Total factor productivity, 2024

For release 10:00 a.m. (ET) Friday, March 21, 2025	USDL-25-0380
Technical information:	(202) 691-5606  •  Productivity@bls.gov  
					•  www.bls.gov/productivity
Media contact:		(202) 691-5902 	•  PressOffice@bls.gov
	
TOTAL FACTOR PRODUCTIVITY – 2024

Total factor productivity (TFP) in the private nonfarm business sector increased
1.3 percent in 2024, the U.S. Bureau of Labor Statistics reported today. 
(See table A.) The 2024 increase in TFP reflects a 2.9-percent increase 
in output and a 1.6-percent increase in the combined inputs of capital and 
labor. Capital input grew 2.9 percent and labor input–which is 
the combined effect of hours worked and labor composition–increased
0.7 percent. The 2024 growth in TFP, output, and combined inputs shows 
a similar pattern as 2023 and represents 2 years of growth consistent with the 
pre-COVID-19 year of 2019.

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.

Private business sector total factor productivity also increased 1.3 percent in 2024,
as output increased 2.9 percent and combined inputs increased 1.6 percent. (See table A.) 

Combined Inputs: 2019-24

Combined input growth is made up of growth in three components: capital input, 
hours worked, and labor composition. The growth of capital input, which includes
equipment, structures, and intellectual property products, decelerated from 3.0 percent
in 2019 to 2.3 percent in 2021. Over the past 3 years, capital input has remained 
relatively consistent, with growth ranging from 2.7 percent to 2.9 percent. 

Hours worked has been more volatile over the period, declining 7.8 percent in 2020
and rebounding with 5.6-percent growth in 2021. However, hours growth over the last
3 years has decelerated each year and grew 0.2 percent in 2024. 

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 1987-2024 period. However, the measure was 
uncharacteristically volatile during the pandemic and subsequent recovery. 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. Over the 
last 3 years, growth in labor composition has stabilized and grew 0.5 percent in 2024.
(See table A.)

Total Factor Productivity Trends – 1990-2024

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 0.9 percent per year 
in the private nonfarm business sector in the current 2019-24 business cycle. This growth
outpaced the 0.6-percent TFP growth in the previous business cycle which spanned from 2007-19.
The growth in output and combined inputs in the 2019-24 period are also higher than the previous
business cycle. (See table A). Although TFP growth in the 1990-2000 period is the same as the current
period, output and combined inputs grew significantly faster in the earlier period. TFP grew the
fastest during the 2000-07 business cycle, as a 2.8-percent growth in output outpaced a
1.5-percent growth in combined inputs.

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 2024, private
nonfarm business labor productivity increased 2.7 percent, the largest annual growth since 
2004 that did not immediately follow an economic recession. (See table B.)

The 2024 private nonfarm business sector growth of labor productivity was a result of positive
contributions from all 3 components, led by the 1.3-percent increase in total factor productivity.

The contribution of capital intensity grew 1.1 percent in 2024, the largest growth in the last 
15 years outside the COVID-19 year of 2020. Capital intensity is the ratio of capital input 
growth to labor hours growth. The 2024 increase in capital intensity was driven by the growth 
in capital input of 2.9 percent outpacing hours worked growth of 0.2 percent. (See tables A and B.)  

The contribution of labor composition to labor productivity for private nonfarm business increased 
0.3 percent in 2024 and represents a shift toward hours worked of higher skill labor compared to 
the previous year.  

Detailed Capital Input Trends 2019-23

Capital input in the private nonfarm business sector increased at an annual rate of 2.7
percent in 2023, the latest year of detailed capital data, and is consistent with the 
2.8-percent growth of 2022. The capital input growth of 2.6 percent in the 2019-23 
business cycle 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 2023, intellectual property products
contributed 1.7 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 2023, the 1.7-percent growth in intellectual property
products accounted for almost two-thirds 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 2023, 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 2019-23 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. A year-by-year increase of
0.1-percentage-point contribution from 2021 to 2023 shows steady growth within research 
and development. 

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 is the main driver of equipment capital, as it contributed
0.4 or 0.5 percentage point each year from 2019 to 2023. The other detailed assets within 
equipment saw declines in contributions, with autos, light trucks, and other vehicles having
partially offsetting contributions to private nonfarm business capital growth in 2021, 2022,
and 2023.