For release 10:00 a.m. (EST) Thursday, November 18, 2010 USDL-10-1603
Technical information: (202) 691-5606 • mfpweb@bls.gov • www.bls.gov/mfp
Media contact: (202) 691-5902 • PressOffice@bls.gov
MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2008
Manufacturing sector multifactor productivity decreased at a 0.7 percent annual
rate in 2008, the U.S. Bureau of Labor Statistics reported today.
(See chart 1.) This was the largest annual decline in multifactor productivity
since 2001. (See table 1.) Multifactor productivity measures the change in
output per unit of combined inputs. 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, labor and, in the case of the
manufacturing sector, intermediate inputs (energy, materials, purchased
business services). 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.
Durable manufacturing sector multifactor productivity grew 0.3 percent in 2008,
after increasing 4.9 percent in 2007. Nondurable manufacturing sector
multifactor productivity fell 1.6 percent in 2008, following a 4.6 percent
increase in 2007.
Historical trends in manufacturing
Multifactor productivity in manufacturing grew 1.6 percent annually between
1987 (the starting point of the series) and 2008. Sectoral output increased
at a 2.2 percent annual rate over the period and combined inputs rose an
average of 0.6 percent per year. Output per hour (labor productivity) grew
3.5 percent. For the 2000-2007 period, multifactor productivity in
manufacturing rose more rapidly than in previous periods, averaging 2.6 percent
per year, outpacing the 2.1 percent growth rate in the 1995-2000 period.
(See table A.)
Of the 3.5 percent growth rate in labor productivity in the 1987-2008 period,
1.6 percent can be attributed to increases in multifactor productivity, 0.6
percent to the contribution of capital intensity, 0.1 percent to energy
intensity, 0.8 percent to materials intensity, and 0.4 percent to purchased
business services intensity. Multifactor productivity, the contribution of
intermediate inputs, and the contribution of capital intensity may not sum to
output per hour due to independent rounding. (See table B.)
Fewer industries recorded multifactor productivity, output, and combined input
increases in 2008 than in any other year since 2001. Of the 18 industries that
comprise the manufacturing sector, fewer industries each year experienced
growth in output and combined inputs from 2005 to 2008. (See chart 2.)
Revised measures
Previous and revised productivity measures and related data for 2006 and 2007
for the manufacturing, durable goods manufacturing, and nondurable goods
manufacturing sectors are displayed in table C. In 2007, multifactor
productivity growth was revised upward to 5.1 percent from 4.7 percent in the
manufacturing sector. Multifactor productivity was also revised upward to 4.6
percent from 3.0 percent in the nondurable manufacturing sector but revised
downward to 4.9 percent from 6.0 percent in the durable manufacturing sector.
The revisions in both years were due to comprehensive revisions in source data
in the revised National Income and Products (NIPA) data released by the
Bureau of Economic Analysis (BEA) on July 31, 2009.
Table A. Compound annual growth rates for productivity, sectoral output, and
inputs in the manufacturing sector for selected periods, 1987 to 2008
In percent
1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
Productivity
Multifactor
productivity1 1.6 0.2 1.2 2.1 2.6 -0.7
Output per hour
of all persons 3.5 1.8 3.4 4.8 3.9 -0.3
Output per unit
of capital services 0.0 -0.1 0.6 0.7 -0.1 -5.4
Sectoral Output 2.2 2.1 3.3 4.7 0.7 -4.4
Inputs
Combined inputs2 0.6 1.9 2.1 2.5 -1.8 -3.7
Hours3 -1.2 0.4 -0.1 -0.1 -3.1 -4.0
Capital services 2.2 2.3 2.7 4.0 0.8 1.1
Energy 0.5 1.8 1.6 5.8 -3.8 -2.6
Non-energy
materials 1.4 1.7 3.6 5.5 -2.2 -5.3
Purchased business
services 1.1 5.2 3.2 0.6 -0.9 -5.4
1Output per unit of combined hours, capital services, energy, materials,
and purchased business services inputs.
2The growth rate of each input is weighted by its share of current dollar
costs.
3Hours at work of all persons.
Table B. Compound annual growth rates in output per hour of all persons and
contributions of capital intensity, intermediate inputs intensity, and
multifactor productivity in the manufacturing sector for selected periods,
1987-2008
In percent
1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
Manufacturing
Output per hour
of all persons 3.5 1.8 3.4 4.8 3.9 -0.3
Contribution of
capital intensity1 0.6 0.3 0.4 0.7 0.7 1.0
Contribution of
information
processing
equipment
and software2 0.2 0.2 0.2 0.4 0.2 0.3
Contribution
of all
other capital
services 0.3 0.1 0.2 0.3 0.5 0.8
Contribution of
intermediate inputs3 1.2 1.3 1.7 1.9 0.6 -0.6
Contribution
of energy
intensity4 0.1 0.0 0.0 0.2 0.0 0.1
Contribution
of materials
intensity5 0.8 0.4 1.1 1.6 0.2 -0.4
Contribution
of purchased
business
services
intensity6 0.4 0.8 0.6 0.1 0.4 -0.2
Multifactor
productivity7 1.6 0.2 1.2 2.1 2.6 -0.7
1Growth rate in capital services per hour multiplied by capital's share of
current dollar costs.
2Growth rate of information processing equipment and software per hour
multiplied by its share of total current dollar costs.
3Growth rate in intermediate inputs per hour multiplied by intermediate inputs
share of current dollar costs.
4Growth rate in energy services per hour multiplied by energy’s share of
current dollar costs.
5Growth rate in materials services per hour multiplied by materials’ share of
current dollar costs.
6Growth rate in business services per hour multiplied by business services’
share of current dollar costs.
7 Output per unit of combined hours, capital services, energy, materials, and
business services inputs.
Table C. Previous and revised productivity and related measures for the
2006-2007 and 2005-2006 periods
Inputs
Purc-
Multi- Sect- Com- Cap- hased
factor oral bined ital busi-
Product- out- In- Serv- Mater- ness
Sector ivity1 put puts2 Hours3 ices Energy ials services
Annual percent change,
2006-2007
Manufacturing
Previous 4.7 1.6 -3.0 -1.7 0.5 -2.7 -8.1 -0.3
Revised 5.1 2.4 -2.5 -1.7 1.2 6.0 -7.2 -0.8
Durable manufacturing
Previous 6.0 2.1 -3.7 -2.1 0.6 -3.8 -11.1 0.2
Revised 4.9 3.5 -1.3 -2.1 0.8 8.6 -4.8 2.2
Nondurable manufacturing
Previous 3.0 1.1 -1.8 -1.1 0.4 -2.0 -3.5 -0.9
Revised 4.6 1.3 -3.2 -1.0 1.4 4.3 -6.4 -4.7
Annual percent change,
2005-2006
Manufacturing
Previous 2.5 1.6 -0.9 0.7 0.5 -6.7 -2.5 -1.2
Revised 2.3 1.5 -0.7 0.7 0.9 -7.8 -1.7 -1.6
Durable manufacturing
Previous 4.2 3.1 -1.0 1.1 0.4 -7.5 -4.0 -0.9
Revised 3.2 3.1 -0.1 1.1 1.0 -5.0 -1.4 -0.4
Nondurable manufacturing
Previous 0.6 -0.1 -0.6 0.1 0.6 -6.3 -0.5 -1.5
Revised 1.1 -0.1 -1.2 0.0 0.8 -9.6 -1.2 -3.1
1Output per unit of combined hours, capital services, energy, materials, and
purchased business services inputs.
2The growth rate of each input is weighted by its share of current dollar
costs.
3Hours at work of all persons.
TECHNICAL NOTES
Capital Services: Capital services are the services derived from the stock of
physical assets and software. Capital services asset detail consists of 44
types of equipment, 28 types of structures, 3 categories of inventory, and
land. The aggregate capital services measures are obtained by Tornqvist
aggregation of the capital stocks for each asset type within each of the
eighteen manufacturing 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. Data on investments in physical assets and software are obtained
from Bureau of Economic Analysis (BEA). Nonfarm industry detail for land is
based on IRS book value data.
Labor Hours: The construction of the hours measures follows the methods used
in the private business sector described in USDL 10-1171, Multifactor
Productivity Trends, 2008, http://www.bls.gov/news.release/pdf/prod3.pdf ,
except that hours in manufacturing are directly aggregated and do not include
the effects of labor composition. Hours data for the manufacturing multifactor
productivity measures include hours for all persons working in the
manufacturing 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) survey. Hours paid of production workers are also obtained
primarily from the CES survey. The hours of these 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 BLS Hours at Work Survey.
Hours at work for nonproduction workers are derived using data from the Current
Population Survey (CPS), the CES, and the NCS. The hours at work of
proprietors are derived from the CPS.
Hours at work data are based on underlying hours data published in the June 3,
2010, Productivity and Costs news release. Therefore, the data reflect the
benchmark revisions to the CES and other revisions to hours released on
February 5, 2010. Data in this release do not reflect the comprehensive
revision to the National Income and Product Accounts (NIPA) released by the
Bureau of Economic Analysis of the U.S. Department of Commerce on July 30,
2010.
Intermediate Inputs: In manufacturing, intermediate inputs are energy,
materials, and purchased business services, and represent a large share of
production costs. Research has shown that substitution among inputs,
including intermediate inputs, affects productivity change. Therefore, it
is important to account for intermediate inputs in productivity measures at
the level of manufacturing. In contrast, the more aggregate productivity
measures compare "value-added" output with two classes of inputs, capital and
labor. Because of these differences in concepts and methodology, productivity
change in manufacturing cannot be directly compared with changes in private
business or private nonfarm business.
Data on intermediate inputs are obtained from BEA based on BEA annual
input-output tables. Tornqvist indexes of each of these three input classes
are derived at the 3-digit NAICS level and then aggregated to total
manufacturing. Materials inputs are adjusted to exclude transactions between
establishments within the same sector.
Combined Inputs: The five input indexes (capital services, hours, energy,
materials, and purchased business services) are combined using Tornqvist
aggregation, employing weights that represent each component's share of total
costs. Total costs are defined as the value of manufacturing sectoral output.
Sectoral Output: The output concept used for multifactor productivity in
manufacturing is “sectoral output”. Sectoral output equals gross output
(sales, receipts, and other operating income, plus commodity taxes plus changes
in inventories), excluding transactions between establishments within the same
sector. In contrast, the output concept used for private business and nonfarm
business is “real value added”. Real value added output in private business
equals gross domestic product in the economy less general government,
government enterprises, private households (including the rental value of
owner-occupied real estate), and non-profit institutions. Real value added
output excludes intermediate transactions between businesses.
The output index for manufacturing is computed using a chained superlative
index (Tornqvist) of three-digit NAICS industry outputs. Industry output is
measured as sectoral output, the total value of goods and services leaving the
industry. Wherever possible, the indexes of industry output are calculated with
a Tornqvist formula. This formula aggregates the growth rates of the various
industry outputs between two periods, using their relative shares in industry
value of production averaged over the two periods as weights. Industry output
measures for manufacturing industries are constructed using data from the
economic censuses and annual surveys of the Bureau of the Census, U.S.
Department of Commerce, together with information on price changes, primarily
from BLS.
Multifactor Productivity: The manufacturing multifactor productivity measures
describe the relationship between output in real terms and the inputs involved
in its production. Manufacturing multifactor productivity measures exclude
intermediate inputs between manufacturing establishments from both output and
inputs. Multifactor productivity does not measure the specific contributions
of labor, capital, or any other factor of production. Rather, multifactor
productivity is designed to measure the joint influences 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 are derived by
dividing an output index by an index of the combined inputs of labor, capital
services, energy, non-energy materials, and purchased business services.
Other information: Comprehensive tables containing more detailed data than
that which is published in 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. Methods for measuring manufacturing
multifactor productivity are discussed in "Measurement of productivity growth
in U.S. manufacturing” in the July 1995 issue of the Monthly Labor Review.
See http://www.bls.gov/mfp/mprgul95.pdf.
Table 1. Manufacturing sector: Productivity and related measures, 1988-2008
Annual percent change from previous year
Productivity Inputs
Output Output Purc- Comb-
per per Multi- Sect- Cap- hased ined
hour unit factor oral ital busi- units
of all of Product- out- Serv- Mater- ness of all
Year persons capital ivity1 put Hours2 ices Energy ials services inputs3
1988 2.1 3.4 1.8 5.2 3.0 1.7 4.3 1.4 8.9 3.3
1989 1.0 -0.6 -0.5 1.7 0.6 2.3 -0.5 2.2 5.7 2.2
1990 2.2 -3.0 -0.7 -0.3 -2.5 2.7 1.8 1.6 1.3 0.4
1991 2.6 -4.0 -0.4 -1.7 -4.2 2.4 -0.3 -0.4 -1.0 -1.4
1992 3.8 0.9 -0.7 3.3 -0.5 2.4 -1.0 8.7 7.5 4.0
1993 2.5 1.4 2.6 3.9 1.3 2.5 3.3 0.6 0.8 1.3
1994 3.5 3.2 2.7 5.9 2.3 2.7 3.5 4.0 3.8 3.2
1995 4.5 1.5 1.8 5.2 0.7 3.6 2.6 5.3 4.9 3.4
1996 3.6 -0.6 0.4 3.4 -0.2 4.0 -2.7 8.8 -0.5 3.0
1997 5.5 2.9 2.8 7.4 1.8 4.4 -2.1 8.0 4.1 4.4
1998 5.5 0.5 2.6 5.3 -0.3 4.7 3.3 6.4 -0.3 2.6
1999 4.9 0.4 1.2 4.2 -0.7 3.8 23.3 6.3 1.0 3.0
2000 4.4 0.1 3.6 3.1 -1.3 3.0 9.1 -1.9 -1.3 -0.5
2001 1.9 -6.2 -1.1 -4.8 -6.5 1.6 9.3 -6.3 -1.7 -3.7
2002 7.3 -1.3 3.2 -0.3 -7.1 1.0 -22.6 1.0 -3.2 -3.4
2003 6.3 0.6 3.6 1.1 -4.9 0.4 -10.7 -1.7 -0.6 -2.4
2004 2.3 2.0 3.7 1.7 -0.5 -0.3 -6.3 -0.8 -6.4 -1.9
2005 4.7 2.9 1.4 3.6 -1.1 0.7 10.1 1.5 8.9 2.1
2006 0.8 0.6 2.3 1.5 0.7 0.9 -7.8 -1.7 -1.6 -0.7
2007 4.2 1.2 5.1 2.4 -1.7 1.2 6.0 -7.2 -0.8 -2.5
2008 -0.3 -5.4 -0.7 -4.4 -4.0 1.1 -2.6 -5.3 -5.4 -3.7
1. Output per unit of combined hours, capital services, energy, materials,
and purchased business services inputs.
2. Hours at work of all persons.
3. Combined units of hours, capital services, energy, materials, and
purchased business services, superlative chained index.
Source: Output data are from the Bureau of the Census, U.S. Department of
Commerce, and modified by the Bureau of Labor Statistics,
U.S. Department of Labor. Compensation and hours data are from
the Bureau of Labor Statistics. Capital measures are based on data
supplied by the Bureau of Economic Analysis.
See also Technical Notes in this release.
Table 2. Manufacturing sector: Productivity and related measures, 1987-2008
Indexes 2005=100
Productivity Inputs
Output Output Purc- Comb-
per per Multi- Sect- Cap- hased ined
hour unit factor oral ital busi- units
of all of Product- out- Serv- Mater- ness of all
Year persons capital ivity1 put Hours2 ices4 Energy ials services inputs3
1987 51.0 96.6 75.9 62.9 123.2 65.1 84.9 65.1 74.1 82.8
1988 52.1 99.9 77.3 66.1 126.9 66.2 88.6 66.0 80.7 85.6
1989 52.6 99.2 76.9 67.2 127.7 67.8 88.1 67.4 85.3 87.4
1990 53.8 96.2 76.4 67.0 124.5 69.6 89.7 68.6 86.3 87.7
1991 55.2 92.4 76.1 65.8 119.3 71.3 89.4 68.3 85.5 86.5
1992 57.3 93.2 75.6 68.0 118.7 73.0 88.5 74.2 91.9 90.0
1993 58.8 94.5 77.5 70.7 120.3 74.8 91.4 74.7 92.6 91.1
1994 60.8 97.5 79.6 74.8 123.1 76.8 94.6 77.7 96.2 94.0
1995 63.6 99.0 81.1 78.8 123.9 79.6 97.1 81.8 100.9 97.2
1996 65.9 98.4 81.4 81.4 123.6 82.8 94.4 89.0 100.4 100.1
1997 69.5 101.2 83.6 87.4 125.8 86.4 92.4 96.1 104.5 104.6
1998 73.3 101.7 85.8 92.1 125.5 90.5 95.4 102.3 104.1 107.3
1999 77.0 102.1 86.8 95.9 124.7 93.9 117.7 108.7 105.1 110.5
2000 80.4 102.3 89.9 98.9 123.1 96.7 128.4 106.7 103.7 110.0
2001 81.9 95.9 89.0 94.2 115.0 98.3 140.3 100.0 102.0 105.9
2002 87.9 94.6 91.8 93.9 106.9 99.2 108.6 101.0 98.7 102.3
2003 93.4 95.3 95.1 94.9 101.6 99.6 97.0 99.3 98.1 99.8
2004 95.5 97.2 98.6 96.6 101.1 99.3 90.8 98.5 91.8 97.9
2005 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2006 100.8 100.6 102.3 101.5 100.7 100.9 92.2 98.3 98.4 99.3
2007 105.0 101.9 107.4 104.0 99.0 102.1 97.7 91.3 97.6 96.8
2008 104.7 96.4 106.7 99.4 95.0 103.2 95.2 86.4 92.3 93.2
1. Output per unit of combined hours, capital services, energy, materials,
and purchased business services inputs.
2. Hours at work of all persons.
3. Combined units of hours, capital services, energy, materials,
and purchased business services, superlative chained index.
Source: Output data are from the Bureau of the Census, U.S. Department of
Commerce, and modified by the Bureau of Labor Statistics,
U.S. Department of Labor. Compensation and hours data are from
the Bureau of Labor Statistics. Capital measures are based on data
supplied by the Bureau of Economic Analysis.
See also Technical Notes in this release.
Table 3. Multifactor productivity measures for manufacturing industries
in selected periods, 1987-2008
Compound annual growth rates
1987- 1987- 1990- 1995- 2000- 2007-
2008 1990 1995 2000 2007 2008
Manufacturing 1.6 0.2 1.2 2.1 2.6 -0.7
Nondurable 0.5 -0.5 0.6 0.1 1.6 -1.6
manufacturing
Food, beverage, 0.1 -1.5 1.5 -1.3 1.1 -2.0
and tobacco
products
Textile mills 0.9 1.2 0.7 1.3 1.4 -5.8
and textile
product mills
Apparel, leather, -0.4 -0.2 2.5 0.2 -2.5 -2.2
and allied
products
Paper products 0.5 -0.3 -0.1 0.8 1.2 -0.3
Printing and 0.5 0.8 -0.3 -0.4 1.4 1.9
related support
activities
Petroleum and coal 0.7 0.3 0.5 0.8 0.6 4.4
products
Chemical products 0.5 -1.0 -0.8 0.2 3.4 -7.1
Plastics and rubber 0.6 0.6 0.6 1.3 0.6 -3.9
products
Durable manufacturing 2.4 0.8 1.6 3.5 3.3 0.3
Wood products -0.1 0.9 -1.2 -0.3 1.1 -4.6
Nonmetallic mineral 0.3 0.2 1.0 0.2 0.3 -2.1
products
Primary metals 0.6 1.0 0.2 0.3 0.6 2.1
Fabricated metal 0.6 -0.1 1.0 0.0 0.7 2.1
products
Machinery -0.2 1.0 -1.7 -1.3 1.3 -0.9
Computer and 10.6 5.6 9.6 15.7 10.6 6.7
electronic
products
Electrical -0.5 -2.3 -2.4 -2.1 2.1 5.8
equipment,
appliances,
and components
Transportation 0.4 -1.7 -0.3 0.8 2.3 -5.0
equipment
Furniture and 0.3 -0.8 0.7 0.6 0.7 -2.0
related products
Miscellaneous 1.8 2.3 0.2 2.6 2.1 2.4
manufacturing
Note: Multifactor productivity measures by industry do not sum up to aggregate
manufacturing measures because industry measures exclude transactions
only within the specific industry while the aggregate manufacturing
measures also exclude transactions between all manufacturing industries.
United States Department of Labor
