Multifactor productivity trends for detailed industries, 2013

For release 10:00 a.m. (EDT) Tuesday, September 29, 2015	                                USDL-15-1894

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Multifactor productivity - defined as output per unit of combined inputs - rose in 38 of the 86 4-digit 
NAICS manufacturing industries in 2013, as well as in the two transportation industries that are 
measured, the U.S. Bureau of Labor Statistics reported today. This was up from 2012, when multifactor 
productivity increased in 35 manufacturing and in the two transportation industries. 

Multifactor Productivity: Definition and Concepts

Multifactor productivity indexes relate the change in real output to the change in the combined inputs of 
labor, capital, and intermediate purchases consumed in producing that output.

Multifactor productivity growth measures the extent to which output growth exceeds the growth in 
inputs. A variety of factors that influence economic growth are not specifically accounted for among 
measured inputs, including: technological change, returns to scale, enhancements in managerial and staff 
skills, changes in the organization of production, and other efficiency improvements. Multifactor 
productivity reflects these factors. 

2013 Trends in Multifactor Productivity

Among manufacturing industries, the greatest increase in multifactor productivity occurred in 
communications equipment (17.3 percent). Four other industries experienced multifactor productivity 
gains greater than 6.4 percent: seafood product preparation and packaging, audio and video equipment, 
alumina and aluminum production and processing, and iron and steel mills and ferroalloys.
In the two measured transportation industries, multifactor productivity increased 1.6 percent in air 
transportation and 0.5 percent in line-haul railroads. 

Components of Multifactor Productivity Growth: Output and Combined Inputs

In 2013, 43 industries experienced increases in both output and combined inputs. In 2012, 50 industries 
experienced increases in both components.

In 2013, output increased in 57 manufacturing industries, the same number as in 2012. The following 
industries had double-digit increases in output in 2013:
  *     Agricultural chemicals (16.1 percent)
  *     Railroad rolling stock (14.1 percent)
  *     Communications equipment (11.3 percent)

Output declined the most in footwear (-12.7 percent) and in magnetic media manufacturing and 
reproducing (-11.2 percent).

Combined inputs of capital, labor, and intermediate purchases rose in 57 manufacturing industries in 
2013, compared to 62 industries in 2012. Growth in intermediate purchases was widespread, rising in 60 
industries. Fewer manufacturing industries experienced growth in labor hours (43 industries) and capital 
services (33 industries). 

The following industries had the largest increases in combined inputs in 2013:
  *     Household appliances (17.0 percent)
  *     Leather and hide tanning and finishing (16.8 percent)
  *     Railroad rolling stock (16.2 percent)
  *     Agricultural chemicals (9.1 percent)
  *     Motor vehicle bodies and trailers (8.9 percent)

For some manufacturing industries, multifactor productivity rose despite falling output, as combined 
inputs fell more rapidly. This occurred in three industries:
  *     Other leather and allied products
  *     Computer and peripheral equipment
  *     Electric lighting equipment

Multifactor productivity rose in 17 of the 28 manufacturing industries that recorded a decline in 
combined inputs in 2013. Within this group, the largest declines in combined inputs occurred in 
computer and peripheral equipment and in communications equipment. 

In the air transportation industry, output increased 1.4 percent and combined inputs declined 0.2 percent. 
In line-haul railroads, output rose 2.7 percent and combined inputs increased 2.2 percent.

Long Term Trends in Multifactor Productivity

Year-to-year movements and long-term trends in industry multifactor productivity may both reflect 
cyclical changes in the economy. However, long-term average annual changes in multifactor 
productivity are more reliable indicators of historical trends in industry performance.

More industries experienced multifactor productivity growth over the long term than in the short term. 
From 1987 to 2013, 57 industries increased, compared to 38 in 2013. Average annual rates of change in 
multifactor productivity for nearly all manufacturing industries ranged between -2.0 and 2.0 percent 
over the long term.
In contrast, 2013 multifactor productivity growth rates varied. For example, multifactor productivity 
declined by 2.0 percent or more in 24 industries. However, only one industry (pharmaceuticals and 
medicines) experienced average annual decline of that magnitude. 

Between 1987 and 2013, the number of manufacturing industries with growth in multifactor productivity 
was highest in 2003 and 2010. These were years of economic growth following recessions. In contrast, 
relatively few manufacturing industries saw multifactor productivity growth in the recession years of 
2001 and 2009.

From 1987 to 2013, multifactor productivity rose in both air transportation and line-haul railroads by 1.3 
and 1.9 percent, respectively. While both industries experienced increases in output, productivity grew 
more in line-haul railroads because its combined inputs showed very slight long-term growth. 

Source Data Revisions and Improvements

This news release incorporates 2013 and 2012 data, as well as revisions in earlier years, from the Annual 
Survey of Manufacturers and the 2012 Economic Census. It also incorporates the annual benchmark 
revisions of the BLS Current Employment Statistics (CES) survey published in February 2015. All 
measures in this release are subject to revision.

The capital services component of combined inputs for manufacturing industries includes for the first 
time benchmark capital investment data from the Census Bureau’s Annual Capital Expenditures Survey 
(ACES). Capital structure assets have been expanded from two categories to ten by using the ACES 
benchmark data for 2008 and 2012. Capital equipment assets have been reduced from 25 categories to 
24 by combining some obsolete or rare equipment types. Capital services measures for manufacturing 
and air transportation also incorporate changes from the 2013 Bureau of Economic Analysis (BEA) 
comprehensive data revision.

The intermediate purchases component of combined inputs incorporates the 2007 BEA benchmark 
input-output tables as well as revisions to the 1997 and 2002 tables. Intermediate purchases in this 
release are calculated using improved price deflators for purchased materials commodities. 

For the first time, the industries included in this news release are classified according to the 2012 North 
American Industrial Classification System (NAICS). While the rates of change reported by BLS in this 
news release are rounded to one decimal place, all industry productivity percent changes are calculated 
using index numbers rounded to three decimal places.

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Last Modified Date: June 28, 2016