People are asking...

How is MFP defined?

MFP measures reflect output per unit of a set of combined inputs. A change in MFP reflects the change in output that cannot be accounted for by the change in combined inputs. As a result, MFP measures reflect the joint effects of many factors including research and development (R&D), new technologies, economies of scale, managerial skill, and changes in the organization of production.

Why is productivity measurement important?

Advances in productivity, that is the ability to produce more with the same or less input, are a significant source of increased potential national income. In the long run, increases in real hourly earnings are tied to productivity gains. The U.S. economy has been able to produce more goods and services over time, not by requiring a proportional increase of labor time, but by making production more efficient.

Why isn't MFP available quarterly?

Some source data needed to construct such measures are not available quarterly.

How do the multifactor productivity measures for private business and private nonfarm business differ from the measures for the manufacturing sector and manufacturing industries?

The multifactor productivity measures for private business and private nonfarm business use a value-added concept of output. Value added measures the contributions of capital and labor in production. In private business and private nonfarm business, value added output is compared to only two inputs, capital and labor. In measuring labor input for these major sectors, the effects of changing labor composition are estimated.

For the manufacturing sector and manufacturing industries, output is "sectoral output," which measures the total value of production including purchased intermediate inputs, but excludes shipments between establishments in the same industry/sector. Multifactor productivity is measured by comparing sectoral output to three classes of inputs: labor, capital, and purchased intermediates (including energy, materials, and business services from outside of manufacturing). For the manufacturing sector and manufacturing industries, labor input is a direct aggregate of hours, and changes in labor composition are not measured.

Are sector or industry productivity measures available for separate regions, states, and cities in the United States?

No. Our sector or industry productivity measures are only available at the national level. Data availability at anything less than the national level is not adequate for developing regional measures.

 

Last modified: August 21, 2007