Multifactor productivity in private nonfarm business, 2009

In 2009, multifactor productivity—a measure of the change in output per unit of combined capital and labor—in the private nonfarm business sector grew at a modest 0.1-percent annual rate.

In 2009, the gain in multifactor productivity reflected decreases of 3.7 percent in output and 3.8 percent in the combined inputs of capital and labor.

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Labor input—the combined effect of hours worked and labor composition—fell 6.3 percent and capital services grew by 1.1 percent in 2009. For the private nonfarm business sector, the declines recorded in output, combined inputs of capital and labor, and labor input were the largest in the series, which began in 1987. Growth in capital services was also the slowest recorded since the series began.

[Chart data]

Multifactor productivity in private nonfarm business grew 0.9 percent annually between 1987 (the starting year of the series) and 2009. For the 2000–2007 period, multifactor productivity in private nonfarm business rose more rapidly than in previous periods, averaging 1.4 percent per year. Multifactor productivity decreased for the 2007–2009 period, averaging a decline of 0.5 percent per year.

Multifactor productivity is designed to measure the joint influences of technological change, efficiency improvements, returns to scale, reallocation of resources, and other factors on economic growth, 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.

These data are from the Multifactor Productivity program. Productivity data are subject to revision. To learn more, see "Multifactor Productivity Trends, 2009," news release USDL-11-0435 (HTML) (PDF). A change in multifactor productivity reflects the change in output that cannot be accounted for by the change in combined inputs of labor and capital.