Manufacturing Productivity Increase 5% in Third Quarter

U.S. productivity for the third quarter of 2007 is up 6.7% in the business sector and 6.3% in the nonfarm business sector, the Labor Department reported on Dec. 5. These gains are the largest since the third quarter of 2003.

Output grew 5.7% while hours decreased 1% in the business sector and 0.6% in the nonfarm business sector.

In manufacturing, revised productivity increases in the third quarter were:

5% in manufacturing,
6% in durable goods manufacturing, and
4.3% in nondurable goods manufacturing.

Output, in the third quarter increased 4.5% and hours of all persons decreased 0.5%. Compared to the third quarter of 2006, productivity increased 2.8%, less than during any four-quarter period since the period ending with the fourth quarter of 2004, when productivity also increased 2.8%.

In durable goods industries, productivity increased 6.1% in the third quarter of 2007. Output grew 6.7% and hours rose 0.6%. Productivity grew more slowly in the nondurable goods industries,
4.3%, reflecting an increase of 1.9% in output and a decrease of 2.3% in hours.

The average hourly compensation of all manufacturing workers rose 1.5% in the third quarter of 2007. Hourly compensation was revised down substantially in the second quarter, from the 3.7% increase reported previously to a 1.4% decrease. When the increase in consumer prices is taken into account, real hourly compensation for all manufacturing workers declined 0.3% in the third quarter of 2007.

Unit labor costs in manufacturing fell 3.3% in the third quarter of 2007. Unit labor costs declined 5.1% in durable goods industries and fell 1.3% in nondurable goods manufacturing during the third quarter.