Technical note

                                      
                               TECHNICAL NOTES
                                      
Labor  Hours: Hours data for the labor productivity and cost measures include
hours for all persons working in the sector-wage and salary workers, the self-
employed,  and  unpaid family workers.  The primary source of  hours  and  em-
ployment  data is the BLS Current Employment Statistics (CES) program,  which
provides  monthly survey data on the number of jobs held by wage  and  salary
workers in nonfarm establishments.  The CES also provides average weekly paid
hours  of  production  and  nonsupervisory workers in  these  establishments.
Weekly  paid hours are adjusted to hours at work using data from the National
Compensation Survey (NCS).  The BLS Hours at Work survey, conducted for  this
purpose,  was  used for years prior to 2001.  The Office of Productivity  and
Technology  estimates  average weekly hours at  work  for  nonproduction  and
supervisory  workers  using  information from the Current  Population  Survey
(CPS), the CES, and the NCS.
     Data  from  the  CPS are used for farm labor, nonfarm  proprietors,  and
nonfarm unpaid family workers.  Estimates of labor input for government enter
prises are derived from the CPS, the CES, and the National Income and Product
Accounts  (NIPA)  prepared by the Bureau of Economic Analysis  (BEA)  of  the
Department of Commerce.

Output: Business sector output is an annual-weighted index constructed  after
excluding  from  gross domestic product (GDP) the following outputs:  general
government, nonprofit institutions, and private households (including  owner-
occupied  housing). Corresponding exclusions also are made in  labor  inputs.
Business  output accounted for about 78 percent of the value of GDP in  2000.
Nonfarm business, which also excludes farming, accounted for about 77 percent
of GDP in 2000.
   Annual  indexes  for  manufacturing and its durable and  nondurable  goods
components  are  constructed by deflating current-dollar  industry  value  of
production  data from the U.S. Bureau of the Census with deflators  from  the
BEA.   These deflators are based on data from the BLS producer price  program
and  other  sources.   The  industry shipments are  aggregated  using  annual
weights,  and  intrasector transactions are removed.  Quarterly manufacturing
output  measures  are  based on the index of industrial  production  prepared
monthly by the Board of Governors of the Federal Reserve System, adjusted  to
be  consistent with annual indexes of manufacturing sector output prepared by
BLS.   Durables include the following 3-digit NAICS industries: wood  product
manufacturing;  nonmetallic  mineral  product  manufacturing;  primary  metal
manufacturing;  fabricated  metal  product manufacturing;  machinery  manufac
turing;  computer and electronic product manufacturing; electrical  equipment
and   appliance   manufacturing;  transportation   equipment   manufacturing;
furniture and related product manufacturing; and miscellaneous manufacturing.
Nondurables include: food manufacturing; beverage and tobacco product manufac-
turing;  textile mills; textile product mills; apparel manufacturing; leather
and  allied product manufacturing; paper manufacturing; printing and  related
support activities; petroleum and coal products manufacturing; chemical  manu-
facturing; and plastics and rubber products manufacturing.
   Nonfinancial  corporate output is an annual-weighted index  calculated  on
the  basis of the costs incurred and the incomes earned from production.  The
output  measure excludes the following outputs from GDP: general  government;
nonprofit  institutions;  private households;  unincorporated  business;  and
those  corporations classified as offices of bank holding companies,  offices
of  other holding companies, or offices in the finance and insurance  sector.
Nonfinancial corporations accounted for about 54 percent of the value of  GDP
in 2000.

Productivity:  These productivity measures describe the relationship  between
real  output  and the labor time involved in its production.  They  show  the
changes  from  period to period in the amount of goods and services  produced
per  hour.  Although these measures relate output to hours  at  work  of  all
persons engaged in a sector, they do not measure the specific contribution of
labor,  capital, or any other factor of production. Rather, they reflect  the
joint  effects  of many influences, including changes in technology;  capital
investment; level of output; utilization of capacity, energy, and  materials;
the organization of production; managerial skill; and the characteristics and
effort of the work force.
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