Multifactor productivity trends for detailed manufacturing industries, 2005
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MULTIFACTOR PRODUCTIVITY TRENDS
FOR DETAILED MANUFACTURING INDUSTRIES, 2005
The Bureau of Labor Statistics of the U.S. Department of Labor reported today on
multifactor productivity – output per unit of combined inputs – for four-digit NAICS
manufacturing industries through the year 2005. Multifactor productivity rose in roughly
two-thirds of the 86 detailed manufacturing industries in 2005, slightly fewer than in
2004. More industries experienced an increase in multifactor productivity over a longer
period. From 1987 to 2005, multifactor productivity increased in three-quarters of the
manufacturing industries.
Multifactor productivity indexes relate the change in output to the change in the
combination of labor, capital, and intermediate purchases consumed in producing that out-
put. Because industry multifactor productivity indexes explicitly account for inputs of
capital and intermediates as well as labor, they are not influenced by the substitution of
capital and intermediate inputs for labor, as are measures of labor productivity. Industry
multifactor productivity indexes measure the joint influences on economic growth of a
variety of factors, including technological change, returns to scale, enhancements in
managerial and staff skills, changes in the organization of production, and other
efficiency improvements.
The attached tables present multifactor productivity and related series for all four-
digit manufacturing industries that are based, for the first time, on the North American
Industry Classification System, or NAICS. Historical data were reconstructed to reflect
the switch to NAICS, and therefore these measures are not comparable with the detailed
industry measures previously reported on a 1987 Standard Industrial Classification (SIC)
basis.
2004-05 change
Multifactor productivity rose in 58 industries in 2005, as output rose in 71
industries and combined inputs rose in 55 industries. Changes in multifactor productivity
were broadly distributed and varied greatly across industries, even within 3-digit industry
groups. (See Table 1 and Chart 1.) Multifactor productivity rose by 3 percent or more in
29 industries, but declined in 28 industries in 2005.
*Chart 1. Distribution of annual rates of change for multifactor productivity, 2004-2005
Five industries registered double-digit growth in multifactor productivity. The
largest increase in multifactor productivity, 27.6 percent, occurred in computer and
peripheral equipment (NAICS 3341), followed by an increase of 18.9 percent in apparel
knitting mills (NAICS 3151). Output rose rapidly in the five industries with the largest
productivity increases, while combined inputs declined in all five except computer and
peripheral equipment. The largest multifactor productivity decline was 10.9 percent in
railroad rolling stock (NAICS 3365), where output increased but combined inputs rose
much more rapidly.
*Chart 2. Number of industries with multifactor productivity growth, Annually, 2001-2005
The number of industries with multifactor productivity growth each year
increased greatly after 2001. (See Chart 2.) While still high compared to 2001, the 58
industries with multifactor productivity growth in 2005 represent a slight decline from the
numbers that recorded growth in 2002, 2003, and 2004. Although output rose in 16 more
industries in 2005 than in 2004, combined inputs increased in 19 more industries than in
2004. For most industries, input growth in 2005 was led by increases in intermediate
purchases. While capital services increased in 31 industries and labor hours rose in 30
industries, intermediate purchases increased in 60 industries.
Long-term trends
From 1987 to 2005, multifactor productivity rose in 65 industries. (See Table 2.)
Output rose in 69 industries while combined inputs rose in 60 industries. Although more
industries registered multifactor productivity growth from 1987 to 2005 than did so in
2005, the average annual change in multifactor productivity was more modest for most
industries over the long term. Multifactor productivity grew between 0 percent and 3
percent per year, on average, in 63 industries, and exceeded 3 percent per year in only
four industries. (See Chart 3.)
*Chart 3. Distribution of annual rates of change for multifactor productivity, 1987-2005
The five manufacturing industries with the fastest growth in multifactor
productivity over the period were all in the computer and electronic products subsector
(NAICS 334). The multifactor productivity growth of 17.5 percent per year in computer
and peripheral equipment (NAICS 3341) and 14.9 percent in semiconductors and
electronic components (NAICS 3344) were much faster than for any other manufacturing
industry.
Multifactor productivity declined in nineteen industries from 1987 to 2005.
However, the average decline over the period was less than 1 percent per year for all but
three industries. The largest decline in multifactor productivity was 1.8 percent per year
in tobacco and tobacco products (NAICS 3122).
Table 3 shows average annual multifactor productivity growth by industry
between 1987 and 2005 and for various subperiods. Multifactor productivity grew in
more industries from 2000 to 2005 than in any of the other periods shown. (See Chart 4.)
From 2000 to 2005, 68 industries recorded positive multifactor productivity growth, and
12 industries recorded average annual growth in excess of three percent. By comparison,
from 1995 to 2000, 51 industries had positive multifactor productivity growth, with six
industries growing at an average annual rate greater than three percent. Average annual
multifactor productivity growth accelerated in 55 industries in 2000 to 2005 compared to
1995 to 2000.
*Chart 4. Number of industries with multifactor productivity growth, 1987-2005 and
selected subperiods
Last Modified Date: August 21, 2007
Bureau of Labor Statistics
