Multifactor Productivity Trends In Manufacturing, 2016


For release 10:00 a.m. (EDT)  Wednesday, May 16, 2018	USDL-18-0785
Technical information:	(202) 691-5606 •  mfp@bls.gov  •  www.bls.gov/mfp
Media contact:	        (202) 691-5902 •  PressOffice@bls.gov

MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2016

Manufacturing sector multifactor productivity declined 3.2 percent in 2016, 
the U.S. Bureau of Labor Statistics reported today.(See chart 1, table A.) 
This was the largest annual decline in manufacturing multifactor productivity
since the series started in 1987. (See table 1.) The multifactor productivity
decline in 2016 reflected a 0.4-percent increase in sectoral output and a
3.6-percent increase in combined inputs. The decrease in multifactor 
productivity followed a 1.5-percent decrease in 2015. 

Multifactor productivity is calculated by dividing an index of real sectoral
output by an index of combined units of labor input, capital services, and 
intermediate inputs. Multifactor productivity annual measures differ from BLS
quarterly labor productivity or output per hour measures because the former 
also includes information on capital services, shifts in the composition of 
the workforce, and intermediate inputs. 

Durable manufacturing sector multifactor productivity decreased 2.2 percent 
in 2016. The decline reflected a 1.2-percent decrease in sectoral output and
a 1.0-percent increase in combined inputs. Nondurable manufacturing sector 
multifactor productivity decreased 3.6 percent in 2016. The decline reflected
a 1.4-percent increase in sectoral output and a 5.2-percent increase in 
combined inputs. (See table C, table 3.)
 
Among the 18 manufacturing industries, 14 experienced declines in multifactor 
productivity in 2016. The largest declines in multifactor productivity were 
in the chemical products and apparel, leather, and allied products industries.
Printing and related support activities and miscellaneous manufacturing 
industries showed the largest gains in multifactor productivity. Sectoral 
output increased in 8 industries and combined inputs increased in 12 
industries in 2016. (See chart 2, table 3.) 
Chart 3 displays the contributions of three-digit manufacturing industries
to manufacturing sector multifactor productivity. Contributions take into 
account the relative importance of each industry to total manufacturing 
output. Chemical products and food manufacturing made the largest negative 
contribution to manufacturing sector multifactor productivity. Miscellaneous
manufacturing and primary metal products made the largest positive 
contribution to manufacturing sector multifactor productivity in 2016,
partially offsetting the overall productivity decline. 

Trends in the manufacturing sector

Manufacturing sector output grew in 2016 with an annual increase of 0.4 
percent compared to the 0.6-percent decline in 2015. The 3.6-percent 
increase in combined inputs was driven by a 9.4-percent growth in 
materials, larger than the 0.9-percent increase in combined inputs in
2015. (See table 1.) 

Multifactor productivity in the manufacturing sector grew at an average 
annual rate of 0.7 percent from 1987 to 2016 with sectoral output 
increasing at an average annual rate of 1.6 percent, faster than the
0.9-percent average annual rate of increase in combined inputs. During
the same period, labor productivity grew at an average annual rate of 
2.8 percent. (See table A.) Of the 2.8-percent average annual increase 
in labor productivity, multifactor productivity contributed 0.7 percent,
capital intensity contributed 0.7 percent, intermediate inputs intensity
contributed 1.2 percent, and labor composition contributed 0.2 percent.
(See table B.)

For the most recent 2007-16 period, multifactor productivity declined 
at a 0.8-percent average annual rate as compared to an increase of 1.7 percent
during the 2000-07 period. (See table A.) Sectoral output decreased at a 
0.5-percent annual average rate and combined inputs rose at a 0.3-percent 
annual average rate over the 2007-16 period.

Annual rates of multifactor productivity and related series were revised 
historically for all three sectors. (See table D.) The revisions were a
result of changes to BLS methodology for estimating intrasectoral transactions
and labor composition, as well as revisions to the National Income and 
Product Accounts (NIPA) released on January 26, 2018 and the Gross 
Domestic Product by Industry data released on November 2, 2017. 
Additional information can be found at 
www.bls.gov/mfp/sectoraloutputrevisions.htm.

Over the 1987-2015 period, manufacturing multifactor productivity increased 
0.8 percent as previously reported. Revisions over the 1987-2015 period 
resulted in a 0.1-percentage point upward revision to multifactor productivity
in nondurable manufacturing, with a 0.1-percentage point downward revision to
multifactor productivity growth in durable manufacturing. 

Revised measures

In 2015, multifactor productivity in the manufacturing sector was revised 
upward 1.3 percentage points, the upward revision was due to a larger 
downward revision to combined inputs than to sectoral output. Multifactor
productivity was revised upward 0.9 percent in the durable manufacturing 
sector and 1.5 percent in the nondurable manufacturing sector. Materials 
were revised downward 9.0 percent in manufacturing, 7.0 percent in durable
manufacturing, and 6.2 percent in nondurable manufacturing. (See table D.)

Table A. Productivity, sectoral output, and inputs in the manufacturing
sector for selected periods, 1987-2016

                                                                               
Compound annual growth rates                                                   
                                                                               
                             1987-  1987-  1990-  1995-  2000-  2007-  2015-
                             2016   1990   1995   2000   2007   2016   2016 
                                                                               
  Productivity                                                                 
                                                                               
     Multifactor              0.7    0.2    1.0    1.8    1.7   -0.8   -3.2 
     productivity1                                                          
     Labor productivity2      2.8    1.7    3.3    4.6    4.3    0.6    0.2 
     Output per unit of      -0.7   -0.8    0.5    0.3   -0.1   -2.2   -1.9 
     capital services                                                       
                                                                               
                                                                               
                                                                               
  Sectoral Output             1.6    1.8    3.2    4.5    1.1   -0.5    0.4 
                                                                               
  Inputs                                                                       
                                                                               
     Combined Inputs3         0.9    1.6    2.2    2.6   -0.6    0.3    3.6 
      Labor input4           -0.6    0.6    0.6    0.3   -2.4   -0.8    0.5 
        Hours                -1.1    0.1   -0.1   -0.1   -3.1   -1.1    0.1 
        Labor composition5    0.5    0.5    0.7    0.5    0.7    0.4    0.4 
      Capital Services        2.3    2.7    2.7    4.2    1.3    1.8    2.3 
      Energy                 -0.9    1.9    1.6    6.6   -3.9   -4.8   -0.8 
      Materials               1.4    0.4    3.2    4.3    0.3    0.1    9.4 
      Purchased business      1.5    5.3    3.2    1.3   -0.5    0.9    1.3 
     services                                                               
                                                                               
 1. Output per combined units of labor input, capital services, energy,        
    materials, and purchased business services.                                
 2. Output per hour worked.                                                    
 3. The growth rate of each input is weighted by its share of current dollar   
    costs.                                                                     
 4. Hours at work by age, education, and gender group are weighted by each     
    group's share of total wages.                                              
 5. Ratio of labor input to hours.                                             

Table B. Labor productivity and contributions of capital intensity,   
intermediate inputs intensity, labor composition, and multifactor productivity 
to labor productivity in the manufacturing sector for selected periods
, 1987-2016 

                                                                               
 Compound annual growth rates                                                  
                                                                               
                           1987-  1987-  1990-  1995-  2000-  2007-  2015-
                           2016   1990   1995   2000   2007   2016   2016 
                                                                               
  Labor productivity1       2.8    1.7    3.3    4.6    4.3    0.6    0.2 
                                                                          
                                                                          
                                                                               
    Contribution of         0.7    0.5    0.5    0.9    0.9    0.7    0.6 
    Capital Intensity2                                                    
                                                                          
                                                                          
                                                                               
       Information          0.1    0.1    0.1    0.2    0.1    0.0    0.0 
       processing                                                         
       equipment                                                          
       intensity3                                                         
                                                                          
                                                                          
                                                                               
       Research and         0.3    0.2    0.1    0.2    0.4    0.3    0.3 
       Development                                                        
       intensity4                                                         
                                                                          
                                                                          
                                                                               
       All Other            0.1    0.1    0.1    0.2    0.0    0.0    0.0 
       intellectual                                                       
       property products                                                  
       intensity5                                                         
                                                                          
                                                                          
                                                                               
       All other capital    0.3    0.2    0.2    0.3    0.5    0.3    0.3 
       services intensity                                                 
                                                                          
                                                                          
                                                                               
    Contribution of         1.2    0.8    1.5    1.7    1.4    0.6    2.8 
    Intermediate Inputs                                                   
    Intensity6                                                            
                                                                          
                                                                          
                                                                               
       Energy intensity7    0.0    0.0    0.0    0.2    0.0   -0.1    0.0 
                                                                          
                                                                          
                                                                               
       Materials            0.7    0.1    0.9    1.3    1.0    0.4    2.6 
       intensity8                                                         
                                                                          
                                                                          
                                                                               
       Purchased business   0.4    0.7    0.5    0.2    0.5    0.3    0.2 
       services                                                           
       intensity9                                                         
                                                                          
                                                                          
                                                                               
    Contribution of         0.2    0.2    0.2    0.1    0.2    0.1    0.1 
    labor composition10                                                   
                                                                          
                                                                          
                                                                               
    Multifactor             0.7    0.2    1.0    1.8    1.7   -0.8   -3.2 
    productivity11                                                        
                                                                          
                                                                          
                                                                               
 1. Output per hour worked.                                                    
 2. Capital intensity multiplied by capital's share of current dollar          
    costs.                                                                     
 3. Information processing equipment per hour multiplied by its share of       
    current dollar costs.                                                      
 4. Research and development per hour multiplied by its share of current       
    dollar costs.                                                              
 5. Software and artistic originals per hour multiplied by its share of        
    current dollar costs.                                                      
 6. Intermediate inputs per hour multiplied by intermediate inputs' share of   
    current dollar costs.                                                      
 7. Energy per hour multiplied by energy’s share of current dollar costs.      
 8. Materials per hour multiplied by materials’ share of current dollar costs. 
 9. Purchased business services per hour multiplied by purchased business'     
    services' share of current dollar costs.                                   
 10. Labor composition multiplied by labor’s share of current dollar costs.    
 11. Output per combined units of labor input, capital services, energy,       
     materials, and purchased business services.                               

Table C. Multifactor productivity and related measures for selected periods 
1987-2016 total, durable, and nondurable manufacturing sectors

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                         
                                1987- 1987- 1990- 1995- 2000- 2007- 2015-
                                2016  1990  1995  2000  2007  2016  2016 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.7   0.2   1.0   1.8   1.7  -0.8  -3.2
   Labor productivity             2.8   1.7   3.3   4.6   4.3   0.6   0.2
   Sectoral Output                1.6   1.8   3.2   4.5   1.1  -0.5   0.4
   Combined Inputs2               0.9   1.6   2.2   2.6  -0.6   0.3   3.6
   Capital Services               2.3   2.7   2.7   4.2   1.3   1.8   2.3
   Labor input3                  -0.6   0.6   0.6   0.3  -2.4  -0.8   0.5
   Energy                        -0.9   1.9   1.6   6.6  -3.9  -4.8  -0.8
   Materials                      1.4   0.4   3.2   4.3   0.3   0.1   9.4
   Purchased business services    1.5   5.3   3.2   1.3  -0.5   0.9   1.3
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      1.3   0.7   1.3   3.1   2.5  -0.4  -2.2
   Labor productivity             3.2   2.0   4.4   6.0   4.5   0.5  -1.2
   Sectoral Output                2.1   1.9   4.3   6.7   1.3  -0.8  -1.2
   Combined Inputs2               0.8   1.1   2.9   3.5  -1.2  -0.4   1.0
   Capital Services               2.1   2.6   2.3   5.4   0.9   0.9   1.1
   Labor input3                  -0.5   0.4   0.5   1.1  -2.4  -0.9   0.3
   Energy                        -1.6   1.2   0.9   6.4  -4.6  -5.7  -5.2
   Materials                      1.6   0.9   6.1   5.2  -1.3  -0.4   4.2
   Purchased business services    1.1   1.7   3.8   2.5  -0.4   0.0  -2.6
                                                                                     
  NonDurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1     -0.1  -0.4   0.4  -0.2   0.6  -0.9  -3.6
   Labor productivity             2.0   1.2   1.8   2.9   3.7   0.6   1.0
   Sectoral Output                0.8   1.7   1.9   1.4   0.6  -0.4   1.4
   Combined Inputs2               0.9   2.1   1.4   1.6   0.0   0.6   5.2
   Capital Services               2.4   2.8   3.0   3.0   1.5   2.4   3.2
   Labor input3                  -0.7   0.9   0.9  -0.9  -2.5  -0.6   0.8
   Energy                        -0.4   2.5   2.2   6.8  -3.3  -4.3   2.1
   Materials                      0.8   0.6   0.7   2.5   0.8   0.0   8.1
   Purchased business services    1.9  10.0   2.4  -0.1  -0.7   2.1   5.8
                                                                                     
 1. Output per combined units of hours, capital services, energy, materials          
   ,and purchased business services.                                                 
 2. The growth rate of each input is weighted by its share of current dollar 
    costs.  
 3. Hours at work by age, education, and gender group, weighted by each              
    group’s share of total wages.                                                    

Table D. Difference between revised and previous multifactor productivity 
and related measures, for selected periods 1987-2015

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                               
                                1987- 1987- 1990- 1995- 2000- 2007- 2013- 2014-
                                2015  1990  1995  2000  2007  2015  2014  2015 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.0  -0.1   0.0   0.0   0.0   0.1  -0.6   1.3
   Labor productivity             0.0  -0.1   0.1  -0.1   0.0  -0.2  -0.1  -2.0
   Sectoral Output                0.0   0.0   0.0   0.0   0.0  -0.2   0.0  -1.8
   Combined Inputs2              -0.1   0.1   0.0   0.0   0.0  -0.4   0.6  -3.2
   Capital Services               0.0   0.0   0.0   0.0   0.0  -0.1  -0.2  -0.5
   Labor input3                   0.0   0.2  -0.1   0.0   0.0  -0.1   0.9  -0.3
   Energy                        -0.1   0.0   0.0   0.0   0.0  -0.2   1.7  -3.4
   Materials                     -0.3   0.0   0.0   0.0   0.0  -1.0   0.8  -9.0
   Purchased business services    0.0   0.0   0.0   0.0   0.0   0.0   0.6  -0.3
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1     -0.1  -0.1   0.0   0.0   0.0   0.0  -1.2   0.9
   Labor productivity             0.0  -0.1   0.0   0.0   0.0  -0.2   0.0  -1.6
   Sectoral Output               -0.1   0.0   0.0   0.0   0.0  -0.2   0.0  -1.5
   Combined Inputs2               0.0   0.1   0.0   0.0   0.0  -0.2   1.3  -2.5
   Capital Services               0.0   0.0   0.0   0.0   0.0  -0.1  -0.3  -0.6
   Labor input3                   0.0   0.2   0.0   0.0   0.0   0.0   1.0  -0.4
   Energy                         0.1   0.0   0.0   0.0   0.0   0.2   4.0  -2.2
   Materials                     -0.1   0.0   0.0   0.0   0.0  -0.5   2.7  -7.0
   Purchased business services    0.0   0.0   0.0   0.0   0.0   0.1   0.9  -0.4
                                                                                     
  NonDurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1      0.1   0.0   0.0   0.0   0.0   0.2   0.1   1.5
   Labor productivity             0.0  -0.1   0.0  -0.1   0.0  -0.2  -0.1  -1.6
   Sectoral Output               -0.1   0.0   0.0   0.0   0.0  -0.2   0.0  -1.4
   Combined Inputs2              -0.1   0.0  -0.1   0.0   0.0  -0.4  -0.1  -3.1
   Capital Services               0.0   0.0   0.0   0.0   0.0  -0.1  -0.2  -0.4
   Labor input3                  -0.1   0.3  -0.1   0.1  -0.2  -0.1   0.7   0.0
   Energy                        -0.1   0.0   0.0   0.0   0.0  -0.5   0.5  -4.1
   Materials                     -0.3   0.0   0.0   0.0   0.0  -0.8  -0.3  -6.2
   Purchased business services    0.0   0.0   0.0   0.0   0.0   0.0   0.4  -0.3
                                                                                     
 1. Output per combined units of hours, capital services, energy, materials          
   ,and purchased business services.                                                 
 2. The growth rate of each input is weighted by its share of current dollar 
    costs.  
 3. Hours at work by age, education, and gender group, weighted by each              
    group’s share of total wages.                                                    
                                                                                     

The PDF version of the news release

Table of Contents

Last Modified Date: May 16, 2018