Multifactor Productivity Trends In Manufacturing, 2012

For release 10:00 a.m.  (EDT) Thursday, August 21, 2014	USDL-14-1549
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2012


Manufacturing sector multifactor productivity increased at a 0.6 percent 
annual rate in 2012, the U.S. Bureau of Labor Statistics reported today.
This increase offset the 0.5-percent decrease in 2011. The multifactor 
productivity gain in 2012 reflected a 3.3-percent increase in output and
a 2.7-percent increase in combined inputs. (See table A, table 1.) 

Multifactor productivity measures the change in output per unit of 
combined inputs. Multifactor productivity in manufacturing is designed to 
measure the joint influences on economic growth of technological change,
efficiency improvements, returns to scale, reallocation of resources, 
and other factors, allowing for the effects of capital, labor and 
intermediate inputs (energy, materials, purchased business services). 
Multifactor productivity measures differ from labor productivity 
(output per hour worked) measures that are published quarterly by BLS 
because multifactor productivity measures include information on capital 
services and intermediate inputs. Also, data needed to construct multifactor
productivity are not available on a quarterly basis.

Durable manufacturing sector multifactor productivity increased 1.4
percent in 2012, following a 1.9-percent increase in 2011. Nondurable 
manufacturing sector multifactor productivity was unchanged in 2012, 
following a 2.3-percent decrease in 2011. (See table C, table 3.)

NAICS and Index Changes
Beginning with this release, multifactor productivity measures are 
developed from data based on the 2007 North American Industry 
Classification System (NAICS). Previous measures were based on the 
2002 NAICS. Additionally, the index series have been rebased from 
2005=100 to 2009=100.

Historical trends in manufacturing
Multifactor productivity in manufacturing grew 1.2 percent annually 
from 1987 to 2012 with sectoral output increasing at an annual rate of 1.8
percent, faster than the 0.6-percent annual increase in combined inputs. 
During the same period, output per hour (labor productivity) increased 3.3 
percent annually. (See table A.) Of the 3.3 percent growth rate in labor
productivity, multifactor productivity added 1.2 percent, capital intensity
contributed 0.8 percent, materials intensity added 0.7 percent, and purchased
business services intensity added a 0.4-percent increase. The contribution of
energy intensity was unchanged. (See table B.)

For the 2007-2012 period, multifactor productivity rose at a 0.4 percent 
annual rate compared to a larger 1.9 percent annual growth rate in the 
2000-2007 period. (See table A.) Sectoral output declined 1.2 percent and 
combined inputs declined 1.6 percent over the 2007-2012 period.

In 2012, more NAICS three-digit manufacturing industries had an increase in
sectoral output growth compared to 2011. The number of industries exhibiting
an increase in multifactor productivity growth remained steady compared to 
2011. In 2012, fewer NAICS three-digit manufacturing industries had an increase 
in combined inputs compared to 2011. Fourteen industries showed an increase in 
combined inputs. Fifteen industries showed increasing sectoral output. Nine out
of 18 manufacturing industries exhibited an increase in multifactor 
productivity.(See chart 2.) Nine industries experienced a decline in 
multifactor productivity growth. Of these nine industries, four 
were durable manufacturing industries: wood products; nonmetallic 
mineral products; primary metals; and electrical equipment, appliances,
and components. The remaining five industries were in the nondurable 
manufacturing sector: apparel, leather, and allied products; paper products;
printing and related support activities; chemical products; and plastics
and rubber products. (See table 3.)

Revised measures

Previous and revised productivity measures and related data for 2010 and
2011 for the manufacturing, durable manufacturing, and nondurable 
manufacturing sectors are displayed in table C. In 2011, multifactor 
productivity growth in the manufacturing sector decreased 0.5 percent, a 
downward revision from the previously reported 0.8- percent increase. 
Multifactor productivity in the durable manufacturing sector was 1.9 percent,
remaining the same as previously reported. In the nondurable manufacturing 
sector, multifactor productivity decreased 2.3 percent, a significant downward
revision from the previously reported a 0.3-percent decrease. The downward 
revision of multifactor productivity in the manufacturing and nondurable 
manufacturing sectors was due to a slight downward revision in sectoral output
and a large upward revision in combined inputs. These revisions were due to 
new intra-sector transaction ratios now based on 2007 NAICS and the new 
inclusion of research and development assets into capital services. In 2010, 
multifactor productivity in the manufacturing and durable manufacturing 
sectors was revised upward. It remained the same for the nondurable
manufacturing sector.  

Table A.  Compound annual growth rates for productivity, sectoral output, and
inputs in the manufacturing sector for selected periods, 1987-2012

In percent
                        1987- 1987- 1990- 1995- 2000- 2007- 2011-
                        2012  1990  1995  2000  2007  2012  2012
Productivity
   Multifactor
   productivity1         1.2   0.3   1.1   1.8   1.9   0.4   0.6
   Output per hour
   of all persons        3.3   2.0   3.3   5.2   3.7   1.5   1.0
   Output per unit
   of capital services  -0.5  -0.3   0.5   0.8  -0.7  -2.6   2.1

Sectoral Output          1.8   2.4   3.2   5.0   0.5  -1.2   3.3

Inputs

   Combined inputs2      0.6   2.1   2.1   3.2  -1.3  -1.6   2.7
      Labor hours3      -1.4   0.4  -0.1  -0.1  -3.1  -2.7   2.3
      Capital services   2.3   2.7   2.7   4.2   1.2   1.5   1.2
      Energy            -0.2   1.9   1.6   6.6  -2.8  -6.0   6.3
      Materials          1.6   2.3   4.0   7.7  -1.6  -2.7   1.6
      Purchased business
      services           1.2   5.5   3.2   1.2  -0.3  -1.1   7.7

1Output per combined units of hours, capital services, energy, materials,
and purchased business services.
2The growth rate of each input is weighted by its share of current dollar
costs.
3Hours at work of all persons.

Table B.  Compound annual growth rates in output per hour of all persons and 
contributions of capital intensity, intermediate inputs intensity, and
multifactor productivity in the manufacturing sector for selected periods,
1987-2012

In percent
                            1987- 1987- 1990- 1995- 2000- 2007- 2011-
                            2012  1990  1995  2000  2007  2012  2012
Manufacturing

Output per hour
of all persons               3.3   2.0   3.3   5.2   3.7   1.5   1.0

Contribution of
capital intensity1           0.8   0.5   0.6   0.9   0.9   1.0  -0.3

      Contribution of
      information
        capital2             0.1   0.1   0.1   0.2   0.1   0.1   0.0

      Contribution
      of intellectual
      property
      products3              0.4   0.2   0.3   0.4   0.4   0.5   0.0

      Contribution
      of all
      other capital
      services               0.3   0.2   0.2   0.3   0.5   0.4  -0.3

Contribution of
intermediate inputs4         1.2   1.3   1.6   2.4   0.9   0.1   0.6

      Contribution
      of energy
      intensity5             0.0   0.0   0.0   0.2   0.0  -0.1   0.1

      Contribution
      of materials
      intensity6             0.7   0.5   1.0   2.0   0.4   0.0  -0.2

      Contribution
      of purchased
      business
      services
      intensity7             0.4   0.7   0.5   0.2   0.5   0.3   0.7

Multifactor
productivity8                1.2   0.3   1.1   1.8   1.9   0.4   0.6

1Capital services per hour multiplied by capital's share of current dollar
costs.
2Information processing equipment per hour multiplied by its share ot total
current dollar costs.
3Intellectual property products per hout multiplied by its share of total
current dollar costs
4Intermediate inputs per hour multiplied by intermediate inputs share of
current dollar costs.
5Energy per hour multiplied by energy’s share of current dollar costs.
6Materials per hour multiplied by materials’ share of current dollar costs.
7Purchased business services per hour multiplied by purchased business'
services' share of current dollar costs.
8Output per combined units of hours, capital services, energy, materials,
and purchased business services.

Table C.  Previous and revised productivity and related measures for the
2010-2011 and 2009-2010 periods
                                                  Inputs
                                                                       Purc-
                       Multi-   Sec-  Com-         Capi-               hased 
                       factor   toral bined        tal                 busi- 
                       produc-  out-  in-          ser-         Mate-  ness
Sector                 tivity1  put   puts2 Hours3 vices Energy rials  services
Annual percent change,
2010-2011
Manufacturing
Previous                  0.8   3.1    2.3    2.3   0.1    2.0    6.3   -3.1
Revised                  -0.5   2.9    3.4    2.1   1.0    6.5    7.0    1.1
Durable manufacturing
Previous                  1.9   6.3    4.3    3.9   0.0    0.9   13.2   -2.1
Revised                   1.9   6.2    4.2    3.8   0.4   -4.9   13.3    1.3
Nondurable manufacturing
Previous                 -0.3   0.5    0.8   -0.4   0.2    2.7    2.7   -4.5
Revised                  -2.3   0.3    2.7   -0.6   1.4   14.0    4.3    0.8

Annual percent change,
2009-2010
Manufacturing
Previous                  4.5   6.3    1.7    0.0  -0.5    1.6    5.0    1.3
Revised                   4.9   6.2    1.2   -0.1   0.7   -3.9    3.4    1.3
Durable manufacturing
Previous                  6.8  10.0    3.0   -0.1  -1.6   12.8   14.2   -1.3
Revised                   8.2   9.9    1.5   -0.2  -0.8    0.9   10.6   -0.2
Nondurable manufacturing
Previous                  2.1   3.3    1.1    0.1   0.1   -5.1    1.4    4.9
Revised                   2.1   3.3    1.1    0.1   1.8   -6.9    1.0    3.0

1Output per combined units of hours, capital services, energy, materials, and
purchased business services.
2The growth rate of each input is weighted by its share of current dollar costs.
3Hours at work of all persons.

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Last Modified Date: August 21, 2014