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Bureau of Labor Statistics > Office of Survey Methods Research > Publications > Browse Research Papers

Comparing early estimates of US manufacturing output

Peter B Meyer

Abstract

Measures of labor productivity can be based on different concepts of output. This paper examines measures of quarterly output for the US manufacturing sector. Gross output is the value of all goods produced in US manufacturing establishments. Sectoral output subtracts the costs of intermediate inputs (energy, materials, and services) purchased from within the sector, which reduces double-counting of goods both produced and used in the sector. Value-added output subtracts the costs of all intermediate inputs and is the measure of output used in GDP. This paper compares sectoral and value-added output growth over time and discusses the justifications for using each concept in measures of productivity. I develop simple prediction models of components of these output measures using data available within one month of the end of each quarter. In both durable and nondurable goods manufacturing, sectoral output tends to grow faster than value-added in periods when import prices are rising. In durables manufacturing, increases in new orders, temporary help employment, and overall manufacturing employment help predict when sectoral output grows faster than value-added. This paper explains these relationships and examines differences in growth rates to help readers interpret productivity statistics based on these different output concepts.