For release 10:00 a.m. (ET) Thursday, March 19, 2026 USDL-26-0504
Technical information: (202) 691-5606 • Productivity@bls.gov • www.bls.gov/productivity
Media contact: (202) 691-5902 • PressOffice@bls.gov
TOTAL FACTOR PRODUCTIVITY – 2025
Private nonfarm business sector total factor productivity (TFP) increased 0.8 percent in 2025, the U.S.
Bureau of Labor Statistics reported today. (See table A.) The 2025 increase in TFP reflects a 2.6-percent
increase in output and a 1.7-percent increase in the combined inputs of capital and labor. Capital input grew
2.7 percent and labor input–which is the combined effect of hours worked and labor composition–increased 1.1
percent. Output and TFP growth decelerated in each of the last 2 years, while combined inputs rebounded in
2025 from a deceleration in growth in 2024.
Private business sector TFP also increased 0.8 percent in 2025, as output increased 2.6 percent and
combined inputs increased 1.7 percent. (See table A.)
Total factor productivity is calculated by dividing an index of real output by an index of combined units of
labor input and capital input. Total factor productivity annual measures differ from BLS quarterly labor
productivity (output per hour worked) measures because TFP includes the influences of capital input and
shifts in the composition of workers. Measures for the most recent year of this release are preliminary
estimates. See the Technical Notes for additional information.
Combined Inputs in the private nonfarm business sector: 2019-25
Combined input growth is made up of growth in three components: capital input, hours worked, and labor
composition. Capital input, which includes equipment, structures, and intellectual property products, grew 2.7
percent in 2025, consistent with the last 4 years of growth.
During the 2019-25 period, hours worked growth peaked in 2021 at 5.5 percent, followed by 2 years of
deceleration. In 2024, hours worked declined 0.1 percent and rebounded to an increase of 0.4 percent in 2025.
Labor composition, which estimates the effect of shifts in the age, education, and sex of the workforce, tends
to be a relatively stable measure with average annual growth of 0.5 percent over the 2019-25 period. However,
the measure was uncharacteristically volatile during the pandemic and subsequent recovery. The labor
composition index tends to increase faster during a recession and the early stages of the recovery, because
younger and less-educated workers are more likely to lose their jobs. Labor composition grew 2.8 percent in
2020 as businesses shed less skilled workers but then declined 0.8 percent the following year as the economy
reopened. More recently, growth in labor composition has stabilized and grew 0.6 percent in both 2024 and
2025. (See table A.)
Total Factor Productivity Trends – 1990-2025
Productivity is often viewed as a long-run measure as changes in the production process that lead to
productivity growth take time to implement. TFP grew 1.0 percent in the private nonfarm business sector over
the current business cycle, 2019-25. This growth outpaced the 0.6-percent TFP growth in the previous
business cycle which spanned from 2007-19. The growth in output in the 2019-25 period of 2.7 percent is
higher than the 2007-19 growth in output of 2.1 percent. Combined inputs growth in 2019-25 is the same as
the previous business cycle, 1.6 percent. (See table A.)
Labor Productivity Trends
Changes in the use of capital and worker skills impact output per hour worked, also known as labor
productivity. Labor productivity growth can be approximated as the sum of three components: the
contribution of capital intensity, the contribution of labor composition, and the remaining gains that are
attributed to total factor productivity. In 2025, private nonfarm business labor productivity increased 2.2
percent, less than the 3.0 percent growth in 2024. (See table B.)
The deceleration in labor productivity growth in 2025 can be attributed to slower growth from TFP and the
contribution of capital intensity. In 2024, TFP was the largest contributor to labor productivity growth at 1.5
percent. However, in 2025, TFP’s contribution decreased by almost half to 0.8 percent, which accounted for
most of the labor productivity decline. Additionally, the contribution of capital intensity in 2025 decreased
slightly from the 1.1 percentage point growth in 2024 to 0.9 percentage point growth in 2025. The
contribution of labor composition to labor productivity for private nonfarm business increased slightly from
0.3 percentage point in 2024 to 0.4 percentage point in 2025.
Detailed Capital Input Trends 2019-24
Capital input in the private nonfarm business sector increased at an annual rate of 2.7 percent in 2024, the
latest year of detailed capital data, and is the same as the 2.7-percent growth of 2023. The capital input growth
of 2.6 percent in the 2019-24 period is 0.2-percentage point higher than the previous 2007-19 period. (See
table C.)
Capital input is made up of different types of capital assets, including equipment, structures, and intellectual
property products. In 2024, intellectual property products contributed 1.6 percentage points to the 2.7 percent
growth in capital input in the private nonfarm business sector. This asset category’s influence on capital input
growth has increased since 2019 when its 1.4-percentage-point contribution represented nearly half of the 3.0
percent growth in capital input. In 2024, the 1.6-percent growth in the contribution of intellectual property
products accounted for more than half of the 2.7-percent capital input growth. Equipment’s contribution,
however, has declined since 2019, when its 1.1-percentage-point contribution was over a third of private
nonfarm business capital input growth. By 2024, this asset category’s contribution was less than half its 2019
value at 0.5 percentage point and accounted for less than a fifth of capital input growth.
Underlying assets within intellectual property products and equipment capital allow for examination of
intellectual property products’ strong contribution to capital growth and the decline in equipment’s
contribution over the 2019-24 period. Within intellectual property products, research and development (R&D)
was the main contributing asset for all years in the period, closely followed by pre-packaged software. R&D
contribution to capital input growth increased from 0.5 percentage point in 2019 to 0.8 percentage point in
2023 followed by a slight deceleration to 0.7 percentage point in 2024.
The equipment asset type can be further broken down into information processing equipment; motor vehicles
including autos, light trucks, and other vehicles; and all other equipment. Information processing equipment
was the largest contributor to equipment capital between 2019 and 2024. It contributed 0.3 percentage point in
2024, decelerating for the second year in a row.
Technical Notes
Capital Input
Capital input is the services derived from the stock of physical assets and intellectual property
assets. There are 90 asset types for fixed business equipment, structures, inventories, land, and
intellectual property products. Data on investment for fixed assets are obtained from the Bureau
of Economic Analysis (BEA). Data on inventories are estimated using information from BEA
and the Internal Revenue Service (IRS) Corporation Income Returns. Data for land in the farm
sector are obtained from the U.S. Department of Agriculture (USDA). Nonfarm industry detail
for land is based on IRS book value data. Current-dollar value-added data, obtained from BEA,
are used to estimate capital rental prices.
Additional detail on information processing equipment and intellectual property products are
available in table C. Information processing equipment is composed of three broad classes of
assets: computers and related equipment, communications equipment, and other information
processing equipment. Computers and related equipment include mainframe computers,
personal computers, printers, terminals, tape drives, storage devices, and integrated systems.
Communications equipment is not further differentiated. Other information processing
equipment includes medical equipment and related instruments, electromedical instruments,
nonmedical instruments, photocopying and related equipment, and office and accounting
machinery. Intellectual property products are composed of three broad classes of assets:
software, research and development, and artistic originals. Software is comprised of pre-
packaged and custom-made. Research and development is creative work undertaken to increase
the stock of knowledge for the purpose of discovering or developing new products or
improving existing ones. Research and Development also includes own-account R&D for
software which had previously been classified as software. Artistic originals include theatrical
movies, long-lived television programs, books, music, and other forms of entertainment.
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 61 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.
Capital input measures constructed for the most recent year are preliminary and are based on less
detail than the rest of the series. These measures consist of 6 asset types as opposed to the 90
asset types for fixed business equipment, structures, inventories, land, and intellectual property
products included in estimates for all previous years. The assets included in the most recent year
are structures, fixed business equipment, intellectual property products, inventories, rental
residences, and land. Investments, depreciation, and capital income are estimated for each of
these six aggregates. Capital input is calculated by a chained superlative Tornqvist index
combining stocks of the six asset categories, weighted by capital income shares. See the June
2005 Monthly Labor Review article, “Preliminary estimates of multifactor productivity growth”
located at www.bls.gov/opub/mlr/2005/06/art3full.pdf.
Labor Input
Labor input in private business and private nonfarm business is obtained by a chained
superlative Tornqvist aggregation of the hours worked, classified by age, education, and sex
with weights determined by each group’s share of the total wage bill. Hours worked data for
the measures this news release include hours worked for all persons working in the sector-
wage and salary workers, the self-employed and unpaid family workers. The primary source of
hours data is the BLS Current Employment Statistics (CES) program, which provides monthly
survey data on the number of jobs held by and hours paid to wage and salary workers in
nonfarm establishments, counting a person who is employed by two or more establishments at
each place of employment. Hours of paid time off are excluded from hours paid using data
from the National Compensation Survey (NCS) for 1996 forward and data from the BLS
Hours at Work survey, conducted for this purpose, prior to 1990. Between 1990 and 1995,
hours of paid time off are excluded using a combination of NCS and Hours at Work survey
data. Off-the-clock hours are added, yielding hours worked, using data from the Current
Population Survey (CPS). To estimate the hours of farm labor, nonfarm proprietors, and
nonfarm unpaid family workers the CPS data are used. The hours worked of proprietors,
unpaid family workers, and farm employees are derived from the CPS. Hours worked data
reflect estimates in the March 5, 2026 “Productivity and Costs” news release
(www.bls.gov/news.release/archives/prod2_03052026.pdf).
The estimates of 2025 hours worked for the private nonfarm business and private business sectors
are extrapolated from the hours worked reported in the nonfarm business and business sectors,
respectively, in the March 5, 2026 “Productivity and Costs” news release
(www.bls.gov/news.release/archives/prod2_03052026.pdf). 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. The index of hours worked of all persons including employees,
proprietors, and unpaid family workers, classified by age, education, and sex are weighted
together using median wages to compute the labor composition estimates reflecting the different
skillset of the work force. These cell estimates are smoothed using a three-year moving average
to address missing observations and reduce volatility.
Combined Inputs
Labor input and capital input are combined using chained superlative Tornqvist aggregation,
applying weights that represent each component's average share of total costs. The chained
superlative Tornqvist index uses changing weights; the share in each year is averaged with the
preceding year's share. Total costs are defined as the value of output 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.
Capital Intensity
Capital intensity is the ratio of capital input to hours worked in the production process. The
higher the capital to hours ratio, the more capital intensive the production process becomes.
In a production process, profit-maximizing/cost-minimizing firms adjust the factor proportions
of capital and labor when the price of one factor is less than the other factor; there is a tendency
for the firms to substitute the less expensive factor for the more expensive one. In the short run,
changes in hours worked are more variable than changes in capital input. Changes in hours
worked in business cycles can result in volatility of the capital intensity ratio over short periods
of time. In the long run an increase in wages relative to the price of capital will induce the firm to
substitute capital for labor, resulting in an increase in capital intensity.
Rising labor costs are, in fact, an incentive for firms to introduce automated production
processes. Industry estimates of capital to hours ratios can be obtained at
www.bls.gov/productivity/tables/.
Value-Added Output
Private business sector output is a chain-type, current-weighted index constructed after excluding
from gross domestic product (GDP) the following outputs: general government, nonprofit
institutions, private households (including owner-occupied housing), and government
enterprises. This release presents data for the private business and private nonfarm business
sectors. Additionally, the private nonfarm business sector excludes farms from the private
business sector but includes agricultural services. Total factor productivity measures exclude
government enterprises, while the BLS quarterly Productivity and Costs series include them.
The output measures are based on the National Income and Product Accounts (NIPA) data
released by BEA on February 20, 2026. The estimates of 2025 output for the private nonfarm
business and private business sectors are extrapolated from the output reported in the nonfarm
business and business sectors, respectively, in the March 5, 2026 “Productivity and Costs” news
release (www.bls.gov/news.release/archives/prod2_03052026.pdf).
Total Factor Productivity
Total factor 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 or
capital, or any other factor of production. Rather, total factor 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.
The total factor productivity indexes for private business and private nonfarm business are
derived by dividing an output index by an index of combined inputs of capital input and labor
input. The output indexes are computed as chained superlative indexes (Fisher Ideal indexes) of
components of real output.
Research and Development
The stock of research and development in private nonfarm business is derived by aggregating
different vintages of constant dollar measures of research and development expenditures and
allowing for depreciation. Current dollar expenditures for privately financed research and
development 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.
The research and development data in the private nonfarm business sector presented here show
the effect of spillovers from economic units that conduct research and development. BEA
publishes measures of research and development investments in each industry that include
estimates of the direct returns to firms conducting such research and development activities. By
combining the direct returns to firms conducting research and development with the spillover
effect of other firms, a picture of the total overall effects of research and development can be
drawn.
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" at
www.bls.gov/productivity/technical-notes/impact-of-research-and-development-on-
productivity-growth-1989.pdf.
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 www.bls.gov/productivity/highlights/research-and-development-contribution-to-total-factor-
productivity.htm.
Other Information
Detailed information on methods used in this release can be found in the BLS Handbook of
Methods, Office of Productivity and Technology section at
www.bls.gov/opub/hom/opt/home.htm
Comprehensive tables containing more detailed data than are published in this news
release are available at www.bls.gov/productivity/tables.
Industry specific contributions to output are available at
www.bls.gov/productivity/highlights/contributions-of-total-factor-productivity-major-industry-to-
output.htm.
If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access
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Table A. Productivity, output, and inputs in the private nonfarm business and private business sectors for selected periods, 1987-2025 | Average annual growth rates | 1987-2025 | 1990-2000 | 2000-07 | 2007-19 | 2019-25 | 2024 | 2025 |
|---|
Private nonfarm business | | | | | | | |
|---|
Productivity | | | | | | | |
|---|
Total factor productivity | 0.9 | 0.9 | 1.3 | 0.6 | 1.0 | 1.5 | 0.8 |
|---|
Labor productivity | 2.0 | 2.2 | 2.7 | 1.5 | 2.2 | 3.0 | 2.2 |
|---|
Capital productivity | -0.4 | -0.7 | -0.7 | -0.3 | 0.1 | 0.3 | -0.1 |
|---|
Output | 2.9 | 4.0 | 2.8 | 2.1 | 2.7 | 3.0 | 2.6 |
|---|
Combined inputs | 2.1 | 3.1 | 1.5 | 1.6 | 1.6 | 1.4 | 1.7 |
|---|
Labor input | 1.4 | 2.2 | 0.5 | 1.1 | 1.0 | 0.5 | 1.1 |
|---|
Hours worked | 0.9 | 1.7 | 0.1 | 0.6 | 0.5 | -0.1 | 0.4 |
|---|
Labor composition | 0.5 | 0.5 | 0.4 | 0.5 | 0.5 | 0.6 | 0.6 |
|---|
Capital input | 3.4 | 4.7 | 3.5 | 2.4 | 2.6 | 2.7 | 2.7 |
|---|
Analytic Ratio | | | | | | | |
|---|
Capital intensity | 2.5 | 2.9 | 3.4 | 1.8 | 2.2 | 2.7 | 2.3 |
|---|
Private business | | | | | | | |
|---|
Productivity | | | | | | | |
|---|
Total factor productivity | 0.9 | 1.0 | 1.3 | 0.6 | 1.1 | 1.6 | 0.8 |
|---|
Labor productivity | 2.1 | 2.3 | 2.7 | 1.5 | 2.3 | 3.0 | 2.2 |
|---|
Capital productivity | -0.3 | -0.5 | -0.6 | -0.2 | 0.1 | 0.4 | -0.2 |
|---|
Output | 2.9 | 4.0 | 2.8 | 2.1 | 2.7 | 3.0 | 2.6 |
|---|
Combined inputs | 2.0 | 3.0 | 1.5 | 1.6 | 1.6 | 1.4 | 1.7 |
|---|
Labor input | 1.3 | 2.2 | 0.5 | 1.1 | 1.0 | 0.5 | 1.0 |
|---|
Hours worked | 0.8 | 1.7 | 0.1 | 0.6 | 0.4 | 0.0 | 0.3 |
|---|
Labor composition | 0.5 | 0.5 | 0.4 | 0.5 | 0.5 | 0.6 | 0.7 |
|---|
Capital input | 3.3 | 4.5 | 3.4 | 2.4 | 2.6 | 2.6 | 2.8 |
|---|
Analytic Ratio | | | | | | | |
|---|
Capital intensity | 2.4 | 2.8 | 3.3 | 1.8 | 2.2 | 2.6 | 2.5 |
|---|
Table B. Labor productivity growth and the contributions of capital intensity, labor composition, and total factor productivity to labor productivity growth, private nonfarm business and private business sectors | Average annual growth rates/percentage point contributions | 1987-2024 | 1987-2025 | 1990-2000 | 2000-07 | 2007-19 | 2019-25 | 2024 | 2025 |
|---|
Private nonfarm business | | | | | | | | |
|---|
Labor productivity growth | 2.0 | 2.0 | 2.2 | 2.7 | 1.5 | 2.2 | 3.0 | 2.2 |
|---|
Contribution of capital intensity | 0.9 | 0.9 | 1.0 | 1.1 | 0.7 | 0.9 | 1.1 | 0.9 |
|---|
Contribution of information processing equipment (IPE) | 0.3 | - | 0.5 | 0.4 | 0.2 | - | 0.1 | - |
|---|
Contribution of research and development (R&D) | 0.1 | - | 0.1 | 0.1 | 0.1 | - | 0.3 | - |
|---|
Contribution of intellectual property products (IPP) excluding R&D | 0.2 | - | 0.2 | 0.2 | 0.2 | - | 0.4 | - |
|---|
Contribution of capital input excluding IPP & IPE | 0.2 | - | 0.2 | 0.4 | 0.1 | - | 0.3 | - |
|---|
Contribution of labor composition | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 |
|---|
Total factor productivity growth | 0.9 | 0.9 | 0.9 | 1.3 | 0.6 | 1.0 | 1.5 | 0.8 |
|---|
Contribution of R&D to total factor productivity | 0.2 | - | 0.3 | 0.3 | 0.2 | - | 0.3 | - |
|---|
Private business | | | | | | | | |
|---|
Labor productivity growth | 2.1 | 2.1 | 2.3 | 2.7 | 1.5 | 2.3 | 3.0 | 2.2 |
|---|
Contribution of capital intensity | 0.8 | 0.9 | 0.9 | 1.1 | 0.7 | 0.9 | 1.1 | 1.0 |
|---|
Contribution of information processing equipment (IPE) | 0.3 | - | 0.5 | 0.4 | 0.2 | - | 0.1 | - |
|---|
Contribution of research and development (R&D) | 0.1 | - | 0.1 | 0.1 | 0.1 | - | 0.3 | - |
|---|
Contribution of intellectual property products (IPP) excluding R&D | 0.2 | - | 0.2 | 0.2 | 0.2 | - | 0.4 | - |
|---|
Contribution of capital input excluding IPP & IPE | 0.2 | - | 0.2 | 0.4 | 0.1 | - | 0.3 | - |
|---|
Contribution of labor composition | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 |
|---|
Total factor productivity growth | 0.9 | 0.9 | 1.0 | 1.3 | 0.6 | 1.1 | 1.6 | 0.8 |
|---|
Table C. Real capital input growth by asset type, private nonfarm business and private business sectors | Average annual growth rates | 1987-2024 | 1990-2000 | 2000-07 | 2007-19 | 2019-24 | 2024 |
|---|
Private nonfarm business | | | | | | |
|---|
All assets | 3.4 | 4.7 | 3.5 | 2.4 | 2.6 | 2.7 |
|---|
Equipment | 4.3 | 6.7 | 5.0 | 3.3 | 1.7 | 1.9 |
|---|
Information processing equipment (IPE) | 9.2 | 13.6 | 9.6 | 6.9 | 5.7 | 4.6 |
|---|
Computers & related equipment | 14.3 | 28.6 | 14.4 | 5.8 | 6.1 | 5.0 |
|---|
Communication equipment | 9.1 | 7.9 | 9.8 | 10.9 | 8.0 | 6.5 |
|---|
Other IPE | 3.1 | 3.5 | 3.3 | 2.8 | 2.9 | 2.2 |
|---|
All other equipment | 2.2 | 3.5 | 2.9 | 1.8 | 0.4 | 1.0 |
|---|
Structures | 1.5 | 2.1 | 1.3 | 0.9 | 0.9 | 1.1 |
|---|
Intellectual property products (IPP) | 6.2 | 7.5 | 5.4 | 4.8 | 7.2 | 7.0 |
|---|
Research and development | 4.7 | 5.5 | 4.1 | 3.7 | 5.8 | 6.3 |
|---|
Software | 10.4 | 13.9 | 8.1 | 7.3 | 10.6 | 9.6 |
|---|
Artistic originals | 2.8 | 3.7 | 3.6 | 2.0 | 1.0 | 0.9 |
|---|
Rental residential capital | 1.2 | 1.4 | 2.2 | 0.2 | 1.0 | 0.7 |
|---|
Inventories | 2.7 | 3.6 | 2.2 | 2.4 | 2.1 | 1.3 |
|---|
Land | 0.8 | 0.9 | 0.7 | 0.6 | 0.7 | 1.3 |
|---|
Private business | | | | | | |
|---|
All assets | 3.3 | 4.5 | 3.4 | 2.4 | 2.6 | 2.6 |
|---|
Equipment | 4.2 | 6.5 | 4.9 | 3.3 | 1.7 | 1.9 |
|---|
Information processing equipment (IPE) | 9.2 | 13.6 | 9.6 | 6.9 | 5.7 | 4.5 |
|---|
Computers & related equipment | 14.3 | 28.6 | 14.4 | 5.8 | 6.1 | 5.0 |
|---|
Communication equipment | 9.1 | 7.9 | 9.8 | 10.9 | 8.0 | 6.5 |
|---|
Other IPE | 3.2 | 3.6 | 3.4 | 2.9 | 2.8 | 2.1 |
|---|
All other equipment | 2.2 | 3.3 | 2.8 | 1.8 | 0.4 | 1.0 |
|---|
Structures | 1.4 | 2.0 | 1.2 | 0.9 | 0.9 | 1.1 |
|---|
Intellectual property products (IPP) | 6.2 | 7.5 | 5.4 | 4.8 | 7.2 | 7.0 |
|---|
Research and development | 4.7 | 5.5 | 4.1 | 3.7 | 5.8 | 6.3 |
|---|
Software | 10.4 | 13.9 | 8.1 | 7.3 | 10.6 | 9.6 |
|---|
Artistic originals | 2.8 | 3.7 | 3.6 | 2.0 | 1.0 | 0.9 |
|---|
Rental residential capital | 1.2 | 1.4 | 2.2 | 0.2 | 1.0 | 0.7 |
|---|
Inventories | 2.6 | 3.5 | 2.1 | 2.2 | 2.1 | 1.4 |
|---|
Land | 0.7 | 0.5 | 0.6 | 0.3 | 1.0 | 0.5 |
|---|
United States Department of Labor
