Multifactor Productivity Trends News Release

For release 10:00 a.m.(EDT) Tuesday, August 24, 2010	      USDL-10-1171 
Technical information:	(202) 691-5606     dprweb@bls.gov   www.bls.gov/mfp
Media contact:	        (202) 691-5902     PressOffice@bls.gov


MULTIFACTOR PRODUCTIVITY TRENDS - 2008

Private nonfarm business sector multifactor productivity increased at a 0.1 
percent annual rate in 2008, the U.S. Bureau of Labor Statistics reported 
today. (See chart 1, table A.)  This was the slowest gain in multifactor 
productivity since 1995. (See table 1.)  Multifactor productivity measures
the change in output per unit of combined inputs of labor and capital.  
Multifactor productivity is designed to measure the joint influences on 
economic growth of technological change, efficiency improvements, returns 
to scale, reallocation of resources, and other factors, allowing for the 
effects of capital and labor.  Multifactor productivity, therefore, differs
from labor productivity (output per hour worked) measures that are published 
quarterly by BLS since it includes information on capital services and other
data that are not available on a quarterly basis.  Additionally, multifactor
productivity measures for the private business and private nonfarm business 
sectors account for shifts in the composition of labor.  Estimates of labor 
composition are not included in the quarterly labor productivity measures.

The modest multifactor productivity gain in 2008 reflected a 0.2 percent 
decrease in output and a 0.3 percent decrease in the combined inputs of 
capital and labor.  Capital services grew by 2.8 percent, the slowest rate 
of growth since 2004.  Labor input fell 1.7 percent, the largest decline 
since 2002.  

Private business sector multifactor productivity grew 0.1 percent in 2008,
the slowest annual growth rate since 1995.  The multifactor productivity 
gain in 2008 reflected no change in the growth rate of output and a 0.1 
percent decrease in the combined inputs of capital and labor. 


Historical trends in private nonfarm business

Multifactor productivity in private nonfarm business grew 1.0 percent 
annually between 1987 (the starting year of the series) and 2008. 
(See table A.)  Output increased at a 3.2 percent annual rate over that
period and combined inputs of labor and capital rose an average of 2.2 
percent per year.  Output per hour worked (labor productivity) grew at 
a 2.2 percent rate.  For the 2000-2007 period, multifactor productivity 
in private nonfarm business rose more rapidly than in previous periods, 
averaging 1.4 percent per year, slightly outpacing the 1.3 percent growth
rate during the 1995-2000 period.

Historical trends in labor productivity growth can be viewed as the sum 
of three components: multifactor productivity growth, the contribution of
increased capital intensity, and the contribution of shifts in labor 
composition.  The relationship between labor productivity growth and these
three components can be seen in table B and chart 2.  Chart 2 shows how 
relative to output per hour, contributions of multifactor productivity and
of capital intensity increased during the latter half of the 1990s.  These
contributions have continued to be relatively high over the 2000-2007 period.

Of the 2.2 percent growth rate in labor productivity for the 1987-2008 period,
1.0 percent can be attributed to increases in multifactor productivity, 0.9 
percent to the contribution of capital intensity, and 0.3 percent to changes
in labor composition. (See table B.)  

Previous and revised multifactor productivity data for 1987-2008 for the 
private nonfarm business sector are displayed in table C.  The differences 
in 2008 are largely due to the fact that previous results were based on 
preliminary information.  The 0.1-percent change in multifactor productivity
growth for the private nonfarm business sector is much lower than the 
1.1-percent change reported on May 6, 2009, based on preliminary information.
This downward revision was due to output being revised down to a decline of 
0.2 percent from an increase of 0.8 percent.

 
Table A.  Compound average growth rates for productivity, output, and inputs
in the private nonfarm business and private business sectors for selected
periods,1987-2008

In percent

                            1987-    1987-    1990-    1995-    2000-    2007-
                            2008     1990     1995     2000     2007     2008

Private nonfarm business1

Productivity
  Multifactor Productivity2  1.0      0.5      0.5      1.3      1.4      0.1
    Output per hour of all
      persons                2.2      1.5      1.6      2.8      2.7      2.1
    Output per unit of
      capital services      -0.8     -0.4     -0.5     -1.1     -0.6     -2.8


Output                       3.2      3.2      2.9      5.0      2.7     -0.2


Inputs

  Combined inputs3           2.2      2.7      2.4      3.6      1.3     -0.3
   Labor input4              1.4      2.3      2.0      2.5      0.4     -1.7
     Hours                   1.0      1.7      1.3      2.2      0.0     -2.2
     Labor Composition5      0.5      0.6      0.7      0.3      0.3      0.5
   Capital services          4.1      3.7      3.4      6.2      3.4      2.8

Analytic ratio
  Capital services per
    hour of all persons      3.0      1.9      2.0      3.9      3.4      5.1


Private business1

Productivity
  Multifactor Productivity2  1.1      0.6      0.4      1.5      1.5      0.1
    Output per hour of all
      persons                2.3      1.6      1.5      2.9      2.7      2.1
    Output per unit of
      capital services      -0.7     -0.4     -0.3     -0.9     -0.5     -2.6


Output                       3.2      3.2      2.9      5.0      2.7      0.0


Inputs

  Combined inputs3           2.2      2.6      2.4      3.4      1.2     -0.1
   Labor input4              1.4      2.1      2.0      2.3      0.3     -1.5
     Hours                   0.9      1.6      1.3      2.0      0.0     -2.1
     Labor Composition5      0.5      0.6      0.7      0.3      0.3      0.6
   Capital services          3.9      3.6      3.2      6.0      3.3      2.7

Analytic ratio
  Capital services per
    hour of all persons      3.0      2.0      1.8      3.9      3.3      4.9


1.  Excludes government enterprises.
2.  Output per unit of combined labor and capital inputs.
3.  The growth rate of each input is weighted by its share of nominal costs,
4.  Index of hours at work; hours at work by age, education, and gender group
    group are weighted by each group’s share of labor compensation.
5.  Ratio of labor input to hours.


Table B.  Compound annual growth rates in output per hour of all persons 
and the contributions of capital intensity, labor composition, and 
multifactor productivity in the private nonfarm business and private 
business sectors for selected periods, 1987-2008

In percent

                            1987-    1987-    1990-    1995-    2000-    2007-
                            2008     1990     1995     2000     2007     2008

Private nonfarm business1

Output per hour
of all persons               2.2      1.5      1.6      2.8      2.7      2.1

Contribution of
capital intensity2           0.9      0.6      0.6      1.2      1.0      1.6

  Contribution of
  information processing
  equipment and software3    0.6      0.5      0.5      0.9      0.6      0.7

  Contribution of all
  other capital services     0.3      0.1      0.1      0.2      0.4      1.0

Contribution of
labor composition4           0.3      0.4      0.5      0.2      0.2      0.3

Multifactor productivity5    1.0      0.5      0.5      1.3      1.4      0.1

  Contribution of R&D to
  multifactor productivity   0.2      0.2      0.2      0.2      0.2      0.2


Private business1

Output per hour
of all persons               2.3      1.6      1.5      2.9      2.7      2.1

Contribution of
capital intensity2           0.9      0.6      0.6      1.2      1.0      1.6

  Contribution of
  information processing
  equipment and software3    0.6      0.5      0.5      0.9      0.6      0.6

  Contribution of all
  other capital services     0.3      0.1      0.1      0.2      0.4      1.0

Contribution of
labor composition4           0.3      0.4      0.5      0.2      0.2      0.4

Multifactor productivity5    1.1      0.6      0.4      1.5      1.5      0.1

1. Excludes government enterprises.
2. Growth rate in capital services per hour multiplied by capital's share of
   current dollar costs.
3. Growth rate of information processing equipment and software per hour
   multiplied by its share of current dollar costs.
4. Growth rate of labor composition (the growth rate of labor input less the
   growth rate of the hours of all persons) multiplied by labor's share of
   current dollar costs.
5. Output per unit of combined labor and capital inputs.

Multifactor productivity plus contribution of capital intensity and
labor composition may not sum to output per hour due to independent
rounding.  Contribution of information processing equipment and all other
capital may not sum to the contribution of capital intensity due to
independent rounding.


Table C. Annual growth rates of the preliminary and revised multifactor
productivity measures in the private nonfarm business sector for the
1987-2008 period

Percent change from previous year

                         Multifactor Productivity
               Year      Preliminary   Revised


                1988         1.0         1.0
                1989         0.0         0.1

                1990         0.4         0.4
                1991        -0.8        -0.9
                1992         2.4         2.3
                1993         0.2         0.3
                1994         0.8         0.7

                1995         0.1         0.0
                1996         1.4         1.4
                1997         0.7         0.6
                1998         1.3         1.5
                1999         1.3         1.6

                2000         1.1         1.6
                2001         0.4         0.7
                2002         2.1         2.4
                2003         2.6         2.5
                2004         2.6         2.6

                2005         1.3         1.0
                2006         0.5         0.4
                2007         0.2         0.5
                2008         1.1         0.1


TECHNICAL NOTES

Capital Input:  Capital input measures the services derived from the stock of 
physical assets and software.  The assets included are fixed business 
equipment, structures, inventories, and land.  Among equipment, BLS provides
additional detail for information processing equipment and software (IPES).  
IPES is composed of four broad classes of assets: computers and related 
equipment, software, communications equipment, and other IPES equipment.  
Computers and related equipment includes mainframe computers, personal 
computers, printers, terminals, tape drives, storage devices, and integrated 
systems.  Software is comprised of pre-packaged, custom, and own-account 
software.  Communications equipment is not further differentiated.  Other IPES
includes medical equipment and related instruments, electromedical instruments,
nonmedical instruments, photocopying and related equipment, and office and 
accounting machinery.  Structures include nonresidential structures and 
residential capital that are rented out by profit-making firms or persons.

Financial assets are excluded from capital input measures, as are 
owner-occupied residential structures.  The aggregate capital input measures 
are obtained by Tornqvist aggregation of the capital stocks for each asset 
type within each of 60 NAICS industry groupings using estimated rental prices
for each asset type.  Each rental price reflects the nominal rate of return 
to all assets within the industry and rates of economic depreciation and 
revaluation for the specific asset; rental prices are adjusted for the effects
of taxes.  Current-dollar capital costs can be defined as each asset’s rental 
price multiplied by its constant-dollar stock, adjusting for capital 
composition effects.  Data on investments in physical assets are obtained 
from BEA.  Data on inventories are obtained from BEA using additional 
information from IRS Corporation Income Returns.  Estimates for land in the 
farm sector are obtained from USDA.  Nonfarm industry detail is based on IRS
book value data.  Current-dollar gross product originating (GPO) data, 
obtained from BEA, are used in estimating capital rental prices.

Labor Input:  Labor input in private business and private nonfarm business 
is obtained by chained superlative (Tornqvist) aggregation of the hours at 
work by all persons, classified by age, education, and gender with weights 
determined by their shares of labor compensation.  Hours paid of employees 
are largely obtained from the Current Employment Statistics program (CES). 
These hours of employees are then converted to an at-work basis by using 
information from the Employment Cost Index (ECI) of the National Compensation
Survey (NCS) and the Hours at Work Survey.  Hours at work for nonproduction
and supervisory workers are derived using data from the CPS, the CES, and 
the NCS.  The hours at work of proprietors, unpaid family workers, and farm 
employees are derived from the Current Population Survey.  Hours at work 
data reflect Productivity and Costs data as of the June 3, 2010 news release.
The growth rate of labor composition is defined as the difference between 
the growth rate of weighted labor input and the growth rate of the hours of
all persons. Additional information concerning data sources and methods of 
measuring labor composition can be found in Cindy Zoghi, 2007, Measuring Labor
Composition: A Comparison of Alternate Methodologies       
http://www.bls.gov/bls/fesacp1121407.pdf.

Combined Inputs:  Labor and capital input are combined using Tornqvist
aggregation, employing weights that represent each component's share of 
total costs.  Total costs are defined as the value of output 
(Gross Product Originating) less a portion of taxes on production and imports. 
Most taxes on production and imports, such as excise taxes, are excluded from
costs; however, property and motor vehicle taxes remain in total costs.  The
index uses changing weights: The share in each year is averaged with the 
preceding year's share.

Productivity:  The private nonfarm business and private nonfarm business 
multifactor productivity measures describe the relationship between output in
real terms and the inputs involved in its production.  They do not measure 
the specific contributions of labor, capital, or any other factor of 
production.  Rather, multifactor productivity is designed to measure the 
joint influences of output, capital, and labor on economic growth of 
technological change, efficiency improvements, returns to scale, reallocation
of resources due to shifts in factor inputs across industries, and other
factors.
     
The multifactor productivity indexes for private business and private 
nonfarm business are derived by dividing an output index by an 
index of labor input and capital services.  The output indexes are computed 
as chained superlative indexes (Fisher Ideal indexes) of components of real 
output.  For the years 1987 to 2008, BEA supplies the output indexes.  BLS 
adjusts these to remove the output of government enterprises.

Output:  This release presents data for the private business and private 
nonfarm business sectors.  The private business sector, which accounted for
approximately 76 percent of gross domestic product in 2005, includes all of
gross domestic product except the output of general government, government 
enterprises, non-profit institutions, the rental value of owner-occupied 
real estate, and the output of paid employees of private households.  
Additionally, the private nonfarm business sector excludes farms from the 
private business sector, but includes agricultural services.  Multifactor 
measures exclude government enterprises, while the BLS quarterly Productivity 
and Cost series include them.  The output measures reflect the revised National
Income and Product Accounts (NIPA) data released by BEA on July 31, 2009 but 
do not reflect the revised data released by BEA on July 30, 2010.

Research and development:  The stock of research and development in private
nonfarm business is derived by cumulating constant dollar measures of research
and development expenditures and allowing for depreciation.  Current dollar 
expenditures for privately financed research and development for the years 
1987-2008 are obtained from annual issues of Research and Development in 
Industry published by the National Science Foundation.  BLS develops price 
deflators and estimates of the rate of depreciation.  Further description of
these data and methods can be found in BLS Bulletin 2331 (September 1989), 
"The Impact of Research and Development on Productivity Growth."  BLS 
measures of year-to-year contributions of research and development to the
private nonfarm business sector and measures of the stock of research and 
development are available at http://www.bls.gov/mfp/rdtable.pdf .

Other information:  Comprehensive tables containing additional data beyond 
the scope of this press release are available upon request at 202-691-5606
or at http://www.bls.gov/mfp/mprdload.htm .  More detailed information on
methods, limitations, and data sources of capital and labor are provided 
in BLS Bulletin 2178 (September 1983), Trends in Multifactor Productivity, 
1948-81 and on the BLS Multifactor Productivity website under the title 
“Technical Information About the BLS Multifactor Productivity Measures” 
for Major Sectors and 18 NAICS 3-digit Manufacturing Industries at 
http://www.bls.gov/mfp/mprtech.pdf.  General information is available on
the BLS Multifactor Productivity website at 
http://www.bls.gov/mfp/mprover.htm.   Additional data not contained in the 
release can be obtained in print or at http://www.bls.gov/mfp.  A number
of comprehensive tables set up as zip files can be obtained at 
http://www.bls.gov/mfp/mprdload.htm.  Included in the additional data
available in the home page is a zip file containing selected multifactor 
productivity data that links 1948-87 SIC data to NAICS data from 1987 forward. 
This file includes data for the private business and private nonfarm business
sectors. 

Table 1. Private nonfarm business sector: productivity and related measures
for the 1987-2008 period1

Percent change from previous year

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1988    1.7     0.9     1.0     4.6     3.5     3.7     3.5     0.8
1989    0.8    -0.3     0.1     3.5     3.3     3.9     3.5     1.1

1990    1.9    -1.9     0.4     1.4     0.1     3.4     1.0     3.8
1991    1.7    -3.6    -0.9    -0.9    -1.1     2.9     0.0     5.5
1992    4.0     1.3     2.3     3.8     1.0     2.5     1.5     2.7
1993    0.7     0.4     0.3     3.6     3.3     3.2     3.3     0.3
1994    1.1     0.9     0.7     4.7     4.1     3.7     4.0     0.1

1995    0.5    -1.2     0.0     3.3     2.7     4.5     3.2     1.7
1996    2.6    -0.4     1.4     4.4     2.2     4.9     3.0     3.0
1997    1.5    -0.4     0.6     5.1     4.0     5.5     4.5     1.9
1998    3.0    -1.2     1.5     5.2     2.4     6.6     3.6     4.3
1999    3.3    -1.4     1.6     5.6     2.6     7.1     3.9     4.7

2000    3.4    -2.2     1.6     4.5     1.2     6.8     2.8     5.8
2001    3.1    -3.9     0.7     1.0    -1.6     5.1     0.3     7.3
2002    4.7    -1.5     2.4     1.9    -2.0     3.5    -0.5     6.2
2003    3.7     0.2     2.5     3.1    -0.4     2.9     0.6     3.5
2004    2.8     1.7     2.6     4.2     1.2     2.4     1.5     1.1

2005    1.7     0.1     1.0     3.4     1.9     3.3     2.4     1.5
2006    1.0    -0.2     0.4     3.2     2.5     3.4     2.8     1.2
2007    1.9    -0.9     0.5     2.4     1.2     3.3     1.9     2.8
2008    2.1    -2.8     0.1    -0.2    -1.7     2.8    -0.3     5.1

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 2. Private business sector: productivity and related measures
for the 1987-2008 period1

Percent change from previous year

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1988    1.6     0.5     0.8     4.4     3.4     3.8     3.5     1.1
1989    1.0    -0.1     0.3     3.7     3.2     3.8     3.4     1.1

1990    2.2    -1.6     0.7     1.5    -0.1     3.1     0.9     3.8
1991    1.6    -3.4    -0.9    -0.8    -1.0     2.7     0.1     5.2
1992    4.2     1.6     2.5     4.0     1.0     2.3     1.4     2.5
1993    0.6     0.3     0.2     3.3     3.1     3.1     3.1     0.4
1994    0.9     1.2     0.7     4.9     4.5     3.6     4.2    -0.3

1995    0.1    -1.4    -0.3     2.9     2.7     4.4     3.2     1.6
1996    2.9    -0.1     1.7     4.6     2.0     4.6     2.8     3.0
1997    1.7    -0.1     0.8     5.2     3.9     5.3     4.4     1.9
1998    3.0    -1.2     1.5     5.1     2.3     6.4     3.5     4.3
1999    3.5    -1.2     1.8     5.6     2.4     6.9     3.7     4.7

2000    3.5    -1.9     1.7     4.6     1.2     6.6     2.8     5.5
2001    3.2    -3.8     0.8     0.9    -1.8     5.0     0.2     7.3
2002    4.6    -1.3     2.4     2.0    -1.9     3.4    -0.4     6.0
2003    3.9     0.4     2.6     3.1    -0.5     2.8     0.5     3.5
2004    2.9     1.6     2.6     4.2     1.1     2.5     1.5     1.3

2005    1.7     0.2     1.0     3.4     1.9     3.2     2.3     1.5
2006    1.0     0.0     0.5     3.1     2.3     3.1     2.6     1.0
2007    1.8    -0.8     0.5     2.3     1.1     3.1     1.8     2.6
2008    2.1    -2.6     0.1     0.0    -1.5     2.7    -0.1     4.9

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 3. Private nonfarm business sector: Indexes of productivity and related
measures, 1987-2008

Indexes 2005=100

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1987    66.1    113.6   82.1    54.2    75.6    47.7    66.0    58.2
1988    67.2    114.6   83.0    56.7    78.3    49.4    68.3    58.6
1989    67.7    114.2   83.0    58.7    80.9    51.4    70.7    59.3

1990    69.0    112.1   83.3    59.5    80.9    53.1    71.4    61.5
1991    70.2    108.1   82.6    59.0    80.0    54.6    71.4    64.9
1992    73.0    109.5   84.5    61.3    80.8    56.0    72.5    66.7
1993    73.4    109.9   84.8    63.5    83.5    57.8    74.9    66.8
1994    74.2    110.9   85.4    66.5    87.0    59.9    77.9    66.9

1995    74.6    109.6   85.4    68.6    89.3    62.6    80.4    68.1
1996    76.5    109.1   86.5    71.7    91.3    65.7    82.8    70.1
1997    77.6    108.7   87.1    75.3    94.9    69.3    86.5    71.4
1998    80.0    107.3   88.4    79.3    97.2    73.9    89.7    74.5
1999    82.6    105.9   89.9    83.7    99.8    79.1    93.2    78.0

2000    85.4    103.5   91.3    87.5   101.0    84.5    95.8    82.5
2001    88.1     99.5   91.9    88.4    99.4    88.8    96.1    88.6
2002    92.2     98.0   94.2    90.1    97.4    91.9    95.7    94.1
2003    95.7     98.2   96.5    92.8    97.0    94.5    96.2    97.4
2004    98.4     99.9   99.0    96.7    98.1    96.8    97.7    98.5

2005   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2006   101.0     99.8  100.4   103.2   102.5   103.4   102.8   101.2
2007   102.9     98.9  100.9   105.6   103.7   106.8   104.7   104.0
2008   105.0     96.1  101.0   105.5   101.9   109.7   104.4   109.3

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 4. Private business sector: Indexes of productivity and related
measures, 1987-2008

Indexes 2005=100

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1987    65.2    111.0   81.1    54.1    76.5    48.8    66.7    58.8
1988    66.3    111.6   81.8    56.5    79.0    50.6    69.0    59.4
1989    67.0    111.5   82.0    58.6    81.6    52.5    71.4    60.1

1990    68.4    109.7   82.6    59.5    81.5    54.2    72.0    62.3
1991    69.5    106.0   81.8    59.0    80.7    55.6    72.1    65.6
1992    72.5    107.8   83.9    61.4    81.5    56.9    73.1    67.2
1993    72.9    108.0   84.1    63.4    84.0    58.7    75.4    67.5
1994    73.6    109.4   84.7    66.5    87.8    60.8    78.6    67.3

1995    73.7    107.8   84.4    68.5    90.1    63.5    81.1    68.3
1996    75.8    107.8   85.9    71.6    91.9    66.4    83.4    70.3
1997    77.1    107.6   86.6    75.3    95.5    70.0    87.0    71.7
1998    79.5    106.4   87.9    79.2    97.7    74.4    90.1    74.7
1999    82.3    105.2   89.5    83.6   100.0    79.5    93.4    78.2

2000    85.2    103.1   91.0    87.4   101.2    84.8    96.0    82.6
2001    87.9     99.2   91.7    88.2    99.5    89.0    96.2    88.6
2002    91.9     97.8   93.9    90.0    97.5    92.0    95.8    94.0
2003    95.5     98.2   96.4    92.8    97.1    94.5    96.2    97.3
2004    98.3     99.8   99.0    96.7    98.1    96.9    97.7    98.5

2005   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2006   101.0    100.0  100.5   103.1   102.3   103.1   102.6   101.0
2007   102.9     99.3  101.0   105.5   103.5   106.2   104.4   103.6
2008   105.0     96.7  101.1   105.4   102.0   109.1   104.3   108.7

See footnotes following table 4.
Source: Bureau of Labor Statistics



Footnotes, Tables 1-4

Source:  BLS develops productivity measures using output data published by 
the Bureau of Economic Analysis (BEA), compensation and hours data published 
by other Bureau of Labor Statistics (BLS) programs, and capital data supplied
by BEA and U.S. Department of Agriculture.  Also see Technical Notes in this
release.

(1) The private business sector includes all of gross domestic product except
    the output of general government, government enterprises, non-profit 
    institutions, the rental value of owner-occupied real estate, and the 
    output of paid employees of private households.  The private nonfarm 
    business sector also excludes farms but includes agricultural services.

(2) Output per unit of combined labor and capital inputs.

(3) Gross domestic product originating in the sector, superlative chained 
    index.

(4) Index of hours at work of all persons including employees, proprietors, 
    and unpaid family workers, classified by age, education, and gender.  
    This superlative chain index is computed by combining changes in the hours
    of each age, education, and gender group weighted by each group’s share of
    labor compensation. 

(5) A measure of the flow of capital services used in the sector.  Capital 
    services measure the services derived from the stock of physical assets and
    software.  The assets included are fixed business equipment, structures, 
    inventories, and land.

(6) Labor input combined with capital input are weighted with labor's and 
    capital's share of current dollar costs to form a superlative chained 
    index. 

Table 5. Compound average annual growth rates in real capital services
by asset type, private nonfarm business sector, 1987-2008

In percent


                        1987-   1987-   1990-   1995-   2000-   2007-
                        2008    1990    1995    2000    2007    2008

All Assets               4.1     3.7     3.4     6.2     3.4     2.8

  Equipment              6.1     4.9     5.1     9.9     5.1     3.8

    All Information     11.1    10.9     9.6    17.6     8.3     6.7
    Processing
    Equipment & Software
    (IPES)

      Computers &       21.3    19.0    16.2    40.5    14.5    13.8
      related equipment

      Software          12.6    17.8    13.5    16.8     8.1     5.7

      Communications     6.9     6.1     5.3    10.3     6.3     5.1
      equipment

      Other IPES         4.2     3.0     4.2     3.9     4.6     5.4

    All other equipment  2.2     2.2     1.9     3.2     1.9     1.6

  Structures             2.0     2.8     2.0     2.2     1.5     1.9

  Residential rental     1.5     2.1     1.2     1.7     1.5     0.5
  capital

  Inventories            2.7     3.2     2.2     3.9     2.2     0.5

  Land                   1.6     1.8     1.3     1.7     1.5     2.4

Source: Bureau of Labor Statistics

Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.



Table 6. Compound average annual growth rates in real capital services
by asset type, private business sector, 1987-2008

In percent


                        1987-   1987-   1990-   1995-   2000-   2007-
                        2008    1990    1995    2000    2007    2008

All Assets               3.9     3.6     3.2     6.0     3.3     2.7

  Equipment              6.0     4.6     4.9     9.8     5.1     3.8

    All Information     11.1    10.9     9.6    17.6     8.3     6.7
    Processing
    Equipment & Software
    (IPES)

      Computers &       21.3    19.1    16.2    40.5    14.5    13.8
      related equipment

      Software          12.6    17.8    13.5    16.7     8.1     5.7

      Communications     6.9     6.1     5.3    10.3     6.3     5.1
      equipment

      Other IPES         4.2     3.0     4.3     3.9     4.6     5.4

    All other equipment  2.1     2.2     1.8     3.1     1.8     1.6

  Structures             1.9     2.7     1.9     2.1     1.4     1.9

  Residential rental     1.5     2.1     1.2     1.7     1.5     0.5
  capital

  Inventories            2.5     2.8     2.2     3.8     2.1     0.4

  Land                   1.5     3.2     1.4     1.2     0.9     1.8

Source: Bureau of Labor Statistics

Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.



Last Modified Date: August 24, 2010