Total Factor Productivity for Major Industries – 2024

For release 10:00 a.m. (ET) Friday, December 19, 2025					USDL-25-1588
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			TOTAL FACTOR PRODUCTIVITY FOR MAJOR INDUSTRIES – 2024

Total factor productivity (TFP) increased in 13 out of 21 major industries in 2024, the U.S. Bureau of 
Labor Statistics reported today, led by the retail trade and the agriculture, forestry, fishing, and hunting 
industries. Most of the industries that saw TFP growth were the result of increases to output outpacing 
increases to combined inputs of capital, labor, and the intermediate inputs of energy, materials, and 
services.

Output increased in 15 of 21 major industries in 2024. Of these 15 industries, all but one industry 
(agriculture, forestry, fishing, and hunting) had increased combined inputs in 2024. The largest increases 
in output (12.4 percent) and combined inputs (11.0 percent) occurred in the educational services industry. 
Within educational services, intermediate inputs drove the combined input growth. (See table 1.)

Over the current 2019-24 business cycle, 12 of 21 industries experienced TFP growth. Output growth was 
widespread, increasing in 17 of 21 industries over the period. The output declines occurred in the goods 
producing sector (mining, manufacturing, durable manufacturing, and nondurable manufacturing). Labor 
input grew in 16 of 21 industries during the 2019-24 cycle, demonstrating that these industries have 
recovered from labor losses in 2020. (See table 3.)

TFP is defined as output per unit of combined inputs. TFP shows the relationship between changes in real 
sectoral output and changes in the combined inputs of capital input (K), labor input (L), and intermediate 
inputs (energy (E), materials (M), and services (S)) used in production of final goods and services. It 
reflects economic growth that is not due to growth in measured KLEMS inputs, including technological 
change, organizational changes in the production process, and other efficiency improvements.

Total factor productivity and KLEMS as sources of labor productivity growth

Labor productivity increased in 16 of 21 industries in 2024. Labor productivity can be expressed as the 
sum of six components: TFP growth and the contributions of capital intensity, labor composition, energy 
intensity, materials intensity, and services intensity. The contribution of each KLEMS input is defined as 
the ratio of the services provided by that input to hours worked in the production process, weighted by its 
share of sectoral output. Examining input contributions and TFP changes reveals the substitution effect 
of increased use of an input relative to labor on an industry’s labor productivity. (See table 5.) 

Of the 16 industries with labor productivity growth in 2024, TFP was the largest contributor in 6 
industries.  TFP’s contribution to labor productivity growth was strong in the retail trade and the 
agriculture, forestry, fishing, and hunting industries. Services intensity made a significant contribution to 
the 11.3-percent growth in labor productivity for the educational services industry. Service intensity also 
made notable positive contributions to labor productivity growth in the management of companies and the 
finance and insurance industries. The labor composition index estimates the effect of shifts in the 
composition of the workforce on hours worked, using information on age, education, sex, and relative 
wages as a proxy for experience. In 2024, all 21 industries measured had positive or no contribution from 
labor composition.

TFP and input contributions to output 

Private business sector output growth can be viewed as the sum of three components: total factor 
productivity, contribution of capital input, and contribution of labor input. The drivers of output growth 
for the private business sector in 2024 were TFP and capital, each with a 1.1-percentage-point 
contribution. Labor input contributed 0.3 percentage point to output growth.

Productivity growth is often viewed as a long run measure, encompassing many economic shocks like the 
COVID-19 pandemic. The current business cycle of 2019-24 shows similar contributions from capital and 
labor to aggregate output growth as the previous 2007-19 business cycle, while the contribution from TFP 
has increased 0.3 percentage point. 

The private business sector can be divided into four broad sectors: goods producing; information and 
communication technology (ICT); finance, insurance, and real estate (FIRE); and service providing. 
Looking at these sectors provides further insights into how different sectors of the economy contribute to 
output. (See technical notes for industry makeup of each sector.)

TFP’s contribution to output

Total factor productivity’s contribution to private business output was consistent between 2023 and 2024 
(1.2-percentage-point and 1.1-percentage-point, respectively). The 2023 and 2024 contributions are 
similar to the pre-pandemic year of 2019 for most sectors. The service providing sector is the largest 
contributor in each of the 2019, 2023, and 2024 years (0.9-percentage-point, 1.0-percentage-point, and 
0.7-percentage-point, respectively) led by the retail trade industry within this sector. Of note between 
2019 and 2023-24 is the change in the contribution for the goods producing sector. This industry’s TFP 
went from having a negative contribution to private business output in 2019 (-0.4-percentage-point) to a 
positive contribution in 2024 (0.2-percentage-point). 

The increased contribution from TFP to private business output in the 2019-24 business cycle compared 
to the previous 2007-19 business cycle is due largely to the increased contribution of 0.2-percentage-point 
from the professional and technical services industry within the service providing sector. (See tables 6-
13.)

Labor’s contribution to output

Labor’s contribution to private business output growth decreased from 0.6-percentage-point in 2023 to 
0.3-percentage-point in 2024 and was due to contribution declines in all sectors (except for ICT with a 0.0 
percentage contribution in both years). Decreased contributions in the goods producing sector of durable 
manufacturing and the service providing industry of accommodation and food services accounted for over 
half of the decreased contribution. 

Labor’s contribution to private business output is lower in the current 2019-24 business cycle (0.5-
percentage-point) than the previous 2007-19 business cycle (0.6-percentage-point) due to a decreased 
contribution from the service providing sector. (See tables 6-13.)

Capital’s contribution to output

All sectors’ capital contributions contributed positively to private business output growth in 2024 (1.1-
percentage-point). The service-providing sector made the largest positive contribution (0.5-percentage-
point). 

Capital had similar positive contributions for the years 2019 to 2024 and the two most recent business 
cycles. The slight increase in capital contribution from the service-providing sector from the 2007-19 
business cycle to the 2019-24 business cycle (0.3-percentage-point to 0.4-percentage-point, respectively) 
was led by the retail trade industry (0.0-percentage point to 0.1-percentage-point, respectively) and the 
professional and technical services industry (0.0-percentage-point to 0.1-percentage-point, respectively). 
(See tables 6-13.)