Total factor productivity rose in 78 of the 86 manufacturing industries in 2021

Total factor productivity rose in 78 of the 86 manufacturing industries in 2021. Six of the largest increases in 2021, all above 15.0 percent, were in coating, engraving, and heat treating metals (19.9 percent), clay products and refractories (19.1 percent), cutlery and handtools (16.2 percent), sugar and confectionery products (15.9 percent), rubber products (15.5 percent), and petroleum and coal products (15.3 percent). Among the manufacturing industries with falling total factor productivity, three had declines larger than 5.0 percent. The largest declines were in alumina and aluminum production (−5.3 percent), glass and glass products (−5.9 percent), and iron and steel mills and ferroalloys (−20.8 percent).

From 1987 to 2021, long-term total factor productivity grew in 64 manufacturing industries (compared to 78 from 2020 to 2021). Average annual rates of change in total factor productivity for nearly all manufacturing industries ranged between −2.0 percent and +2.0 percent per year over the long term. In contrast, total factor productivity increased by 2.1 percent or more in 70 industries in 2021. Only four industries saw an average annual increase of that magnitude from 1987 to 2021: communications equipment, audio and video equipment, semiconductors and electronic components, and computer and peripheral equipment. 

Both year-to-year movements and long-term trends in industry total factor productivity may reflect cyclical changes in the economy. This was particularly true in 2021 due to the continuation of the COVID-19 pandemic. While long-term annual percent changes in total factor productivity are affected by economic conditions such as the pandemic, these historical trends are nevertheless more reliable indicators of industry performance.

These data are from the Productivity program. To learn more, see “Total Factor Productivity for Detailed Industries — 2021.” Total factor productivity is defined as output per unit of combined inputs. Changes in total factor productivity show the relationship between changes in real output and changes in the combined inputs of labor, capital, and intermediate inputs (energy, materials, and purchased services) used to produce that output.