Bureau of Labor Statistics > Productivity > Publications > Productivity Highlights

Total Factor Productivity Major Industry Contributions to Output

Data For Charts

See the contributions data presented in these charts and industry-level data.

Using the growth accounting identities, the nation's private business output growth can be decomposed into the contributions of labor input, capital input, and total factor productivity growth. In 2023, contributions from labor input and capital input remained positive, however the upturn in TFP’s 2023 contribution compared to 2022 lead to a larger output growth for the private business sector.

Chart data can be found at https://www.bls.gov/productivity/highlights/contributions-of-total-factor-productivity-nipa-industry.xlsx. Stacked bar chart of the percentage point contributions (of capital, labor, and TFP) to output growth in private business since 2007.

The charts that follow examine in more detail the impact of TFP, labor input and capital input through the contributions of four broad sectors that encompass the private business economy: goods producing; information and communication technology (ICT); finance, insurance, and real estate (FIRE); and service providing (See Sector-Industry composition table to view specific industries within each sector). Looking at these sectors provides further insights into the drivers of economic growth in 2023 compared to 2022.

Expand to view Sector-Industry composition table.

Sector-Industry Composition
Sector	Industry
Goods Producing	Farms
Goods Producing	Forestry, fishing, and related activities
Goods Producing	Oil and gas extraction
Goods Producing	Mining, except oil and gas
Goods Producing	Support activities for mining
Goods Producing	Utilities
Goods Producing	Construction
Goods Producing	Wood products
Goods Producing	Nonmetallic mineral products
Goods Producing	Primary metals
Goods Producing	Fabricated metal products
Goods Producing	Machinery
Goods Producing	Electrical equipment, appliances, and components
Goods Producing	Motor vehicles
Goods Producing	Other transportation equipment
Goods Producing	Furniture and related products
Goods Producing	Miscellaneous manufacturing
Goods Producing	Food and beverage and tobacco products
Goods Producing	Textile mills and textile product mills
Goods Producing	Apparel and leather and allied products
Goods Producing	Paper products
Goods Producing	Printing and related support activities
Goods Producing	Petroleum and coal products
Goods Producing	Chemical products
Goods Producing	Plastics and rubber products
Service Providing	Wholesale trade
Service Providing	Retail trade
Service Providing	Air transportation
Service Providing	Rail transportation
Service Providing	Water transportation
Service Providing	Truck transportation
Service Providing	Transit and ground passenger transportation
Service Providing	Pipeline transportation
Service Providing	Other transportation and support activities
Service Providing	Warehousing and storage
Service Providing	Publishing industries, except internet (includes software)
Service Providing	Motion picture and sound recording industries
Service Providing	Legal services
Service Providing	Miscellaneous professional, scientific, and technical services
Service Providing	Management of companies and enterprises
Service Providing	Administrative and support services
Service Providing	Waste management and remediation services
Service Providing	Educational services
Service Providing	Ambulatory health care services
Service Providing	Hospitals and nursing and residential care facilities
Service Providing	Social assistance
Service Providing	Performing arts, spectator sports, museums, and related activities
Service Providing	Amusements, gambling, and recreation industries
Service Providing	Accommodation
Service Providing	Food services and drinking places
Service Providing	Other services, except government
FIRE	Federal Reserve banks, credit intermediation, and related activities
FIRE	Securities, commodity contracts, and investments
FIRE	Insurance carriers and related activities
FIRE	Funds, trusts, and other financial vehicles
FIRE	Real estate
FIRE	Rental and leasing services and lessors of intangible assets
ICT	Computer and electronic products
ICT	Broadcasting and telecommunications
ICT	Data processing, internet publishing, and other information services
ICT	Computer systems design and related services

TFP's contribution to output

Total factor productivity’s contribution to private business output rebounded from a negative 1.59 percentage point contribution in 2022 to a positive 0.74 percentage point contribution in 2023. The 2.33 percentage point change in TFP’s contribution to output is due in large part to service providing industries, as their contribution increased from negative 0.37 percentage point in 2022 to 0.93 percentage point in 2023. The strong service upturn was driven by the retail trade industry, which accounted for nearly half of the increase going from a negative 0.45 percentage point contribution in 2022 to a 0.76 percentage point contribution in 2023. The goods producing sector had a negative TFP contribution in both 2022 and 2023. However, the sector’s TFP contribution did improve in 2023 due to large upturns in oil and gas extraction (negative 0.41 percentage point in 2022 to 0.70 percentage point in 2023) and petroleum and coal products (negative 0.15 percentage point in 2022 to 0.20 percentage point in 2023).

Labor input's contribution to output

Labor input’s positive contribution to output growth of 0.72 percentage point in 2023 was a strong deceleration from the 2.46 percentage point contribution in 2022. While all four broad sectors had positive contributions in both years, private business’ labor input contribution in 2023 was less than a third of what it was in 2022.

The service providing sector’s labor input had the largest deceleration in contribution to private business output growth going from a 1.58 percentage point contribution in 2022 to just 0.49 percentage point in 2023. This deceleration in 2023 is due in part to the miscellaneous professional, scientific, and technical services industry and the administrative and support services industry falling by 0.27 percentage point and 0.22 percentage point respectively.

Capital's contribution to output

Capital input’s positive contribution to output growth in 2023 continued to remain positive with similar trends to 2022. With an overall contribution of 1.09 percentage points, all sectors demonstrated a positive contribution of capital to output growth in 2023 driven by the service providing sector (0.51 percentage point in 2023).

The contribution of the service providing sector in 2023 was driven by increases in the wholesale and retail trade industries with contributions of 0.11 and 0.10 percentage point, respectively. Within the ICT sector, the data processing, internet publishing, and other information services industry contributed the most to output growth in 2023 with a contribution of 0.17 percentage point.

How to use contributions

Contributions of factors of production are calculated as the natural log change in the factor index weighted by its share of Private Business value added growth.

For each factor input into the economy (total factor productivity, capital, and labor) we can decompose output growth by its contributing input growth, by sector and industry. To demonstrate this, we will focus on the contribution of TFP to private business output growth and drill down the change in contributions over the last 3 business cycles by the finance, insurance, real estate, and leasing (FIRE) sector and the real estate industry.

First, let’s look at the contribution of each input to private business output growth. Table 1 shows us that the TFP contribution to the Private Business output growth has slowed in the last business cycle. We can see that the “slow” growth of output in this business cycle relative to previous cycles, has largely come from a deceleration in TFP’s contribution to growth.

Table 1. Input Contributions to Output Growth
Input Contributions to Output Growth	1990-2000	2000-2007	2007-2019
Private Business Output Growth*	4.00%	2.80%	2.10%
Capital	1.49	1.18	0.91
Labor	1.44	0.25	0.58
TFP	1.03	1.24	0.56
*Contributions may not sum due to aggregation, rounding, and integration of top line to industry.

Productivity growth has been a key ingredient to the growth in output, accounting for roughly a quarter of the growth in the 2007-2019 business cycle and the business cycle in the 1990’s (Table1). While TFP growth roughly accounts for the same percentage of growth, the source of growth in TFP between the business cycle in the 1990’s and the 2007-2019 business cycle have been significantly different (Table 2). For instance, the finance, insurance, and real estate sector (FIRE) productivity growth went from being a drag on private business output growth in 1990-2000 and 2000-2007 business cycles to contributing positively in 2007-2019. Conversely, manufacturing was a solid contributor to growth until this most recent business cycle where professional and business services have led the nation’s productivity growth.

Table 2. Sector TFP Contributions to Private Business Output Growth
Sector TFP Contributions to Private Business Output Growth	1990-2000	2000-2007	2007-2019
Private Business TFP Contribution	1.03	1.24	0.56
Sector Sums	1.03	1.24	0.56
Agriculture, Forestry, and Fishing	0.06	0.02	0.02
Mine, Util, Cons	-0.04	-0.03	0.09
Manufacturing Sector	0.64	0.64	-0.07
Trade	0.52	0.20	0.11
Transportation and Warehousing	0.08	0.08	0.01
Information	-0.08	0.33	0.10
Finance, Insurance, and Real Estate	-0.02	-0.06	0.03
Professional and business services	-0.11	0.11	0.23
Educational services, health care, and social assistance	-0.11	-0.01	0.04
Arts, recreation, entertainment, accommodation, and food services	0.03	0.01	0.02
Other services, except government	0.06	-0.06	-0.02

Using the FIRE sector as an example, the subsectors in FIRE are: finance and insurance and real estate and rental and leasing. Table 3 illustrates that within FIRE, the real estate and rental and leasing subsector is the main driver of the aggregate sector and has positively impacted the nation’s productivity growth over the last two business cycles.

Table 3. Sub-Sector TFP Contributions to Private Business Output Growth
Sub-Sector TFP Contributions to Private Business Output Growth	1990-2000	2000-2007	2007-2019
FIRE TFP Contributions Private Business Output Growth	-0.02	-0.06	0.03
Sub-Sector Sums	-0.02	-0.06	0.03
Finance and insurance	0.08	-0.11	-0.04
Real estate and rental and leasing	-0.10	0.04	0.06

So now let’s ask the question: what industry within the real estate and rental and leasing subsector is the main contributor to the subsectors rising importance in the economy’s productivity growth? Table 4 shows us that it’s all the real estate industry. Without the strong growth of this industry’s productivity growth, the subsector and sector it belongs to would be a drag on private business output growth.

Table 4. Industry TFP Contributions to Private Business Output Growth
Industry TFP Contributions to Private Business Output Growth	1990-2000	2000-2007	2007-2019
FIRE TFP Contributions Private Business Output Growth	-0.02	-0.06	0.03
Finance and insurance	0.08	-0.11	-0.04
Industry Sums	0.08	-0.11	-0.04
Federal Reserve banks, credit intermediation, and related activities	-0.09	-0.19	0.00
Securities, commodity contracts, and investments	0.15	0.04	-0.05
Insurance carriers and related activities	0.05	0.06	0.02
Funds, trusts, and other financial vehicles	-0.02	0.01	-0.01
Real estate and rental and leasing	-0.10	0.04	0.06
Industry Sums	-0.10	0.04	0.06
Real estate	0.00	0.10	0.06
Rental and leasing services and lessors of intangible assets	-0.11	-0.06	0.00

In this way, all the inputs to production can be viewed as a contribution to the nation’s private business output growth. Industry capital and labor inputs can also be used to decompose output further by industry in a similar manner.

Note: The 4 sectors' data in this file are calculated using a KLEMS growth accounting framework. The source of sectoral output differs among industries and sectors. Output for manufacturing industries, mining and utilities, air transportation, information, and food and beverage industries constructed primarily using data from the Economic Censuses and Annual Surveys of the U.S. Census Bureau together with data on price changes from BLS. Other data sources include: the Energy Information Administration, U.S. Department of Energy; and the Bureau of Transportation Statistics, U.S. Department of Transportation. For all other nonmanufacturing industries, sectoral output is based on indexes of real quantity and cost measures from the Bureau of Economic Analysis (BEA). Due to the different methods of measuring output growth through the use of natural logs, contributions of each factor will not sum directly to the factor growth of the private business sector

Data in this file are consistent with tables and data released on December, 4 2024.

Contact

For further information, contact the Productivity program.

Last Modified Date: December 4, 2024