Multifactor Productivity Trends In Manufacturing, 2013

For release 10:00 a.m.(EDT)   Tuesday, July 28, 2015	     USDL-15-1483
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2013

Manufacturing sector multifactor productivity decreased at a 0.7 percent 
annual rate in 2013, the U.S. Bureau of Labor Statistics reported today. 
It was the third consecutive decline in this measure. The 2013 decline 
reflected a 1.5-percent increase in output and a 2.1-percent increase in
combined inputs. (See table A, table 1.)

Multifactor productivity measures the change in output relative to the
change in capital, labor, and intermediate inputs (energy, materials,
purchased business services) used to produce that output. It is designed 
to measure the joint influences of technological change, efficiency 
improvements, returns to scale, reallocation of resources, and other
factors of economic growth, allowing for the effects of capital, labor, 
and intermediate inputs. Multifactor productivity annual measures 
differ from BLS quarterly labor productivity or output per hour 
measures because the former also include information on capital 
services, shifts in the composition of the workforce, and 
intermediate inputs. Additionally, much of the source data needed
to construct multifactor productivity measures are not available 
on a quarterly basis.

Durable manufacturing sector multifactor productivity decreased 
1.8 percent in 2013, following a 0.8-percent decrease in 2012. 
Nondurable manufacturing sector multifactor productivity 
increased 0.3 percent in 2013, following a 0.8-percent decrease
in 2012. (See table C, table 3.)

Historical trends in manufacturing

Multifactor productivity in manufacturing grew 1.2 percent annually
from 1987 to 2013 with sectoral output increasing at an annual rate of 2.2
percent, faster than the 1.0-percent annual increase in combined inputs. 
During the same period, labor productivity increased 3.5 percent annually.
(See table A.) Of the 3.5-percent growth rate in labor productivity, 
multifactor productivity contributed 1.2 percent, capital intensity
contributed 0.8 percent, materials intensity added 1.0 percent, and 
purchased business services intensity added 0.5 percent. The 
contributions of energy intensity and labor composition were 
unchanged. (See table B.)

For the 2007-2013 period, multifactor productivity declined at a 0.2 
percent annual rate compared to a 1.9-percent annual increase in the 
2000-2007 period. (See table A.) Sectoral output increased 0.1 percent
and combined inputs rose 0.3 percent over the 2007-2013 period.

In 2013, the number of NAICS three-digit manufacturing industries exhibiting
an increase in multifactor productivity growth remained steady compared
to 2012. In 2013, more manufacturing industries exhibited an increase in
sectoral output growth compared to 2012. Fewer manufacturing industries 
had an increase in combined inputs compared to 2012. Nine out of 18
manufacturing industries exhibited an increase in multifactor productivity.
Fourteen industries showed increasing sectoral output. Thirteen industries
showed an increase in combined inputs. (See chart 2, table 3.) 
 
Revised measures

Previous and revised productivity measures and related data for 2011 and 
2012 for the manufacturing, durable manufacturing, and nondurable 
manufacturing sectors are displayed in table C. In 2012, multifactor 
productivity in the manufacturing sector decreased 0.8 percent compared to
the previously reported 0.6-percent increase. Multifactor productivity in the
durable manufacturing sector decreased 0.8 percent compared to the
previously reported 1.4-percent increase. In the nondurable manufacturing 
sector, multifactor productivity decreased 0.8 percent. Previously, 
multifactor productivity was reported as unchanged. In 2011, multifactor 
productivity measures in the manufacturing, durable manufacturing, and 
nondurable manufacturing sectors were also revised. The revisions in both
years were due to the annual revision of the National Income and Product
Accounts (NIPA) released on January 30, 2015.

Table A.  Compound annual growth rates for productivity, sectoral output, and
inputs in the manufacturing sector for selected periods, 1987-2013

Percent
                        1987- 1987- 1990- 1995- 2000- 2007- 2012-
                        2013  1990  1995  2000  2007  2013  2013
Productivity
   Multifactor
   productivity1         1.2   0.4   1.3   2.1   1.9  -0.2  -0.7
   Labor          
   productivity2         3.5   1.9   3.2   4.9   4.6   2.3   0.7
   Output per unit
   of capital services  -0.1  -0.9   0.5   0.5   0.2  -1.2   0.5

Sectoral Output          2.2   1.8   3.2   4.7   1.5   0.1   1.5

Inputs

   Combined inputs3      1.0   1.4   1.9   2.6  -0.5   0.3   2.1
      Labor input4      -1.3   0.0   0.0  -0.2  -3.0  -2.1   0.8
         Hours5         -1.3   0.0   0.0  -0.2  -3.0  -2.1   0.8
         Labor
         composition6    0.0   0.0   0.0   0.0   0.0   0.0   0.0
      Capital services   2.3   2.7   2.7   4.2   1.2   1.4   1.0
      Energy            -0.4   1.9   1.6   6.6  -3.9  -4.6  -0.1
      Materials          2.2   0.1   3.1   5.2   1.0   1.4   2.5
      Purchased business
      services           1.4   5.4   3.2   1.4  -0.6   0.5   5.3

1Output per combined units of labor input, capital services, energy,
 materials, and purchased business services.
2Output per hour worked.
3The growth rate of each input is weighted by its share of current dollar
 costs.
4Hours at work by age, education, and gender group are weighted by each
group's share of total wages.
5Hours at work.
6Ratio of labor input to hours.


Table B.  Compound annual growth rates in labor productivity and 
contributions of capital intensity, intermediate inputs intensity, and
multifactor productivity in the manufacturing sector for selected periods,
1987-2013

Percent
                            1987- 1987- 1990- 1995- 2000- 2007- 2012-
                            2013  1990  1995  2000  2007  2013  2013
Manufacturing

Labor productivity1          3.5   1.9   3.2   4.9   4.6   2.3   0.7

Contribution of
capital intensity2           0.8   0.6   0.6   1.0   1.0   0.8   0.0

      Information    
      processing     
      equipment      
      intensity3             0.1   0.1   0.1   0.2   0.1   0.0   0.0

      Research and
      Development 
      intensity4             0.3   0.2   0.1   0.2   0.4   0.4   0.1

      All other   
      intellectual
      property
      products
      intensity5             0.1   0.1   0.1   0.2   0.0   0.0   0.0

      All other
      capital services
      intensity              0.3   0.2   0.2   0.3   0.5   0.4  -0.1

Contribution of
intermediate inputs
intensity6                   1.5   0.8   1.4   1.8   1.6   1.6   1.3

      Energy
      intensity7             0.0   0.1   0.0   0.2   0.0  -0.1   0.0

      Materials
      intensity8             1.0   0.0   0.8   1.3   1.2   1.3   0.7

      Purchased
      business
      services
      intensity9             0.5   0.8   0.5   0.3   0.4   0.4   0.6

Contribution
of labor    
composition10                0.0   0.0   0.0   0.0   0.0   0.0   0.0

Multifactor
productivity11               1.2   0.4   1.3   2.1   1.9  -0.2  -0.7

1Output per hour worked.
2Capital services per hour multiplied by capital's share of current dollar
 costs.
3Information processing equipment per hour multiplied by its share of
 current dollar costs.
4Research and development per hour multiplied by its share of current
dollar costs.
5Software and artistic originals per hout multiplied by their share of
 current dollar costs
6Intermediate inputs per hour multiplied by intermediate inputs' share of
 current dollar costs.
7Energy per hour multiplied by energy’s share of current dollar costs.
8Materials per hour multiplied by materials’ share of current dollar costs.
9Purchased business services per hour multiplied by purchased business
 services' share of current dollar costs.
10Labor composition multiplied by labor's share of current dollar costs.
11Output per combined units of labor input, capital services, energy,
 materials, and purchased business services.

Table C.  Previous and revised productivity and related measures for the
2011-2012 and 2010-2011 periods
                                                  Inputs
                                                                       Purc-
                       Multi-   Sec-  Com-         Capi-               hased 
                       factor   toral bined        tal                 busi- 
                       produc-  out-  in-          ser-         Mate-  ness
Sector                 tivity1  put   puts2 Labor3 vices Energy rials  services
Annual percent change,
2011-2012
Manufacturing
Previous                  0.6   3.3    2.7    2.3   1.2    6.3    1.6    7.7
Revised                  -0.8   3.0    3.9    2.3   1.1   -0.4    5.8    6.3
Durable manufacturing
Previous                  1.4   6.0    4.6    2.9   1.0   14.2    5.5   10.7
Revised                  -0.8   5.9    6.8    3.1   1.0    4.5   12.2    9.6
Nondurable manufacturing
Previous                  0.0   1.3    1.2    1.3   1.4    2.0    0.3    4.3
Revised                  -0.8   0.7    1.5    0.9   1.2   -3.1    1.7    2.6

Annual percent change,
2010-2011
Manufacturing
Previous                 -0.5   2.9    3.4    2.1   1.0    6.5    7.0    1.1
Revised                  -1.4   7.8    9.3    2.2   1.1    8.6   23.5    1.4
Durable manufacturing
Previous                  1.9   6.2    4.2    3.8   0.4   -4.9   13.3    1.3
Revised                   0.9   8.9    7.9    3.9   0.5   -2.8   21.8    0.5
Nondurable manufacturing
Previous                 -2.3   0.3    2.7   -0.6   1.4   14.0    4.3    0.8
Revised                  -3.1   3.4    6.7   -0.4   1.5   16.3   11.9    2.4

1Output per combined units of labor, capital services, energy, materials, and
 purchased business services.
2The growth rate of each input is weighted by its share of current dollar 
 costs.
3Previous: Hours at work.
  Revised: Hours at work by age, education, and gender group, weighted by each
           group's share of total wages.

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Last Modified Date: July 28, 2015