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Economic News Release
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Technical note

                                     Technical Note

Output

      Industry output is measured as sectoral output, the total value, in real terms, of 
goods and services produced for sale outside the industry.  Real industry output is most 
often derived by deflating nominal sales or value of production, but for some industries it 
is measured by physical quantities of output. Wherever possible, the indexes of industry 
output are calculated with a Törnqvist formula.  This formula aggregates the growth rates 
of the various industry outputs between two periods, using their relative shares in 
industry value of production, averaged over the two periods, as weights.
      
      Industry output measures for service-providing and mining industries are 
constructed primarily using data from the economic censuses and annual surveys of the 
Bureau of the Census, U.S.  Department of Commerce, together with information on 
price changes primarily from BLS.  Other data sources include the U.S. Department of 
Transportation, the U.S. Department of Energy, the U.S. Geological Survey of the U.S. 
Department of the Interior, the U.S. Postal Service, the Federal Deposit Insurance 
Corporation, and the Postal Rate Commission.

Labor Hours

      The industry labor input measures represent the hours of all workers in the 
industry.  The primary source of data on employment and hours is the BLS Current 
Employment Statistics (CES) survey, which provides monthly data on the number of jobs 
held by wage and salary workers employed directly in nonfarm establishments.  The CES 
survey also provides data on the average weekly hours of production and nonsupervisory 
workers in these establishments. 

      Data from the BLS Current Population Survey (CPS) are used to supplement the 
CES data.  The Division of Industry Productivity Studies (DIPS) estimates the average 
weekly hours of supervisory and nonproduction workers for each industry using data 
from the CPS together with the CES data.  CPS data are also used to estimate the 
employment and hours of self-employed and unpaid family workers in most of the 
service-providing industries. The hours of nonsupervisory workers, supervisory workers, 
and self-employed and unpaid family workers are treated as homogeneous and are 
directly aggregated.

      Other sources of employment and hours data for service industries include the 
American Association of Railroads, the U.S. Department of Transportation, and the U.S. 
Postal Service.

Labor Productivity

      The industry labor productivity measures describe the relationship between 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.  Industry output per hour 
indexes are prepared from data published by various public and private agencies, using 
the greatest level of industry detail available.

      Although the labor productivity measures relate output to hours of employees or 
all persons engaged in an industry, 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 use of purchased services inputs, 
including contract employment services; the organization of production; managerial skill; 
and the characteristics and effort of the workforce.

      Long-term trends tend to be more reliable indicators of the performance of an 
industry than are the year-to-year changes.  The annual changes in an industry’s output 
and use of labor may reflect cyclical changes in the economy as well as long-term trends.  
Also, annual productivity indexes are based on sample data, which are likely to differ 
from data generated by a census of establishments in the industry.  

Unit Labor Costs
 
      The unit labor cost series represents the cost of labor input required to produce 
one unit of output.  The indexes of unit labor costs for each industry are computed by 
dividing an index of industry labor compensation by an index of industry output.  
Compensation, defined as payroll plus supplemental payments, is a measure of the cost to 
the employer of securing the services of labor.  Payroll includes salaries, wages, 
commissions, dismissal pay, bonuses, vacation and sick leave pay, and compensation in 
kind.  Supplemental payments include legally required expenditures and payments for 
voluntary programs.  The legally required portion consists primarily of Federal old age 
and survivors’ insurance, unemployment compensation, and workers’ compensation.  
Payments for voluntary programs include all programs not specifically required by 
legislation, such as the employer portion of private health insurance and pension plans.

New Industries

      The introduction of productivity and cost measures for several new industries 
reflects the ongoing BLS effort to expand productivity measurement of the service-
providing industries.  The measurement of industry productivity and costs for these new 
industries follows standard BLS methods, as described above, wherever possible.  To 
construct output measures for the employment placement agencies industry (NAICS 
56131), annual industry receipts were deflated with BLS producer price indexes (PPIs).  
The labor productivity measures for this industry begin in 1994 because no PPIs or other 
appropriate price series are available to deflate revenues prior to 1994.  For amusement 
and theme parks (NAICS 71311) and bowling centers (NAICS 71395), detailed receipts 
were deflated with detailed price indexes from the Consumer Price Index (CPI) program.

Notes

      The measures in this news release replace the mining, utilities, and service 
industry series published in the news release Productivity and Costs by Industry, Selected 
Service-Providing and Mining Industries, 2004 (released July 12, 2006), and in table 51 
of the Monthly Labor Review.  All of the measures for 2005 in this release are 
preliminary and subject to revision.

      Published productivity and unit labor cost indexes for selected NAICS industries, 
including the industries covered in this report, can be accessed electronically by visiting 
the Labor Productivity and Costs Web site: http://www.bls.gov/lpc/home.htm.  While the 
index numbers and rates of change reported by BLS in this news release are rounded to 
one decimal place, all percent changes in this release and on the BLS web site are 
calculated using index numbers to three decimal places, as found on the web site.

      Additional related measures for detailed service-providing industries, including 
industry employment, annual hours, the net value of production, and the implicit price 
deflator for output can be obtained by sending an email request to dipsweb@bls.gov, or 
by calling the Division of Industry Productivity Studies (202-691-5618). 

      Material in this report is in the public domain and, with appropriate credit, may be 
used without permission.  Information in this report will be made available to sensory-
impaired individuals upon request.  Voice phone: 202-691-5618; TDD message referral 
phone number: 1-800-877-8339.

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Last Modified Date: March 25, 2021