Multifactor Productivity Trends In Manufacturing, 2015


For release 10:00 a.m. (EDT) Wednesday, July 12, 2017	USDL-17-0960
Technical information:	(202) 691-5606 •  mfp@bls.gov  •  www.bls.gov/mfp
Media contact:	        (202) 691-5902 •  PressOffice@bls.gov

MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2015

Manufacturing sector multifactor productivity decreased at a 2.8-percent
annual rate in 2015, the U.S. Bureau of Labor Statistics reported today.
(See chart 1, table A.) The 2015 decline was the largest decline since 
2012 and reflected a 1.2-percent increase in sectoral output and a 4.1-percent
increase in combined inputs. The decrease in multifactor productivity
followed a 0.9-percent increase in 2014.

Multifactor productivity is calculated by dividing an index of real sectoral
output by an index of combined units of labor input, capital services, 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. 
Durable manufacturing sector multifactor productivity decreased at a 
2.4-percent annual rate in 2015 following a 0.1-percent decrease in 
2014. Nondurable manufacturing sector multifactor productivity decreased
at a 2.7-percent annual rate in 2015, following a 1.5-percent increase in
2014. (See table 3.)

Methodology Change to BLS Productivity Measures
A methodology change has been implemented with the release of these data. 
This change will also impact BLS multifactor productivity trends for detailed 
industries, scheduled for release July 20, 2017. BLS has updated the way 
intrasectoral transactions and labor composition are estimated. More 
information about these changes can be found shortly at 
www.bls.gov/mfp/sectoraloutputrevisions.htm.

Among the 18 manufacturing industries, half experienced increases in 
multifactor productivity in 2015. Primary metals and computer electronic 
products industries showed the largest gains in multifactor productivity.
The decline in multifactor productivity for the manufacturing sector was 
led by a decline in multifactor productivity in the chemical products and 
transportation equipment industries. Sectoral output increased in 61 
percent of industries and combined inputs increased in 56 percent of 
industries in 2015 (See chart 2, table 3.) 

Trends in the manufacturing sector

Manufacturing sector output growth decelerated in 2015 with an annual
increase of 1.2 percent compared to the 1.6 percent rate in 2014. In 2015,
the 4.1-percent growth in combined inputs accelerated from the 0.7-percent
growth experienced in 2014, driven by a 7.3-percent growth in materials 
and a 5.8-percent growth in purchased business services. (See table 1.) 

Multifactor productivity in the manufacturing sector grew at an average 
annual rate of 0.8 percent from 1987 to 2015 with sectoral output 
increasing at an average annual rate of 1.7 percent, faster than the 
0.9-percent average annual rate of increase in combined inputs. During
the same period, labor productivity grew at an average annual rate of 
2.9 percent. (See table A.) Of the 2.9-percent average annual increase 
in labor productivity, multifactor productivity contributed 0.8 percent,
capital intensity contributed 0.8 percent, intermediate inputs intensity
contributed 1.2 percent, and labor composition contributed 0.2 percent. 
(See table B.)

For the most recent 2007-15 period, multifactor productivity declined at 
a 0.6-percent average annual rate as compared to the 1.7-percent average
annual rate of increase experienced in the 2000-07 period. (See table A.)
Sectoral output decreased at a 0.4-percent annual average rate and 
combined inputs rose at a 0.2-percent annual average rate over the 
2007-15 period.

Revised measures

The difference between revised and previous productivity measures and 
related data in the manufacturing, durable manufacturing, and nondurable
manufacturing sectors are displayed in table C. The revisions were a 
result of changes to BLS methodology for estimating intrasectoral 
transactions and labor composition, as well as revisions to the National
Income and Product Accounts (NIPA) released on January 27, 2017 and the
Gross Domestic Product by Industry data released on November 2, 2016. 
More information about the methodology change can be found shortly at
www.bls.gov/mfp/sectoraloutputrevisions.htm.

The combined impact of these revisions over the 1987-2014 period resulted
in a 0.1 percentage point upward revision to multifactor productivity in 
nondurable manufacturing, with multifactor productivity in manufacturing 
and durable manufacturing unchanged.  

In 2014, multifactor productivity in the manufacturing sector was 
revised upward 1.9 percent, largely due to a downward revision in combined 
inputs. Multifactor productivity was revised upward 2.4 percent in the 
durable manufacturing sector and 1.0 percent in the nondurable manufacturing
sector. In 2013, multifactor productivity and related measures in the 
manufacturing, durable manufacturing, and nondurable manufacturing sectors 
also exhibited major revisions.
Table A. Productivity, sectoral output, and inputs in the manufacturing
sector for selected periods, 1987-2015

                                                                               
Compound annual growth rates                                                   
                                                                               
                             1987-  1987-  1990-  1995-  2000-  2007-  2014-
                             2015   1990   1995   2000   2007   2015   2015 
                                                                               
  Productivity                                                                 
                                                                               
     Multifactor              0.8    0.3    1.0    1.8    1.7   -0.6   -2.8 
     productivity1                                                          
     Labor productivity2      2.9    1.8    3.2    4.7    4.3    0.9    0.5 
     Output per unit of      -0.6   -0.8    0.5    0.3   -0.1   -2.1   -1.4 
     capital services                                                       
                                                                               
                                                                               
                                                                               
  Sectoral Output             1.7    1.8    3.2    4.5    1.1   -0.4    1.2 
                                                                               
  Inputs                                                                       
                                                                               
     Combined Inputs3         0.9    1.5    2.2    2.6   -0.6    0.2    4.1 
      Labor input4           -0.6    0.4    0.7    0.3   -2.4   -0.8    1.4 
        Hours                -1.2    0.0    0.0   -0.2   -3.1   -1.3    0.8 
        Labor composition5    0.6    0.4    0.7    0.4    0.7    0.5    0.6 
      Capital Services        2.3    2.7    2.7    4.2    1.3    1.8    2.6 
      Energy                 -0.8    1.9    1.6    6.6   -3.9   -5.1   -8.4 
      Materials               1.5    0.4    3.2    4.3    0.3    0.0    7.3 
      Purchased business      1.5    5.3    3.2    1.3   -0.5    0.9    5.8 
     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
, 1987-2015 

                                                                               
 Compound annual growth rates                                                  
                                                                               
                           1987-  1987-  1990-  1995-  2000-  2007-  2014-
                           2015   1990   1995   2000   2007   2015   2015 
                                                                               
  Labor productivity1       2.9    1.8    3.2    4.7    4.3    0.9    0.5 
                                                                          
                                                                          
                                                                               
    Contribution of         0.8    0.5    0.5    0.9    0.9    0.7    0.5 
    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    0.2 
       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    0.2 
       services intensity                                                 
                                                                          
                                                                          
                                                                               
    Contribution of         1.2    0.9    1.5    1.7    1.4    0.7    2.7 
    Intermediate Inputs                                                   
    Intensity6                                                            
                                                                          
                                                                          
                                                                               
       Energy intensity7    0.0    0.1    0.0    0.2    0.0   -0.1   -0.2 
                                                                          
                                                                          
                                                                               
       Materials            0.8    0.1    0.9    1.3    1.0    0.4    2.1 
       intensity8                                                         
                                                                          
                                                                          
                                                                               
       Purchased business   0.4    0.7    0.5    0.2    0.5    0.3    0.8 
       services                                                           
       intensity9                                                         
                                                                          
                                                                          
                                                                               
    Contribution of         0.2    0.1    0.2    0.1    0.2    0.1    0.1 
    labor composition10                                                   
                                                                          
                                                                          
                                                                               
    Multifactor             0.8    0.3    1.0    1.8    1.7   -0.6   -2.8 
    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. Difference between revised and previous multifactor productivity  
and related measures, for selected periods 1987-2014

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                               
                                1987- 1987- 1990- 1995- 2000- 2007- 2012- 2013-
                                2014  1990  1995  2000  2007  2014  2013  2014 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.0   0.1  -0.1  -0.1   0.0   0.2   0.0   1.9
   Labor productivity2           -0.4  -0.1  -0.1  -0.2  -0.3  -1.0   0.9   0.0
   Sectoral Output               -0.5   0.0   0.0  -0.2  -0.4  -1.0   0.8  -0.1
   Combined Inputs3              -0.5  -0.1   0.1  -0.1  -0.4  -1.2   0.9  -1.9
   Capital Services              -0.1   0.0   0.0   0.0   0.0   0.0   0.0  -0.1
   Labor input4                   0.0  -0.1   0.1   0.0  -0.1   0.0  -0.1   0.4
   Energy                        -0.4   0.0   0.0   0.0   0.0  -1.2   0.0  -8.5
   Materials                     -1.1   0.3   0.1  -0.9  -0.7  -3.0   2.6  -2.7
   Purchased business services   -0.2  -0.1   0.0  -0.1   0.1  -0.9  -1.4  -5.1
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      0.0  -0.1  -0.2  -0.1   0.0   0.3  -0.6   2.4
   Labor productivity2           -0.4  -0.1   0.0  -0.4   0.0  -0.9   0.9   0.2
   Sectoral Output               -0.4   0.0   0.0  -0.3   0.0  -0.9   0.9   0.0
   Combined Inputs3              -0.4   0.0   0.1  -0.1  -0.1  -1.2   1.5  -2.6
   Capital Services               0.0  -0.1  -0.1  -0.1   0.0   0.0  -0.2  -0.4
   Labor input4                   0.0   0.0   0.1  -0.1   0.0   0.0  -0.2   0.4
   Energy                        -0.2   0.0   0.0   0.0   0.0  -0.6   1.5  -6.2
   Materials                     -1.0   0.1   0.0  -0.6  -0.5  -3.0   4.9  -4.7
   Purchased business services   -0.2   0.0   0.0  -0.1   0.1  -0.6   0.2  -4.7
                                                                                     
  NonDurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1      0.1   0.1   0.0   0.0   0.0   0.2   0.4   1.0
   Labor productivity2           -0.2   0.0   0.0  -0.2  -0.1  -0.7   0.4   0.0
   Sectoral Output               -0.3   0.0   0.0  -0.2  -0.1  -0.6   0.3   0.1
   Combined Inputs3              -0.3   0.0   0.0  -0.2  -0.1  -0.9  -0.1  -0.9
   Capital Services               0.0   0.0   0.0   0.1   0.0   0.1   0.1   0.1
   Labor input4                   0.0  -0.3   0.0   0.0  -0.2   0.2   0.3   0.2
   Energy                        -0.4   0.0  -0.1   0.0   0.0  -1.6  -0.8  -9.8
   Materials                     -0.5   0.1   0.1  -0.6  -0.1  -1.4   0.4  -0.3
   Purchased business services   -0.4  -0.1   0.0   0.0   0.0  -1.3  -3.3  -5.7
                                                                                     
 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. 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 12, 2017