July 13, 2010
Over the 1987–2006 period, the average annual compound multifactor productivity growth rates for 42 nonmanufacturing industries were positive or zero for 25 of the 42 industries and negative for 17 industries.
Among the 42 industries, 6 exhibited average annual multifactor productivity growth rates of 2.0 percent per year or higher. Securities, commodity contracts, and investments had by far the highest growth rate: 7.2 percent. In hindsight, this percentage could be reflective of an overheated financial market.
Computer systems design and warehousing and storage also showed strong growth: 2.9 percent and 2.7 percent per year, respectively.
Of the 17 industries reporting negative productivity over the 20-year period, 2 recorded declines of more than 1.0 percent per year: rental and leasing services, reporting the lowest growth rate, ‑2.3 percent, and legal services, with a growth rate of ‑1.7 percent.
Other industries with long-term negative productivity growth rates were construction, hospitals and nursing and residential care facilities, and transit and ground passenger transportation.
Over time, fewer industries exhibited negative multifactor productivity growth rates. From 1990 to 1995, of 42 industries, 21 exhibited negative multifactor productivity trends. The number fell to 19 industries for the 1995–2000 period and to 14 for 2000–06.
These data are from the Multifactor Productivity program. To learn more, see Nonmanufacturing industry contributions to multifactor productivity, 1987–2006 (PDF), in the June 2010 issue of the Monthly Labor Review. Multifactor productivity, measured as output per unit of labor, capital, and other measurable inputs, describes the intangible influences on labor productivity, such as improvements in efficiency and technology.