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Multifactor Productivity Trends In Manufacturing, 2017

For release 10:00 am (EDT) Tuesday, April 23, 2019	USDL-19-0694
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	MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2017
	
Manufacturing sector multifactor productivity declined 1.4 percent in 2017, the
U.S. Bureau of Labor Statistics reported today. (See table A.) The multifactor
productivity decline in 2017 reflected a 0.4-percent increase in sectoral
output and a 1.9-percent increase in combined inputs. The decrease in
multifactor productivity followed a 2.8-percent decrease in 2016.

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 3.2 percent
in 2017. The decline reflected a 0.3-percent increase in sectoral output and a
3.7-percent increase in combined inputs. Nondurable manufacturing sector 
multifactor productivity increased 0.5 percent in 2017. The increase reflected
a no change 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 2017. The largest declines in multifactor productivity were in
the apparel, leather, and allied products industry and the transportation 
equipment industry. Printing and related support activities and petroleum and 
coal products industries showed the largest gains in multifactor productivity.
Sectoral output increased in 5 industries and combined inputs increased in 9
industries in 2017. (See table 3.)

Contributions take into account the relative importance of each industry to the
manufacturing sector multifactor productivity. Transportation equipment made
the largest negative contribution to manufacturing multifactor productivity.
Petroleum and coal products made the largest positive contribution to 
manufacturing multifactor productivity in 2017, partially offsetting the
overall productivity decline.

Trends in the manufacturing sector

Manufacturing sectoral output grew in 2017 with an annual increase of 0.4
percent compared to the 0.1-percent decline in 2016. The 1.9-percent increase
in combined inputs was driven by a 1.1-percent growth in materials. 
(See table 1.)

Multifactor productivity in the manufacturing sector grew at an average annual
rate of 0.6 percent from 1987 to 2017 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 2.7 percent. (See table A.) Of the 
2.7-percent average annual increase in labor productivity, multifactor
productivity contributed 0.6 percentage points, capital intensity contributed
0.7 percentage points, intermediate inputs intensity contributed 1.1 percentage
points, and labor composition contributed 0.2 percentage points. (See table B.)

For the most recent 2007-17 period, multifactor productivity declined at a
0.7-percent average annual rate as compared to an increase of 1.8 percent
during the 2000-07 period. (See table A.) Sectoral output decreased at a
0.4-percent annual average rate and combined inputs rose at a 0.3-percent
annual average rate over the 2007-17 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 Comprehensive Update of the National Income and Product Accounts (NIPA) 
released on July 27, 2018 and the Gross Domestic Product by Industry data
released on November 1, 2018.

Over the 1987-2016 period, manufacturing multifactor productivity growth was
unrevised. It was previously reported as 0.7 percent. Revisions over the
1987-2016 period resulted in a 0.1-percentage point downward revision to
multifactor productivity in nondurable manufacturing, with a 0.1-percentage
point upward revision to multifactor productivity growth in durable
manufacturing.

In 2016, multifactor productivity in the manufacturing sector was revised
upward 0.4 percentage points, the upward revision was due to 0.8 percent and
0.5 percent downward revisions to combined inputs and sectoral output
respectively. Multifactor productivity was revised upward 1.0 percent in the
durable manufacturing sector and downward 0.3 percent in the nondurable
manufacturing sector. Materials were revised downward 4.3 percent in
manufacturing, 4.9 percent in durable manufacturing, and 1.4 percent in
nondurable manufacturing. (See table D.)

   Table A. Productivity, sectoral output, and inputs in the manufacturing
                    sector for selected periods, 1987-2017

                                                                               
Compound annual growth rates                                                   
                                                                               
                             1987-  1987-  1990-  1995-  2000-  2007-  2016-
                             2017   1990   1995   2000   2007   2017   2017 
                                                                               
  Productivity                                                                 
                                                                               
     Multifactor              0.6    0.2    0.9    1.8    1.8   -0.7   -1.4 
     productivity1                                                          
     Labor productivity2      2.7    1.7    3.3    4.6    4.3    0.5   -0.4 
     Output per unit of      -0.7   -0.8    0.6    0.3   -0.4   -2.1   -1.0 
     capital services                                                       
                                                                               
                                                                               
                                                                               
  Sectoral Output             1.6    1.8    3.2    4.5    1.1   -0.4    0.4 
                                                                               
  Inputs                                                                       
                                                                               
     Combined Inputs3         0.9    1.6    2.2    2.6   -0.6    0.3    1.9 
      Labor input4           -0.5    0.5    0.6    0.4   -2.4   -0.5    1.1 
        Hours                -1.1    0.1   -0.1   -0.1   -3.1   -0.9    0.8 
        Labor composition5    0.6    0.4    0.7    0.5    0.7    0.4    0.3 
      Capital Services        2.3    2.7    2.6    4.2    1.5    1.8    1.5 
      Energy                 -1.1    2.0    1.6   10.0   -5.6   -5.2  -15.3 
      Materials               1.5    0.5    3.3    3.8    0.2    0.6    1.1 
      Purchased business      1.0    5.4    3.1    1.3   -0.5   -0.3    8.5 
     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,
1987-2017 

                                                                               
 Compound annual growth rates                                                  
                                                                               
                           1987-  1987-  1990-  1995-  2000-  2007-  2016-
                           2017   1990   1995   2000   2007   2017   2017 
                                                                               
  Labor productivity1       2.7    1.7    3.3    4.6    4.3    0.5   -0.4 
                                                                          
                                                                          
                                                                               
    Contribution of         0.7    0.5    0.5    0.9    1.0    0.6    0.2 
    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    0.2 
       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   -0.1 
       services intensity                                                 
                                                                          
                                                                          
                                                                               
    Contribution of         1.1    0.9    1.6    1.7    1.3    0.5    0.8 
    Intermediate Inputs                                                   
    Intensity6                                                            
                                                                          
                                                                          
                                                                               
       Energy intensity7    0.0    0.1    0.0    0.3   -0.1   -0.1   -0.3 
                                                                          
                                                                          
                                                                               
       Materials            0.8    0.1    1.0    1.2    1.0    0.5    0.1 
       intensity8                                                         
                                                                          
                                                                          
                                                                               
       Purchased business   0.3    0.7    0.5    0.2    0.4    0.1    1.0 
       services                                                           
       intensity9                                                         
                                                                          
                                                                          
                                                                               
    Contribution of         0.2    0.1    0.2    0.2    0.2    0.1    0.1 
    labor composition10                                                   
                                                                          
                                                                          
                                                                               
    Multifactor             0.6    0.2    0.9    1.8    1.8   -0.7   -1.4 
    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
1987-2017 total, durable, and nondurable manufacturing sectors

                                                                               
Average annual growth                                                          
                                                                               
                                                                         
                                1987- 1987- 1990- 1995- 2000- 2007- 2016-
                                2017  1990  1995  2000  2007  2017  2017 
                                                                               
  Manufacturing                                                                
                                                                               
   Multifactor productivity1      0.6   0.2   0.9   1.8   1.8  -0.7  -1.4
   Labor productivity             2.7   1.7   3.3   4.6   4.3   0.5  -0.4
   Sectoral Output                1.6   1.8   3.2   4.5   1.1  -0.4   0.4
   Combined Inputs2               0.9   1.6   2.2   2.6  -0.6   0.3   1.9
   Capital Services               2.3   2.7   2.6   4.2   1.5   1.8   1.5
   Labor input3                  -0.5   0.5   0.6   0.4  -2.4  -0.5   1.1
   Energy                        -1.1   2.0   1.6  10.0  -5.6  -5.2 -15.3
   Materials                      1.5   0.5   3.3   3.8   0.2   0.6   1.1
   Purchased business services    1.0   5.4   3.1   1.3  -0.5  -0.3   8.5
                                                                               
  Durable Manufacturing                                                        
                                                                               
   Multifactor productivity1      1.3   0.7   1.2   3.0   2.5  -0.2  -3.2
   Labor productivity             3.1   2.0   4.4   6.0   4.5   0.4  -0.1
   Sectoral Output                2.1   1.9   4.2   6.7   1.3  -0.6   0.3
   Combined Inputs2               0.8   1.1   3.0   3.7  -1.2  -0.4   3.7
   Capital Services               2.1   2.5   2.2   5.3   1.1   1.2   0.9
   Labor input3                  -0.5   0.3   0.5   1.2  -2.4  -0.7   0.7
   Energy                        -2.1   1.3   0.8  10.3  -5.7  -7.7 -13.8
   Materials                      1.6   1.1   6.1   5.3  -1.2  -0.2   6.2
   Purchased business services    0.8   1.8   3.7   2.7   0.0  -1.4  11.1
                                                                               
  NonDurable Manufacturing                                                     
                                                                               
   Multifactor productivity1     -0.1  -0.4   0.4   0.0   0.7  -1.0   0.5
   Labor productivity             1.9   1.2   1.9   2.9   3.7   0.4  -1.6
   Sectoral Output                0.7   1.6   1.9   1.4   0.6  -0.3   0.0
   Combined Inputs2               0.9   2.1   1.5   1.4  -0.1   0.7  -0.5
   Capital Services               2.5   2.8   3.0   3.1   1.8   2.2   2.0
   Labor input3                  -0.6   0.9   0.8  -0.9  -2.4  -0.2   1.9
   Energy                        -0.4   2.6   2.2   9.9  -5.4  -3.9 -16.0
   Materials                      0.8   0.6   0.8   1.6   0.8   0.5  -3.4
   Purchased business services    1.3  10.0   2.5  -0.4  -1.2   1.0   5.9
                                                                               
 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 1987-2016

                                                                               
Average annual growth                                                          
                                                                               
                                                                               
                                1987- 1987- 1990- 1995- 2000- 2007- 2014- 2015-
                                2016  1990  1995  2000  2007  2016  2015  2016 
                                                                               
  Manufacturing                                                                
                                                                               
   Multifactor productivity1      0.0   0.0  -0.1   0.0   0.1   0.2   0.2   0.4
   Labor productivity             0.0   0.0   0.0   0.0   0.0   0.0   0.0  -0.4
   Sectoral Output                0.0   0.0   0.0   0.0   0.0   0.0   0.0  -0.5
   Combined Inputs2               0.0   0.0   0.0   0.0   0.0  -0.1  -0.2  -0.8
   Capital Services               0.1   0.0  -0.1   0.0   0.2   0.0  -0.2  -0.5
   Labor input3                   0.0  -0.1   0.0   0.1   0.0   0.1   0.0   0.1
   Energy                         0.4   0.1   0.0   3.4  -1.7   0.8   3.2  -1.7
   Materials                      0.1   0.1   0.1  -0.5  -0.1   0.4   1.6  -4.3
   Purchased business services   -0.7   0.1  -0.1   0.0   0.0  -2.2  -3.8   2.8
                                                                               
  Durable Manufacturing                                                        
                                                                               
   Multifactor productivity1      0.1   0.0  -0.1  -0.1   0.0   0.5   0.6   1.0
   Labor productivity             0.0   0.0   0.0   0.0   0.0   0.0  -0.1  -0.2
   Sectoral Output                0.0   0.0  -0.1   0.0   0.0   0.1   0.0  -0.4
   Combined Inputs2              -0.1   0.0   0.1   0.2   0.0  -0.4  -0.6  -1.4
   Capital Services               0.1  -0.1  -0.1  -0.1   0.2   0.3   0.4   0.0
   Labor input3                   0.0  -0.1   0.0   0.1   0.0   0.1  -0.1  -0.1
   Energy                        -0.1   0.1  -0.1   3.9  -1.1  -1.3   4.5 -10.5
   Materials                     -0.1   0.2   0.0   0.1   0.1  -0.5   1.2  -4.9
   Purchased business services   -0.7   0.1  -0.1   0.2   0.4  -2.7  -7.5   0.6
                                                                               
  NonDurable Manufacturing                                                     
                                                                               
   Multifactor productivity1     -0.1   0.0   0.0   0.2   0.1  -0.3  -0.2  -0.3
   Labor productivity             0.0   0.0   0.1   0.0   0.0   0.0   0.0  -0.6
   Sectoral Output                0.0  -0.1   0.0   0.0   0.0   0.1   0.0  -0.2
   Combined Inputs2               0.0   0.0   0.1  -0.2  -0.1   0.3   0.3   0.1
   Capital Services               0.1   0.0   0.0   0.1   0.3  -0.1  -0.6  -0.8
   Labor input3                   0.1   0.0  -0.1   0.0   0.1   0.2   0.2   0.4
   Energy                         0.6   0.1   0.0   3.1  -2.1   1.9   2.3   2.9
   Materials                      0.1   0.0   0.1  -0.9   0.0   0.9   1.1  -1.4
   Purchased business services   -0.7   0.0   0.1  -0.3  -0.5  -1.6   1.3   5.5
                                                                               
 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: April 23, 2019