Multifactor productivity trends, 2013

For release 10:00 a.m. (EDT) Thursday, March 26, 2015	USDL- 15-0480

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MULTIFACTOR PRODUCTIVITY TRENDS - 2013

Private nonfarm business sector multifactor productivity increased at a 0.9
percent annual rate in 2013, the U.S. Bureau of Labor Statistics reported 
today. (See chart 1, table A.) This gain in 2013 reflected a 2.7-percent 
increase in output and a 1.8-percent increase in the combined inputs of 
capital and labor. Capital services grew by 1.7 percent, the largest gain
since 2008, and labor input - which is the combined effect of hours worked 
and labor composition - grew 1.8 percent. Capital services per hour of all
persons decreased at a rate of 0.1 percent in 2013 after falling 0.8 percent
in 2012. The decreases in 2011, 2012, and 2013 are the only three years of
decline in this measure of capital intensity which began in 1987. 
(See table 1.) 

Multifactor productivity measures the change in output relative to the 
change in capital and labor inputs used to produce that output. It is 
designed to measure the joint influences of technological change, 
efficiency improvements, returns to scale, reallocation of resources, 
and other factors of economic growth, accounting for the effects of capital
and labor. Multifactor productivity annual measures differ from BLS 
quarterly labor productivity (output per hour worked) measures because the
former also include the influences of capital services and shifts in the 
composition of the workforce. Additionally, much of the source data needed
to construct multifactor productivity measures are not available on a 
quarterly basis.
	
Private business sector multifactor productivity increased at a 1.1 percent
annual rate in 2013, reflecting a 2.9- percent increase in output and a 
1.7-percent increase in the combined inputs of capital and labor. 
(See table 2.)

 
Historical trends in the private nonfarm business sector

Multifactor productivity in the private nonfarm business sector grew 0.9
percent annually from 1987 to 2013, reflecting a 2.9-percent growth in 
output and a 2.0-percent growth in combined inputs. (See table A.) For 
the 2007-2013 period, multifactor productivity grew 0.5 percent, due to 
a 1.0-percent increase in output coupled with a 0.5-percent increase in
combined inputs. The increase in combined inputs reflected a 1.4-percent
increase in capital services, a 0.5-percent decline in hours, and a 
0.5-percent increase in labor composition. (See table A.)

Annual labor productivity growth can be viewed as the sum of three 
components: multifactor productivity growth, the contribution of capital
intensity, and the contribution of shifts in labor composition. Prior to 
1995, and more recently for the 2007-2013 period, multifactor productivity
and the contributions of capital intensity to labor productivity grew 0.5
percent and 0.7 percent, respectively. The remaining contribution of labor
composition contributed to an overall growth of output per hour. The 
contributions to labor productivity growth differed from the 1995-2000 
and 2000-2007 periods, when upward shifts in multifactor productivity and
capital intensity resulted in stronger output per hour growth. 
(See chart 2, table B.)

Information processing equipment (IPE) and intellectual property products
(IPP) showed the strongest growth among the various capital asset 
components. For the 2007-2013 period, real capital services of IPE grew 
4.3 percent annually and IPP grew 3.0 percent annually in the private 
nonfarm business sector. (See table 5.) Both IPE and IPP have experienced
a steady deceleration in growth from their peak in 1995-2000; in the 
1995-2000 period IPE grew 18.4 percent and IPP grew 8.5 percent.

The revised multifactor productivity measure for 2013 is based on more 
recent source data than were available for the preliminary multifactor 
productivity release, published on July 9, 2014, 
www.bls.gov/news.release/archives/prod3_07092014.pdf. Multifactor 
productivity growth rates in the private nonfarm business sector were
revised from 0.3 percent to 0.9 percent in 2013, and from 1.5 percent
to 0.8 percent in 2012. (See table C.)


Table A.  Compound annual growth rates for productivity, output, and inputs
in the private nonfarm business and private business sectors for selected
periods,1987-2013

In percent


                            1987-  1987-  1990-  1995-  2000-  2007-  2012-
                            2013   1990   1995   2000   2007   2013   2013

Private nonfarm business1

Productivity
  Multifactor Productivity2  0.9    0.5    0.5    1.4    1.4    0.5    0.9
    Output per hour of all
      persons                2.1    1.6    1.6    2.9    2.6    1.5    0.9
    Output per unit of
      capital services      -0.5   -0.5   -0.4   -0.8   -0.4   -0.4    1.0


Output                       2.9    3.3    3.0    5.0    2.8    1.0    2.7


Inputs

  Combined inputs3           2.0    2.8    2.4    3.6    1.4    0.5    1.8
   Labor input4              1.2    2.3    2.0    2.4    0.5    0.0    1.8
     Hours                   0.8    1.7    1.3    2.1    0.2   -0.5    1.8
     Labor Composition5      0.5    0.6    0.7    0.3    0.3    0.5    0.0
   Capital services          3.4    3.8    3.4    5.9    3.3    1.4    1.7

Analytic ratio
  Capital services per
    hour of all persons      2.6    2.1    2.0    3.7    3.1    1.9   -0.1


Private business1

Productivity
  Multifactor Productivity2  1.0    0.6    0.5    1.6    1.4    0.5    1.1
    Output per hour of all
      persons                2.2    1.7    1.6    3.0    2.7    1.6    1.2
    Output per unit of
      capital services      -0.4   -0.5   -0.3   -0.6   -0.4   -0.3    1.2


Output                       2.9    3.3    2.9    5.1    2.8    1.0    2.9


Inputs

  Combined inputs3           1.9    2.7    2.4    3.4    1.4    0.5    1.7
   Labor input4              1.2    2.1    2.1    2.3    0.5    0.0    1.7
     Hours                   0.7    1.5    1.4    2.0    0.1   -0.6    1.7
     Labor Composition5      0.5    0.6    0.7    0.3    0.3    0.5    0.1
   Capital services          3.3    3.8    3.2    5.7    3.2    1.3    1.7

Analytic ratio
  Capital services per
    hour of all persons      2.6    2.2    1.8    3.7    3.1    1.9    0.0


1.  Excludes government enterprises.
2.  Output per unit of combined labor input and capital services.
3.  The growth rate of each input is weighted by its share of current dollar
    costs.
4.  Hours at work by age, education, and gender group are weighted by each
    group’s share of the total wage bill.
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, 1987-2013

In percent



                            1987-  1987-  1990-  1995-  2000-  2007-  2012-
                            2013   1990   1995   2000   2007   2013   2013

Private nonfarm business1

Output per hour
of all persons               2.1    1.6    1.6    2.9    2.6    1.5    0.9

Contribution of
capital intensity2           0.9    0.7    0.7    1.2    1.0    0.7    0.0

  Contribution of
  information processing
  equipment3                 0.3    0.3    0.3    0.6    0.3    0.2    0.0

  Contribution of
  research and develop-
  ment4                      0.1    0.1    0.1    0.1    0.1    0.1    0.0

  Contribution of all
  other intellectual    
  property products          0.2    0.2    0.4    0.4   -0.1    0.1   -0.1

  Contribution of all
  other capital services     0.3    0.1   -0.1    0.1    0.7    0.3    0.0

Contribution of
labor composition6           0.3    0.4    0.4    0.2    0.2    0.3    0.0

Multifactor productivity7    0.9    0.5    0.5    1.4    1.4    0.5    0.9

  Contribution of R&D to
  multifactor productivity


Private business1

Output per hour
of all persons               2.2    1.7    1.6    3.0    2.7    1.6    1.2

Contribution of
capital intensity2           0.9    0.7    0.6    1.2    1.0    0.7    0.0

  Contribution of
  information processing
  equipment3                 0.3    0.3    0.3    0.6    0.3    0.2    0.0

  Contribution of
  research and develop-
  ment4                      0.1    0.1    0.1    0.1    0.1    0.1    0.0

  Contribution of all
  other intellectual    
  property products          0.2    0.2    0.4    0.4   -0.1    0.1    0.0

  Contribution of all
  other capital services     0.3    0.1   -0.1    0.1    0.7    0.3    0.0

Contribution of
labor composition6           0.3    0.4    0.5    0.2    0.2    0.3    0.1

Multifactor productivity7    1.0    0.6    0.5    1.6    1.4    0.5    1.1

1. Excludes government enterprises.
2. Capital services per hour multiplied by capital's share of current
   dollar costs.
3. Information processing equipment per hour multiplied by its share of 
   current dollar costs.
4. Research and development per hour multiplied by its share of current
   dollar costs.
5. Software and artistic originals per hour multiplied by their share
   of current dollar costs.
6. Labor composition multiplied by labor's share of current dollar costs.
7. Output per unit of combined labor input and capital services.

Note: Multifactor productivity plus contribution of capital intensity and
labor composition may not sum to output per hour due to independent
rounding.  Contributions of information processing equipment, research and
development, all other intellectual property products, and all other 
capital services may not sum to the contribution of capital intensity
due to independent rounding.
 
Table C. Annual growth rates of the previous and revised multifactor
productivity measures in the private nonfarm business and private
business sectors for the 1987-2013 period

Annual percent change from previous year

          Private Nonfarm Business      Private Business
Year      Previous      Revised         Previous      Revised


1988         1.0          1.0              0.7          0.7
1989         0.1          0.1              0.4          0.3
1990         0.3          0.4              0.6          0.7
1991        -0.8         -0.8             -0.8         -0.8
1992         2.5          2.5              2.8          2.8
1993        -0.1         -0.1             -0.2         -0.2
1994         0.6          0.7              0.6          0.7
1995         0.3          0.3              0.0          0.0
1996         1.4          1.5              1.8          1.8
1997         0.7          0.7              0.9          0.9
1998         1.6          1.7              1.6          1.6
1999         1.8          1.7              2.0          1.9
2000         1.4          1.5              1.6          1.7
2001         0.5          0.5              0.5          0.6
2002         2.1          2.0              2.1          2.0
2003         2.4          2.3              2.6          2.5
2004         2.8          2.7              2.9          2.8
2005         1.4          1.3              1.4          1.3
2006         0.3          0.3              0.4          0.3
2007         0.4          0.4              0.3          0.3
2008        -1.3         -1.3             -1.2         -1.2
2009        -0.3         -0.2             -0.1          0.0
2010         2.7          2.8              2.6          2.7
2011         0.7          0.0              0.6         -0.1
2012         1.5          0.8              1.4          0.7
2013         0.3          0.9              0.7          1.1

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Last Modified Date: March 26, 2015