Total factor productivity, 2025

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.