Multifactor Productivity Trends In Manufacturing, 2014

For release 10:00 a.m. (EDT) Wednesday, June 22, 2016	USDL-16-1249
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2014

Manufacturing sector multifactor productivity decreased at a 1.0-percent
annual rate in 2014, the U.S. Bureau of Labor Statistics reported today.
This decrease followed a 0.1-percent increase in 2013. The 2014 decline 
reflected a 1.7-percent increase in output and a 2.6-percent increase 
in combined inputs. (See table A, table 1.)

Multifactor productivity is calculated by dividing an index of real 
output by an index of combined units of labor input, capital services,
and intermediate inputs. 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 includes 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 2.5-percent
in 2014, following a 0.5-percent increase in 2013. Nondurable manufacturing
sector multifactor productivity increased 0.5 percent in 2014, following a 
0.2-percent decrease in 2013. (See table C, table 3.)

In 2014, the number of NAICS three-digit manufacturing industries exhibiting 
an increase in multifactor productivity growth decreased compared to 2013. 
Fewer manufacturing industries exhibited an increase in sectoral output growth 
compared to 2013, and more manufacturing industries had an increase in combined
inputs. Four out of 18 manufacturing industries exhibited an increase in 
multifactor productivity. Textile mills and textile product mills and 
petroleum and coal products showed the highest growth in multifactor 
productivity, while apparel, leather, and allied products and primary metals
showed the largest declines in multifactor productivity. In 2014, 10 
industries showed increasing sectoral output and 14 industries showed an 
increase in combined inputs. (See chart 2, table 3.) 

Historical trends in manufacturing

Multifactor productivity in manufacturing grew 0.9-percent annually from
1987 to 2014 with sectoral output increasing at an annual rate of 2.2 
percent, faster than the 1.3-percent annual increase in combined inputs.
During the same period, labor productivity increased 3.4 percent annually.
(See table A.) Of the 3.4-percent growth rate in labor productivity, 
multifactor productivity contributed 0.9 percent, capital intensity 
contributed 0.8 percent, intermediate inputs intensity contributed 1.5 
percent, and labor composition contributed 0.2 percent. (See table B.)

For the most recent 2007-2014 period, multifactor productivity declined 
at a 0.5-percent annual rate compared to a 1.7-percent annual increase 
in the 2000-2007 period. (See table A.) Sectoral output increased 0.4 
percent and combined inputs rose 0.9 percent over the 2007-2014 period.

Revised measures

Previous and revised productivity measures and related data for 2012 
and 2013 for the manufacturing, durable manufacturing, and nondurable 
manufacturing sectors are displayed in table C. In 2013, multifactor
productivity in the manufacturing sector increased 0.1 percent compared 
to the previously reported 0.7-percent decrease. Multifactor productivity
in the durable manufacturing sector increased 0.5 percent compared to the
previously reported 1.8-percent decrease. In the nondurable manufacturing 
sector, multifactor productivity decreased 0.2 percent; previously it was
reported as a 0.4-percent increase. In 2012, 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 29, 2016.

Table A. Productivity, sectoral output, and inputs in the manufacturing       
sector for selected periods, 1987-2014

                                                                               
Compound annual growth rates                                                   
                                                                               
                             1987-  1987-  1990-  1995-  2000-  2007-  2013-
                             2014   1990   1995   2000   2007   2014   2014 
                                                                               
  Productivity                                                                 
                                                                               
     Multifactor              0.9    0.2    1.1    1.9    1.7   -0.5   -1.0 
     productivity1                                                          
     Labor productivity2      3.4    1.9    3.3    4.9    4.6    2.0    0.0 
     Output per unit of      -0.2   -0.9    0.5    0.4    0.2   -1.2   -0.8 
     capital services                                                       
                                                                               
                                                                               
                                                                               
  Sectoral Output             2.2    1.8    3.2    4.7    1.5    0.4    1.7 
                                                                               
  Inputs                                                                       
                                                                               
     Combined Inputs3         1.3    1.6    2.1    2.7   -0.2    0.9    2.6 
      Labor input4           -0.7    0.5    0.6    0.3   -2.3   -1.2    0.6 
        Hours                -1.2    0.0    0.0   -0.2   -3.0   -1.5    1.7 
        Labor composition5    0.5    0.5    0.7    0.6    0.7    0.3   -1.0 
      Capital Services        2.4    2.7    2.7    4.2    1.3    1.7    2.5 
      Energy                 -0.2    1.9    1.6    6.6   -3.9   -3.4   -1.6 
      Materials               2.3    0.1    3.1    5.2    1.0    2.0    3.3 
      Purchased business      1.5    5.4    3.2    1.4   -0.6    1.1    4.6 
     services                                                               
                                                                               
 1. Output per combined units of labor input, capital services, energy,        
    materials, and purchased business services.                                
 2. Output per hour worked.                                                    
 3. The growth rate of each input is weighted by its share of current dollar   
    costs.                                                                     
 4. Hours at work by age, education, and gender group are weighted by each     
    group's share of total wages.                                              
 5. Ratio of labor input to hours.                                             
                                                                               
Table B. Labor productivity and contributions of capital intensity,           
intermediate inputs intensity, labor composition, and multifactor productivity 
to labor productivity in the manufacturing sector for selected periods
, 1987-2014 

                                                                               
 Compound annual growth rates                                                  
                                                                               
                           1987-  1987-  1990-  1995-  2000-  2007-  2013-
                           2014   1990   1995   2000   2007   2014   2014 
                                                                               
  Labor productivity1       3.4    1.9    3.3    4.9    4.6    2.0    0.0 
                                                                          
                                                                          
                                                                               
    Contribution of         0.8    0.6    0.6    1.0    1.0    0.7    0.2 
    Capital Intensity2                                                    
                                                                          
                                                                          
                                                                               
       Information          0.1    0.1    0.1    0.2    0.1    0.0    0.0 
       processing                                                         
       equipment                                                          
       intensity3                                                         
                                                                          
                                                                          
                                                                               
       Research and         0.3    0.2    0.1    0.2    0.4    0.3    0.1 
       Development                                                        
       intensity4                                                         
                                                                          
                                                                          
                                                                               
       All Other            0.1    0.1    0.1    0.2    0.0    0.0    0.0 
       intellectual                                                       
       property products                                                  
       intensity5                                                         
                                                                          
                                                                          
                                                                               
       All other capital    0.3    0.2    0.2    0.3    0.5    0.3    0.0 
       services intensity                                                 
                                                                          
                                                                          
                                                                               
    Contribution of         1.5    0.8    1.4    1.8    1.6    1.7    1.0 
    Intermediate Inputs                                                   
    Intensity6                                                            
                                                                          
                                                                          
                                                                               
       Energy intensity7    0.0    0.1    0.0    0.2    0.0   -0.1   -0.1 
                                                                          
                                                                          
                                                                               
       Materials            1.0    0.0    0.8    1.3    1.2    1.3    0.6 
       intensity8                                                         
                                                                          
                                                                          
                                                                               
       Purchased business   0.5    0.8    0.5    0.3    0.4    0.4    0.4 
       services                                                           
       intensity9                                                         
                                                                          
                                                                          
                                                                               
    Contribution of         0.2    0.2    0.2    0.2    0.2    0.1   -0.2 
    labor composition10                                                   
                                                                          
                                                                          
                                                                               
    Multifactor             0.9    0.2    1.1    1.9    1.7   -0.5   -1.0 
    productivity11                                                        
                                                                          
                                                                          
                                                                               
 1. Output per hour worked.                                                     
 2. Capital services per hour multiplied by capital's share of current dollar   
    costs.                                                                      
 3. Information processing equipment per hour multiplied by its share of        
    current dollar costs.                                                       
 4. Research and development per hour multiplied by its share of current        
    dollar costs.                                                              
 5. Software and artistic originals per hour multiplied by its share of         
    current dollar costs.                                                       
 6. Intermediate inputs per hour multiplied by intermediate inputs' share of    
    current dollar costs.                                                       
 7. Energy per hour multiplied by energy’s share of current dollar costs.       
 8. Materials per hour multiplied by materials’ share of current dollar costs.  
 9. Purchased business services per hour multiplied by purchased business'      
    services' share of current dollar costs.                                    
 10.Labor composition multiplied by labor’s share of current dollar costs.     
 11.Output 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  
2012-2013 and 2011-2012 periods                                          

                                                                               
                                       Inputs                                  
                                                                               
                          Multi-                                       Pur-    
                          factor Sec-  Com-         Capi-              chased  
                          pro-   toral bined        tal                busi-   
                          ducti- out-  in-          Ser-         Mate- ness    
  Sector                  vity1  put   puts2 Labor3 vices Energy rials services
                                                                               
Annual percent change,                                                         
2012-2013                                                                      
Manufacturing                                                                  
 Previous                  -0.7    1.5   2.1   0.8    1.0  -0.1    2.5   5.3   
 Revised                    0.1    1.0   0.8   1.6    1.9  -0.3   -1.0   3.6   
Durable manufacturing                                                          
 Previous                  -1.8    1.8   3.7   1.0    1.0  -0.7    6.1   6.7   
 Revised                    0.5    1.2   0.7   1.6    1.2  -3.9   -0.6   1.6   
Nondurable manufacturing                                                       
 Previous                   0.4    1.1   0.8   0.5    1.0   0.3    0.2   3.6   
 Revised                   -0.2    1.2   1.4   1.5    2.4   1.7    0.0   5.8   
                                                                               
Annual percent change,                                                         
2011-2012                                                                      
Manufacturing                                                                  
 Previous                  -0.8    3.0   3.9   2.3    1.1  -0.4    5.8   6.3   
 Revised                   -2.8    4.1   7.0   2.5    1.3   5.5   12.5   8.0   
Durable manufacturing                                                          
 Previous                  -0.8    5.9   6.8   3.1    1.0   4.5   12.2   9.6   
 Revised                   -1.2    5.5   6.7   3.5    1.1   4.4   13.0   6.0   
Nondurable manufacturing                                                       
 Previous                  -0.8    0.7   1.5   0.9    1.2  -3.1    1.7   2.6   
 Revised                   -3.7    1.8   5.8   0.8    1.4   6.1    8.0  10.3   
                                                                               
1. Output per combined units of hours, capital services, energy, materials,    
   and purchased business services.                                            
2. The growth rate of each input is weighted by its share of current           
   dollar costs.                                                               
3. Previous: 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: June 22, 2016