For release 10:00 a.m. (EDT) Thursday, August 11, 2011 USDL-11-1188
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2009
Manufacturing sector multifactor productivity declined at a 5.7 percent annual
rate in 2009, the U.S. Bureau of Labor Statistics reported today.
(See chart 1.) This was the largest annual decline in multifactor productivity
since the series started in 1987. (See table 1.) The multifactor productivity
decline in 2009 reflected a 12.5 percent decrease in output and a 7.2 percent
decrease in combined inputs.
Multifactor productivity measures the change in output per unit of combined
inputs. Multifactor productivity 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, in the case of the manufacturing sector, also
intermediate inputs (energy, materials, purchased business services).
Multifactor productivity, therefore, differs from labor productivity
(output per hour worked) measures that are published quarterly by BLS since it
includes information on capital services and intermediate inputs that are not
available on a quarterly basis.
Durable manufacturing sector multifactor productivity decreased 8.0 percent in
2009, after increasing 2.2 percent in 2008. Nondurable manufacturing sector
multifactor productivity fell 3.1 percent in 2009, following a 2.2 percent
decrease in 2008. In both sectors these were the sharpest declines in
multifactor productivity since the series began in 1987.
Historical trends in manufacturing
Multifactor productivity in manufacturing grew 1.1 percent annually between
1987 and 2009. Over the same period, sectoral output increased at a 1.5
percent annual rate and combined inputs grew 0.4 percent; output per hour
(labor productivity) increased 3.3 percent. For the 2000-2007 period,
multifactor productivity in manufacturing grew more rapidly than in previous
periods, averaging 2.0 percent per year. In contrast, for the 2007-2009
period, multifactor productivity dropped 3.0 percent and output and all inputs
except capital services experienced steep declines. (See table A.)
Of the 3.3 percent growth rate in labor productivity for the 1987-2009 period,
1.1 percent can be attributed to increases in multifactor productivity, 0.7
percent to the contribution of capital intensity, 0.1 percent to energy
intensity, 0.9 percent to materials intensity, and 0.5 percent to purchased
business services intensity. Multifactor productivity, the contribution of
intermediate inputs, and the contribution of capital intensity may not sum to
output per hour due to independent rounding. (See table B.)
In 2009, almost no manufacturing industries exhibited increases in multifactor
productivity, output, or combined inputs. Of the 18 industries that comprise
the manufacturing sector, only computer and electronic products experienced
growth in multifactor productivity, and only food, beverage, and tobacco
products exhibited growth in combined inputs. No industry had any increase in
output. (See chart 2.)
Revised measures
Previous and revised productivity measures and related data for 2007 and 2008
for the manufacturing, durable manufacturing, and nondurable manufacturing
sectors are displayed in table C. In 2008, multifactor productivity growth was
revised upward, showing a slight decline of 0.1 percent rather than the 0.7
percent decrease reported previously. After revision, multifactor productivity
for the nondurable manufacturing sector fell 2.2 percent rather than falling
1.6 percent. In contrast, multifactor productivity in the durable
manufacturing sector was revised upward to 2.2 percent from 0.3 percent. The
revisions in both years were due to comprehensive revisions in source data in
the revised National Income and Products (NIPA) released on May 25, 2010 and
annual revisions of the NIPA industry accounts released on December 14, 2010.
The manufacturing industry measures have been revised to reflect an improved
methodology for estimating the cost of materials. This revision is most
notable in measures for apparel, leather, and allied products, and computer
and electronic products.
Table A. Compound annual growth rates for productivity, sectoral output, and
inputs in the manufacturing sector for selected periods, 1987 to 2009
In percent
1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
Productivity
Multifactor
productivity1 1.6 0.2 1.2 2.1 2.6 -0.7
Output per hour
of all persons 3.5 1.8 3.4 4.8 3.9 -0.3
Output per unit
of capital services 0.0 -0.1 0.6 0.7 -0.1 -5.4
Sectoral Output 2.2 2.1 3.3 4.7 0.7 -4.4
Inputs
Combined inputs2 0.6 1.9 2.1 2.5 -1.8 -3.7
Hours3 -1.2 0.4 -0.1 -0.1 -3.1 -4.0
Capital services 2.2 2.3 2.7 4.0 0.8 1.1
Energy 0.5 1.8 1.6 5.8 -3.8 -2.6
Non-energy
materials 1.4 1.7 3.6 5.5 -2.2 -5.3
Purchased business
services 1.1 5.2 3.2 0.6 -0.9 -5.4
1Output per unit of combined hours, capital services, energy, materials,
and purchased business services inputs.
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,
1987-2008
In percent
1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
Manufacturing
Output per hour
of all persons 3.5 1.8 3.4 4.8 3.9 -0.3
Contribution of
capital intensity1 0.6 0.3 0.4 0.7 0.7 1.0
Contribution of
information
processing
equipment
and software2 0.2 0.2 0.2 0.4 0.2 0.3
Contribution
of all
other capital
services 0.3 0.1 0.2 0.3 0.5 0.8
Contribution of
intermediate inputs3 1.2 1.3 1.7 1.9 0.6 -0.6
Contribution
of energy
intensity4 0.1 0.0 0.0 0.2 0.0 0.1
Contribution
of materials
intensity5 0.8 0.4 1.1 1.6 0.2 -0.4
Contribution
of purchased
business
services
intensity6 0.4 0.8 0.6 0.1 0.4 -0.2
Multifactor
productivity7 1.6 0.2 1.2 2.1 2.6 -0.7
1Growth rate in capital services per hour multiplied by capital's share of
current dollar costs.
2Growth rate of information processing equipment and software per hour
multiplied by its share of total current dollar costs.
3Growth rate in intermediate inputs per hour multiplied by intermediate inputs
share of current dollar costs.
4Growth rate in energy services per hour multiplied by energy’s share of
current dollar costs.
5Growth rate in materials services per hour multiplied by materials’ share of
current dollar costs.
6Growth rate in business services per hour multiplied by business services’
share of current dollar costs.
7 Output per unit of combined hours, capital services, energy, materials, and
business services inputs.
Table C. Previous and revised productivity and related measures for the
2006-2007 and 2005-2006 periods
Inputs
Purc-
Multi- Sect- Com- Cap- hased
factor oral bined ital busi-
Product- out- In- Serv- Mater- ness
Sector ivity1 put puts2 Hours3 ices Energy ials services
Annual percent change,
2006-2007
Manufacturing
Previous 4.7 1.6 -3.0 -1.7 0.5 -2.7 -8.1 -0.3
Revised 5.1 2.4 -2.5 -1.7 1.2 6.0 -7.2 -0.8
Durable manufacturing
Previous 6.0 2.1 -3.7 -2.1 0.6 -3.8 -11.1 0.2
Revised 4.9 3.5 -1.3 -2.1 0.8 8.6 -4.8 2.2
Nondurable manufacturing
Previous 3.0 1.1 -1.8 -1.1 0.4 -2.0 -3.5 -0.9
Revised 4.6 1.3 -3.2 -1.0 1.4 4.3 -6.4 -4.7
Annual percent change,
2005-2006
Manufacturing
Previous 2.5 1.6 -0.9 0.7 0.5 -6.7 -2.5 -1.2
Revised 2.3 1.5 -0.7 0.7 0.9 -7.8 -1.7 -1.6
Durable manufacturing
Previous 4.2 3.1 -1.0 1.1 0.4 -7.5 -4.0 -0.9
Revised 3.2 3.1 -0.1 1.1 1.0 -5.0 -1.4 -0.4
Nondurable manufacturing
Previous 0.6 -0.1 -0.6 0.1 0.6 -6.3 -0.5 -1.5
Revised 1.1 -0.1 -1.2 0.0 0.8 -9.6 -1.2 -3.1
1Output per unit of combined hours, capital services, energy, materials, and
purchased business services inputs.
2The growth rate of each input is weighted by its share of current dollar
costs.
3Hours at work of all persons.
