/).  Copies of the technical
note also will be available by calling 202-691-5604, sending an email to
dprweb@bls.gov, or writing to the Bureau of Labor Statistics, Division of
Major Sector Productivity, Room 2150, Washington DC 20212.



Revised Measures: Nonfinancial Corporations

     Data for the first quarter of 2004 were revised for the nonfinancial
corporate sector.  Productivity, output, hourly compensation, and unit labor
costs grew more slowly than reported on Aug. 10.

-----------------------------------------------------------------------------
Table D.  Nonfinancial corporations: Previous and revised productivity and
cost measures
(Quarterly percent changes at seasonally adjusted annual rates)
-----------------------------------------------------------------------------                                                           
                                            Real                    
                                   Hourly   hourly  Unit            Implicit
           Produc-                 compen-  compen- labor  Unit     price
           tivity   Output  Hours  sation   sation  costs  profits  deflator
-----------------------------------------------------------------------------           
                                                                    
                            First quarter 2004

Previous    1.3      4.1     2.7    4.1      0.5     2.7    15.5      2.1
Current    c0.1      2.9    c2.8    2.3     -1.3     2.1    16.9      2.1
-----------------------------------------------------------------------------
c=corrected
               
               
               
                              Upcoming changes
                                      
     Late in 2004 or early in 2005, BLS will improve the way it uses data for
farm workers, the nonfarm self employed, and nonfarm unpaid family workers in
the productivity program, adjusting them to account for the effects of
multiple jobholding.  Further information on this change will be announced
later this year.

                              Next release date

     The next release of Productivity and Costs is scheduled for 8:30 AM EST,
Thursday, Nov. 4, 2004.  Preliminary third-quarter measures for business,
nonfarm business, and manufacturing will be released at that time.