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Economic News Release
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Multifactor Productivity Trends In Manufacturing, 2018

For release 10:00 a.m. (EDT) Tuesday, January 28, 2020	USDL-20-0136
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 - 2018

Manufacturing sector multifactor productivity declined 1.0 percent in 2018,
the U.S. Bureau of Labor Statistics reported today. (See chart 1, table A.)
The multifactor productivity decline in 2018 reflected a 0.6-percent decrease
in sectoral output and a 0.3-percent increase in combined inputs. The 
decrease in multifactor productivity followed a revised 0.3-percent 
increase in 2017. 

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 
1.1 percent in 2018. The decline reflected a 0.4-percent decrease
in sectoral output and a 0.7-percent increase in combined inputs. 
Nondurable manufacturing sector multifactor productivity decreased
0.5 percent in 2018. The decline reflected a 1.0-percent decrease 
in sectoral output and a 0.5-percent decrease in combined inputs.
(See table C, table 3.)
 
Among the 18 manufacturing industries, 13 experienced declines in multifactor
productivity in 2018. The largest declines in multifactor productivity were 
in the primary metal products and transportation equipment industries. 
Printing and related support activities and machinery industries showed the
largest gains in multifactor productivity. Sectoral output declined in 13 
industries; the fourth year in which at least half of manufacturing 
industries reported sectoral output declines. (See chart 2, table 3.) 

Trends in the manufacturing sector

Manufacturing sectoral output declined in 2018 with an annual decrease of 
0.6 percent compared to the 0.6-percent increase in 2017. Combined inputs 
increased 0.3 percent, the same increase as 2017. (See table 1.) 

Over the longer term, multifactor productivity in the manufacturing sector 
grew at an average annual rate of 0.9 percent from 1987 to 2018 with 
sectoral output increasing at an average annual rate of 1.5 percent, faster
than the 0.5-percent average annual rate of increase in combined inputs. 
During the same period, labor productivity grew at an average annual rate 
of 2.5 percent. (See table A.) Of the 2.5-percent average annual increase 
in labor productivity, multifactor productivity contributed 0.9 percentage 
points which represents about 40 percent of the growth in the 1987-2018
period. Capital intensity contributed 0.7 percentage points, intermediate
inputs intensity contributed 0.6 percentage points, and labor composition 
contributed 0.2 percentage points to the increase in labor productivity. 
(See table B.) 

For the more recent 2007-18 period, multifactor productivity declined at 
a 0.4-percent average annual rate compared to an increase of 1.7 percent 
during the 2000-07 period. (See table A.) Sectoral output decreased 
0.5-percent (average annual rate) and combined inputs decreased 0.1-percent
(average annual rate) over the 2007-18 period.

Revised measures

Annual rates of multifactor productivity and related series were revised 
historically for all three sectors. (See table D.) The revisions were a 
result of newly released historical series for energy, materials, and 
business services from the Bureau of Economic Analysis for the 1987-1997 
period, and incorporation of the 2017 Economic Census First Look data.

Over the 1987-2017 period, multifactor productivity in the manufacturing 
sector was revised up 0.4 percentage points to 1.0 percent. The upward 
revision was due to a 0.4-percentage point downward revision to intermediate
inputs stemming from the newly incorporated historical detail. The revisions
to the longer term reflect mostly revisions to the 1987-2000 period and the
more recent 2012-2017 period.  Revisions over the 1987-2017 period resulted
in a 0.1-percentage point upward revision to multifactor productivity in 
nondurable manufacturing (0.0 percent), with a 0.5-percentage point upward
revision to multifactor productivity growth (1.8 percent) in durable 
manufacturing. 

In 2017, multifactor productivity in the manufacturing sector was revised 
upward 1.7 percentage points to 0.3 percent. The upward revision was 
primarily due to a 1.6-percentage point downward revision to combined inputs.
Multifactor productivity was revised upward 3.5 percentage points in the 
durable manufacturing sector and downward 0.2 percentage point in the 
nondurable manufacturing sector. Materials were revised downward 8.7 
percentage points in manufacturing, 11.2 percentage points in durable 
manufacturing, and 3.9 percentage points in nondurable manufacturing. 
(See table D.)


Table A. Productivity, sectoral output, and inputs in the manufacturing
sector for selected periods, 1987-2018

                                                                               
Compound annual growth rates                                                   
                                                                               
                             1987-  1987-  1990-  1995-  2000-  2007-  2017-
                             2018   1990   1995   2000   2007   2018   2018 
                                                                               
  Productivity                                                                 
                                                                               
     Multifactor               0.9    0.8    1.7    2.2    1.7   -0.4   -1.0
     productivity1                                                          
     Labor productivity2       2.5    1.7    3.2    4.5    4.3    0.2   -2.6
     Output per unit of       -0.8   -0.9    0.5    0.2   -0.3   -2.2   -2.1
     capital services                                                       
 
  Sectoral Output              1.5    1.8    3.1    4.4    1.2   -0.5   -0.6
  
  Inputs                                                                       
  
     Combined Inputs3          0.5    1.0    1.5    2.1   -0.6   -0.1    0.3
      Labor input4            -0.4    0.5    0.7    0.5   -2.4   -0.3    1.9
        Hours                 -1.0    0.1   -0.1   -0.1   -3.1   -0.7    2.0
        Labor composition5     0.6    0.4    0.7    0.6    0.7    0.4   -0.1
      Capital Services         2.3    2.7    2.7    4.3    1.5    1.8    1.5
      Energy                  -2.1   -0.8   -2.6   10.9   -5.5   -5.4   -3.9
      Materials                0.5   -0.9    3.1    1.5    0.5   -0.7   -0.9
      Purchased business       0.4    3.9   -0.2    2.2   -0.4   -0.7   -2.0
      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
, 1987-2018 

                                                                               
 Compound annual growth rates                                                  
                                                                               
                           1987-  1987-  1990-  1995-  2000-  2007-  2017-
                           2018   1990   1995   2000   2007   2018   2018 
                                                                               
  Labor productivity1       2.5    1.7    3.2    4.5    4.3    0.2   -2.6 
                                                                          
                                                                          
                                                                               
    Contribution of         0.7    0.5    0.5    0.9    1.0    0.6   -0.1 
    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    0.3    0.4    0.3    0.1 
       Development                                                        
       intensity4                                                         
                                                                          
                                                                          
                                                                               
       All Other            0.1    0.1    0.1    0.1    0.0    0.0    0.0 
       intellectual                                                       
       property products                                                  
       intensity5                                                         
                                                                          
                                                                          
                                                                               
       All other capital    0.3    0.2    0.2    0.3    0.5    0.2   -0.2 
       services intensity                                                 
                                                                          
                                                                          
                                                                               
    Contribution of         0.6    0.3    0.7    1.1    1.4   -0.1   -1.5 
    Intermediate Inputs                                                   
    Intensity6                                                            
                                                                          
                                                                          
                                                                               
       Energy intensity7    0.0    0.0   -0.1    0.3   -0.1   -0.1   -0.1 
                                                                          
                                                                          
                                                                               
       Materials            0.4   -0.3    0.8    0.5    1.0    0.0   -0.9 
       intensity8                                                         
                                                                          
                                                                          
                                                                               
       Purchased business   0.2    0.6    0.0    0.4    0.4    0.0   -0.5 
       services                                                           
       intensity9                                                         
                                                                          
                                                                          
                                                                               
    Contribution of         0.2    0.1    0.2    0.2    0.2    0.1    0.0 
    labor composition10                                                   
                                                                          
                                                                          
                                                                               
    Multifactor             0.9    0.8    1.7    2.2    1.7   -0.4   -1.0 
    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 1987-2018
 total, durable, and nondurable manufacturing sectors

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                         
                                1987- 1987- 1990- 1995- 2000- 2007- 2017-
                                2018  1990  1995  2000  2007  2018  2018 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.9   0.8   1.7   2.2   1.7  -0.4  -1.0
   Labor productivity             2.5   1.7   3.2   4.5   4.3   0.2  -2.6
   Sectoral Output                1.5   1.8   3.1   4.4   1.2  -0.5  -0.6
   Combined Inputs2               0.5   1.0   1.5   2.1  -0.6  -0.1   0.3
   Capital Services               2.3   2.7   2.7   4.3   1.5   1.8   1.5
   Labor input3                  -0.4   0.5   0.7   0.5  -2.4  -0.3   1.9
   Energy                        -2.1  -0.8  -2.6  10.9  -5.5  -5.4  -3.9
   Materials                      0.5  -0.9   3.1   1.5   0.5  -0.7  -0.9
   Purchased business services    0.4   3.9  -0.2   2.2  -0.4  -0.7  -2.0
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      1.7   1.5   2.3   3.7   2.5   0.0  -1.1
   Labor productivity             2.9   2.0   4.5   5.9   4.5   0.2  -2.7
   Sectoral Output                2.0   1.9   4.3   6.7   1.3  -0.6  -0.4
   Combined Inputs2               0.3   0.3   1.9   2.8  -1.2  -0.6   0.7
   Capital Services               2.2   2.6   2.3   5.4   1.1   1.3   1.4
   Labor input3                  -0.4   0.3   0.5   1.3  -2.4  -0.4   2.1
   Energy                        -3.3  -2.6  -3.3  10.1  -5.7  -7.6  -4.9
   Materials                      0.4  -1.3   5.2   2.3  -1.2  -1.2   0.2
   Purchased business services    0.1   1.2   0.7   3.6   0.0  -2.1  -2.6
                                                                                     
  NonDurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1      0.0  -0.2   0.6   0.0   0.6  -0.7  -0.5
   Labor productivity             1.7   1.2   1.8   2.9   3.7   0.1  -2.5
   Sectoral Output                0.7   1.7   1.8   1.4   0.6  -0.4  -1.0
   Combined Inputs2               0.7   1.9   1.2   1.4  -0.1   0.3  -0.5
   Capital Services               2.4   2.8   3.1   3.1   1.8   2.2   1.7
   Labor input3                  -0.5   0.8   0.9  -0.8  -2.4   0.0   1.6
   Energy                        -1.1   1.0  -1.8  11.7  -5.4  -3.9  -2.2
   Materials                      0.5   0.6   1.6   1.1   1.0  -0.5  -2.2
   Purchased business services    0.7   7.3  -1.0   0.7  -1.2   1.0  -1.0
                                                                                     
 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 1987-2017

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                               
                                1987- 1987- 1990- 1995- 2000- 2007- 2015- 2016-
                                2017  1990  1995  2000  2007  2017  2016  2017 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.4   0.6   0.8   0.4  -0.1   0.3   0.6   1.7
   Labor productivity            -0.1   0.0  -0.1  -0.1   0.1   0.0  -0.2   0.2
   Sectoral Output               -0.1   0.0   0.0  -0.1   0.1  -0.1  -0.1   0.2
   Combined Inputs2              -0.4  -0.6  -0.7  -0.5   0.0  -0.4  -0.7  -1.6
   Capital Services               0.1   0.0   0.1   0.1   0.0   0.0   0.2   0.1
   Labor input3                   0.0   0.0   0.1   0.1   0.0   0.0   0.1  -0.1
   Energy                        -0.9  -2.8  -4.2   0.9   0.1  -0.4  -5.9  12.0
   Materials                     -0.9  -1.3  -0.2  -2.3   0.3  -1.3  -2.0  -8.7
   Purchased business services   -0.6  -1.5  -3.3   0.9   0.1  -0.3   0.3   9.3
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      0.5   0.8   1.1   0.7   0.0   0.4   0.1   3.5
   Labor productivity             0.0   0.0   0.1  -0.1   0.0   0.1   0.0   0.4
   Sectoral Output                0.0   0.0   0.1   0.0   0.0   0.0   0.0   0.4
   Combined Inputs2              -0.5  -0.8  -1.1  -0.9   0.0  -0.4  -0.2  -3.3
   Capital Services               0.1   0.2   0.1   0.0   0.0   0.1   0.1   0.1
   Labor input3                   0.0   0.0   0.0   0.1   0.0   0.0   0.1  -0.2
   Energy                        -1.2  -4.0  -4.1  -0.2   0.0  -0.2   1.9  -1.4
   Materials                     -1.2  -2.4  -0.9  -3.0   0.0  -1.1  -1.1 -11.2
   Purchased business services   -0.7  -0.6  -3.0   0.9   0.0  -0.6   0.4   2.8
                                                                                     
  NonDurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1      0.1   0.2   0.2   0.0  -0.1   0.2   0.9  -0.2
   Labor productivity             0.0   0.0  -0.1  -0.1   0.0   0.0  -0.2   0.1
   Sectoral Output                0.0   0.0  -0.1   0.0   0.0  -0.1  -0.1   0.1
   Combined Inputs2              -0.2  -0.2  -0.3   0.0   0.0  -0.3  -1.1   0.2
   Capital Services               0.0   0.0   0.1   0.0   0.0   0.0   0.3  -0.1
   Labor input3                   0.1  -0.1   0.1   0.1   0.0   0.0   0.2  -0.1
   Energy                        -0.6  -1.6  -4.0   1.8   0.0  -0.2  -9.7  19.9
   Materials                     -0.2   0.0   0.8  -0.5   0.2  -0.8  -1.7  -3.9
   Purchased business services   -0.6  -2.7  -3.5   1.1   0.0   0.1  -0.2  15.5
                                                                                     
 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.                                                    
                                                                                     

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Last Modified Date: January 28, 2020