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Economic News Release
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Multifactor productivity trends, 2019

For release 10:00 am (EDT) March 24, 2020	USDL-20-0494
Technical information:	(202) 691-5606  •  mfpweb@bls.gov  •  www.bls.gov/mfp
Media contact:	        (202) 691-5902  •  PressOffice@bls.gov
	
	MULTIFACTOR PRODUCTIVITY TRENDS – 2019 

Private nonfarm business sector multifactor productivity increased 0.9 percent
in 2019, the U.S. Bureau of Labor Statistics reported today. 
(See table A.) This 2019 increase reflects a 2.7-percent increase 
in output and a 1.8-percent increase in the combined inputs of capital and 
labor. Capital services grew by 2.9 percent and labor input–which is the 
combined effect of hours worked and labor composition–grew by 1.1 percent. 
Multifactor productivity was revised up to an increase of 0.9 percent in 
2018. (See table 1.)

Multifactor productivity is calculated by dividing an index of real output
by an index of combined units of labor input and capital services. 
Multifactor productivity annual measures differ from BLS quarterly labor
productivity (output per hour worked) measures because the former also 
includes the influences of capital services and shifts in the composition 
of workers. Measures for the most recent year of this release are preliminary
estimates. See the Technical Notes for additional information.

Private business sector multifactor productivity also increased at a
0.9-percent annual rate in 2019. A 2.7-percent increase in output outpaced
a 1.8-percent increase in the combined inputs of capital and labor in 2019.
(See table A, table 2.) 

Multifactor Productivity Trends

The 0.9-percent annual growth of multifactor productivity in the private 
nonfarm business sector in 2019 is 0.1 percentage point higher than the 
average annual rate of 0.8 percent over the 1987-2019 period. For the period
2007-19, reflecting the most recent business cycle, multifactor productivity
grew at an average annual rate of 0.5 percent as output grew 1.9 percent and
combined inputs rose 1.5 percent. The average annual increase in combined 
inputs reflected a 2.3-percent increase in capital services along with a 
0.9-percent increase in labor input. (See table A.)
	
Multifactor productivity growth in the private nonfarm business sector has 
slowed in the most recent business cycle (2007-19) due to a deceleration in 
output growth and almost no change in combined inputs.

Revisions to 2018 Multifactor Productivity Growth

In 2018, the multifactor productivity growth rate in the private nonfarm 
business sector was revised slightly down to an average annual rate of 0.9 
percent, from an average annual rate of 1.0 percent as previously published.
In 2017, the multifactor productivity growth rate in the private nonfarm 
business sector was revised up to an average annual rate of 0.6 percent, 
from an average annual rate of 0.4 percent as previously published. 
(See table D.)

Labor Productivity Trends

Labor productivity growth can be viewed as the sum of three components: 
multifactor productivity growth, the contribution of capital intensity, 
and the contribution of shifts in composition of labor. The contribution 
of capital intensity grew 0.7 percentage points in the 2007-19 period and 
remains the largest contributor to labor productivity growth in the period. 
The contributions of labor composition decelerated slightly between the 
2000-07 period and the 2007-19 period, to 0.2 percent.(See table B.) 

Capital Services Trends

Capital services in the private nonfarm business sector increased at an 
average annual rate of 2.3 percent in the 2007-2018 business cycle, the 
latest year of available detailed capital data. This is less than half of 
the average annual growth rate of 4.7 percent in the 1990-2000 business 
cycle, when capital services peaked. 

Table A.   Productivity, output, and inputs in the private nonfarm business
and private business sectors for selected periods,1987-2019

Compound annual growth rates


                              1987- 1987- 1990- 2000- 2007- 2017- 2018-
                              2019  1990  2000  2007  2019  2018  2019
                                          
Private nonfarm business1                 
                                          
Productivity                              
  Multifactor Productivity2    0.8   0.4   1.0   1.4   0.5   0.9   0.9
  Labor productivity3          2.0   1.4   2.2   2.7   1.4   1.4   1.9
  Output per unit of                       
    capital                   -0.5  -0.5  -0.6  -0.6  -0.4   0.7  -0.2
                                          
                                          
Output                         2.9   3.2   4.0   2.9   1.9   3.5   2.7
Combined inputs4               2.1   2.8   3.0   1.5   1.5   2.6   1.8
   Labor input5                1.4   2.3   2.2   0.5   0.9   2.4   1.1
     Hours                     0.9   1.8   1.7   0.1   0.5   2.0   0.8
     Labor Composition6        0.4   0.5   0.5   0.4   0.4   0.4   0.3
   Capital services            3.5   3.8   4.7   3.5   2.3   2.8   2.9
Analytic ratio                            
   Capital intensity7          2.5   2.0   2.9   3.4   1.8   0.8   2.1
                                          
                                          
Private business1                         
                                          
Productivity                              
  Multifactor Productivity2    0.9   0.5   1.0   1.4   0.5   0.9   0.9
  Labor productivity3          2.0   1.6   2.3   2.8   1.4   1.5   1.9
  Output per unit of                      
    capital                   -0.4  -0.5  -0.5  -0.6  -0.3   0.6  -0.3
                                          
                                          
Output                         2.9   3.2   4.0   2.9   2.0   3.4   2.7
Combined inputs4               2.0   2.7   2.9   1.4   1.5   2.5   1.8
   Labor input5                1.3   2.2   2.2   0.4   0.9   2.3   1.1
     Hours                     0.9   1.6   1.7   0.1   0.6   1.9   0.8
     Labor Composition6        0.4   0.5   0.5   0.4   0.4   0.4   0.3
   Capital services            3.4   3.7   4.5   3.4   2.3   2.8   3.0
Analytic ratio                            
   Capital intensity7          2.4   2.0   2.8   3.4   1.7   0.9   2.2


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

Table B.  Labor productivity and the contributions of capital intensity, labor
composition, and multifactor productivity to labor productivity in the private
nonfarm business and private business sectors for selected periods,1987-2019

Compound annual growth rates



                    1987- 1987- 1987- 1990- 2000- 2007- 2007- 2017- 2018-
                    2018  2019* 1990  2000  2007  2018  2019* 2018  2019*
                                      
Private nonfarm                       
   business1                          
                                      
Labor productivity2  2.0   2.0   1.4   2.2   2.7   1.3   1.4   1.4   1.9
                                      
Contribution of                       
capital intensity3   0.8   0.8   0.6   0.9   1.1   0.7   0.7   0.3   0.8
                                      
   Contribution of                    
   information                        
   processing                         
   equipment(IPE)4   0.3    NA   0.3   0.4   0.4   0.2    NA   0.2    NA
                                      
   Contribution of                    
   research and                       
   development                        
   (R&D)5            0.1    NA   0.1   0.1   0.1   0.1    NA   0.1    NA
                                      
   Contribution of                    
   intellectual                       
   property                           
   products (IPP)                     
   excluding R&D6    0.2    NA   0.2   0.2   0.2   0.2    NA   0.2    NA
                                      
   Contribution of                    
   capital                            
   services                           
   excluding IPP                      
   and IPE           0.2    NA   0.1   0.2   0.4   0.2    NA  -0.1    NA
                                      
Contribution of                       
labor composition7   0.3   0.3   0.4   0.3   0.3   0.3   0.2   0.2   0.2
                                      
Multifactor                           
productivity8        0.8   0.8   0.4   1.0   1.4   0.4   0.5   0.9   0.9
                                      
  Contribution of                     
  R&D to                              
  multifactor                         
  productivity       0.2   NA    0.2   0.2   0.2   0.1    NA   0.2    NA      
                                      
                                      
Private business1                     
                                      
Labor productivity2  2.0   2.0   1.6   2.3   2.8   1.4   1.4   1.5   1.9
                                      
Contribution of                       
capital intensity3   0.8   0.8   0.7   0.9   1.1   0.6   0.7   0.3   0.8
                                      
   Contribution of                    
   information                        
   processing                         
   equipment(IPE)4   0.3    NA   0.3   0.4   0.3   0.2    NA   0.2    NA
                                      
   Contribution of                    
   research and                       
   development                        
   (R&D)5            0.1    NA   0.1   0.1   0.1   0.1    NA   0.1    NA
                                      
   Contribution of                    
   intellectual                       
   property                           
   products (IPP)                     
   excluding R&D6    0.2    NA   0.2   0.2   0.2   0.2    NA   0.2    NA
                                      
   Contribution of                    
   capital                            
   services                           
   excluding IPP                      
   and IPE           0.2    NA   0.1   0.2   0.4   0.1    NA  -0.1    NA
                                      
Contribution of                       
labor composition7   0.3   0.3   0.4   0.3   0.3   0.2   0.2   0.2   0.2
                                      
Multifactor                           
productivity8        0.9   0.9   0.5   1.0   1.4   0.5   0.5   0.9   0.9

1. Excludes government enterprises.
2. Output per hour worked.
3. Capital services per hour multiplied by capital's share of current dollar
   costs.
4. Information processing equipment per hour multiplied by its share of current
   dollar costs.
5. Research and development per hout multiplied by its share of current dollar
   costs.
6. Software and artistic originals per hour multiplied by their share of
   current dollar costs.
7. Labor composition multiplied by labor's share of current dollar costs.
8. Output per unit of combined labor and capital services.
*  NA identifies where data for the most recent year are not available.

Note: Multifactor productivity plus contribution of capital intensity and
labor composition may not sum to labor productivity due to independent
rounding. Contributions of the components of capital intensity may not
sum to the total contribution of capital intensity due to independent
rounding.


Table C. Real capital services by asset type in the private nonfarm business
and private business sectors for selected periods, 1987-2018

Average annual growth rates

    		                1987-   1987-   1990-   2000-   2007-   2017-
		                2018    1990    2000    2007    2018    2018

Private nonfarm business1	
						
All assets		         3.5	 3.8	 4.7	 3.5	 2.3	 2.8

  Equipment		         4.7	 3.8	 6.5	 4.9	 3.2	 3.9
   
    Information 
    Processing 
    Equipment (IPE)	         9.6	 8.5	12.9	 9.4	 7.0	 7.6
	  
      Computers & 
      related equipment	        15.9	18.4	28.1	14.3	 6.2	 4.4
		 
      Communication 
      equipment			 9.2	 6.3	 8.0	 9.7	10.7	12.2
		 
      Other IPE			 3.1	 2.2	 3.3	 3.1	 3.0	 5.1
	  
    All other equipment	 	 2.6	 1.6	 3.6	 2.9	 1.7	 2.6
	
  Structures		         1.6	 2.9	 2.1	 1.3	 1.0	 1.2
  
  Intellectual property 
  products (IPP)	  	 5.9	 7.8	 7.4	 5.5	 4.3	 5.0
  
      Research 
	     &
      Development	 	 4.4	 5.8	 5.3	 4.2	 3.3	 3.9
	  
      Software			10.2	17.0	13.9	 8.2	 6.5	 7.5
	  
      Artistic 
      Originals			 3.1	 3.8	 3.7	 3.6	 2.0	 2.2
	  
  Rental residential 
  capital			 1.2	 2.0	 1.4	 2.2	 0.0	 0.6
  
  Inventories		  	 2.6	 3.4	 3.4	 2.1	 2.1	 1.7
  
  Land				 0.8 	 1.3	 1.3	 0.7	 0.3	 1.3
							
Private business1				
			
All assets			 3.4	 3.7	 4.5	 3.4	 2.2	 2.8
  
  Equipment			 4.6	 3.5	 6.3	 4.9	 3.2	 3.9
    
	Information
    Processing 
    Equipment (IPE)		 9.6	 8.6	12.9	 9.5	 7.0	 7.5
	
      Computers & 
      related equipment	        15.9	18.4	28.1	14.3	 6.2	 4.4
	  
      Communication
      equipment			 9.2	 6.3	 8.0	 9.7	10.7	12.2
	  
      Other IPE			 3.2	 2.2	 3.4	 3.3	 3.2	 5.1
      
	All other equipment      2.5	 1.3	 3.4	 2.9     1.7	 2.6
   
   Structures			 1.5	 2.8	 2.0	 1.2	 1.0	 1.2
   
  Intellectual Property 
  Products (IPP)		 5.9	 7.8	 7.4	 5.5	 4.3	 5.0
   
      Research
	     &
      Development		 4.4	 5.8	 5.3	 4.2	 3.3	 3.9
      
	  Software		10.2	17.0	13.9	 8.2	 6.5	 7.5
      
	  Artistic 
      Originals			 3.1	 3.8	 3.7	 3.6	 2.0	 2.2
   
  Rental residential 
  capital	 		 1.2	 2.0	 1.4	 2.2	 0.0	 0.6
  
  Inventories		 	 2.5	 2.9	 3.3	 2.0	 1.9	 1.6
  
  Land				 0.7	 3.0	 1.0	 0.7	 0.0	 1.4
  
1. Excludes government enterprises.
							
Note: Real capital services by asset type are not available for the most 
recent reference year. For a brief discussion of methods used in 
preparing these data, see the Technical Notes in this release.

Table D. Previous and revised multifactor productivity and related measures for
the 2017-2018 and 2016-2017 periods                                            

                                                                               
                                                           Inputs              
                                                                               
                          Multifactor   Real value-  Combined         Capital 
  Sector                  productivity1 added output inputs2   Labor3 services
                                                                               
                                    Annual percent change, 2017-2018                                 
Private nonfarm business                                                       
 Revised                    0.9           3.5          2.6       2.4    2.8   
 Previous                   1.0           3.5          2.6       2.4    2.9   
Private business                                                               
 Revised                    0.9           3.4          2.5       2.3    2.8   
 Previous                   1.0           3.5          2.5       2.3    2.8   
                                                                               
                                   Annual percent change, 2016-2017                                 
Private nonfarm business                                                       
 Revised                    0.6           2.8          2.2       1.9    2.7   
 Previous                   0.4           2.7          2.3       1.9    2.9   
Private business                                                               
 Revised                    0.6           2.8          2.2       1.8    2.7   
 Previous                   0.4           2.6          2.2       1.8    2.9   
                                                                               
1. Output per combined units of labor input and capital services.              
2. The growth rate of each input is weighted by its share of current           
   dollar costs.                                                               
3. 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: March 24, 2020