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Economic News Release
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Multifactor Productivity Trends In Manufacturing, 2019

For release 10:00 a.m. (ET) Thursday, November 19, 2020	USDL-20-2138
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 - 2019

Manufacturing sector multifactor productivity declined 1.6 percent in 2019,
the U.S. Bureau of Labor Statistics reported today. The multifactor 
productivity decline in 2019 reflected a 1.1-percent decrease in sectoral 
output and a 0.5-percent increase in combined inputs. The decrease in 
multifactor productivity followed a revised 0.7-percent increase in 2018. 
(See table A.)

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 
1.3 percent in 2019. The decline reflected a 0.6-percent decrease 
in sectoral output and a 0.7-percent increase in combined inputs. 
Nondurable manufacturing sector multifactor productivity decreased 
1.8 percent in 2019. The decline reflected a 1.5-percent decrease 
in sectoral output and a 0.3-percent increase in combined inputs. 
(See table C, table 2.)

Among the 19 manufacturing industries, 16 experienced declines in multifactor 
productivity growth in 2019. The largest declines in multifactor productivity 
were in the chemical products, the furniture and related products, and the 
apparel and leather and applied products industries. The primary metals 
products industry showed the largest gains in multifactor productivity. 
Sectoral output declined in 16 industries in 2019, the most industries that 
experienced a decline in sectoral output since 2009. (See table 2.) 

Contributions take into account the relative importance of each industry to 
the manufacturing sector multifactor productivity. Chemical products made the 
largest negative contribution to manufacturing multifactor productivity. 
Petroleum and coal products was the largest offset to the manufacturing 
multifactor productivity decline in 2019. 

Trends in the manufacturing sector

Manufacturing sectoral output declined in 2019 with an annual decrease of 1.1 
percent compared to the 2.3-percent increase in 2018. Combined inputs 
increased 0.5 percent, less than the 1.5-percent increase as 2018. 
(See table 1.) 

Over the longer term, multifactor productivity in the manufacturing sector 
grew at an average annual rate of 0.7 percent from 1987 to 2019 with sectoral 
output increasing at an average annual rate of 1.5 percent, faster than the 
0.8-percent average annual rate of increase in combined inputs. During the 
same period, labor productivity grew at an average annual rate of 2.5 percent.
(See table A.) Of the 2.5-percent average annual increase in labor 
productivity, multifactor productivity contributed 0.7 percentage points 
which represents about 30 percent of the growth in the 1987-2019 period. 
Capital intensity contributed 0.8 percentage points, intermediate inputs 
intensity contributed 0.8 percentage points, and labor composition 
contributed 0.2 percentage points to the increase in labor productivity. 
(See table B.)

For the more recent 2007-19 period, multifactor productivity declined at a 
0.3-percent average annual rate compared to an increase of 1.7 percent during 
the 2000-07 period. (See table A.) Sectoral output decreased at a 0.3-percent 
average annual rate and combined inputs increased 0.1 percent over the 
2007-19 period.

Revised measures

Annual rates of multifactor productivity and related series were revised 
historically for all three sectors. (See table D.) The most notable revisions 
are in the latest business cycle and are due to the release of 2019 GDP by 
Industry data from the Bureau of Economic Analysis. Revisions prior to the 
2007-18 business cycle are small and due to revised hours data from BLS and 
improved estimates of underlying GDP-by-Industry components. Note: the 2018 
Annual Survey of Manufactures was incorporated into all three sectors’ 
measures in July 2020.

Over the 2007-18 period, multifactor productivity in the manufacturing sector 
was revised up 0.1 percentage points to a decline of 0.2 percent. The upward 
revision was due to a 0.1-percentage point downward revision to combined 
inputs. Sectoral output was unchanged. 

In 2018, multifactor productivity in the manufacturing sector was revised 
down 0.1 percentage points to an increase of 0.7 percent. In durable 
manufacturing, multifactor productivity was revised down 0.6 percentage 
points, driven by a 0.5-percent upward revision in combined inputs. 
In nondurable manufacturing, multifactor productivity was revised up 0.4 
percentage points, due to an upward revision of 0.3 percentage points to 
sectoral output and a downward revision of 0.2 percentage points to 
combined inputs. (See table D.)



Table A. Productivity, sectoral output, and inputs in the manufacturing
sector for selected periods, 1987-2019

                                                                               
Average annual growth                                                   
                                                                               
                                 1987-  1987-  1990-  2000-  2007-  2018-
                                 2019   1990   2000   2007   2019   2019 
                                                                               
  Productivity                                                                 
                                                                               
         Multifactor               0.7    0.4    1.5    1.7   -0.3   -1.6
         productivity1                                                   
         Labor productivity2       2.5    1.8    3.9    4.4    0.4   -1.1
         Output per unit of       -0.8   -0.8    0.2   -0.3   -2.0   -2.8
         capital services                                                
                                                                               
  Sectoral Output              1.5    1.8    3.8    1.2   -0.3   -1.1
  
  Inputs                                                                       
    
         Combined inputs3          0.8    1.4    2.3   -0.5    0.1    0.5
          Labor input4            -0.4    0.4    0.6   -2.4   -0.2    0.1
            Hours                 -0.9    0.0   -0.1   -3.1   -0.6    0.0
            Labor composition5     0.5    0.4    0.7    0.7    0.4    0.1
          Capital services         2.3    2.7    3.5    1.5    1.8    1.7
          Energy                  -2.2   -1.0    3.6   -5.4   -5.3   -8.7
          Materials                1.3    0.4    4.2    0.5   -0.5    0.2
          Purchased business       0.4    4.5    0.7   -0.4   -0.4    1.0
         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
, 1987-2019 

                                                                               
Average annual growth/percentage point                                                 
                                                                               
                           1987-  1987-  1990-  2000-  2007-  2018-
                           2019   1990   2000   2007   2019   2019 
                                                                               
  Labor productivity1       2.5    1.8    3.9    4.4    0.4   -1.1 
                                                                   
                                                                   
                                                                               
    Contribution of         0.7    0.5    0.7    1.0    0.6    0.5 
    capital intensity2                                             
                                                                   
                                                                   
                                                                               
       Information          0.1    0.1    0.1    0.1    0.0    0.0 
       processing                                                  
       equipment                                                   
       intensity3                                                  
                                                                   
                                                                   
                                                                               
       Research and         0.3    0.2    0.2    0.4    0.3    0.3 
       development                                                 
       intensity4                                                  
                                                                   
                                                                   
                                                                               
       All Other            0.1    0.1    0.1    0.0    0.0    0.0 
       intellectual                                                
       property products                                           
       intensity5                                                  
                                                                   
                                                                   
                                                                               
       All other capital    0.3    0.2    0.2    0.5    0.2    0.1 
       services intensity                                          
                                                                   
                                                                   
                                                                               
    Contribution of         0.8    0.8    1.4    1.4    0.0    0.0 
    intermediate inputs                                            
    intensity6                                                     
                                                                   
                                                                   
                                                                               
       Energy intensity7    0.0    0.0    0.1   -0.1   -0.1   -0.1 
                                                                   
                                                                   
                                                                               
       Materials            0.6    0.1    1.2    1.0    0.1    0.1 
       intensity8                                                  
                                                                   
                                                                   
                                                                               
       Purchased business   0.2    0.7    0.1    0.4    0.0    0.1 
       services                                                    
       intensity9                                                  
                                                                   
                                                                   
                                                                               
    Contribution of         0.2    0.1    0.2    0.2    0.1    0.0 
    labor composition10                                            
                                                                   
                                                                   
                                                                               
    Multifactor             0.7    0.4    1.5    1.7   -0.3   -1.6 
    productivity11                                                 
                                                                   
                                                                   
                                                                               
 1. Output per hour worked.                                                    
 2. Capital intensity 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. Multifactor productivity and related measures in the total, durable, 
and nondurable manufacturing sectors, for selected periods 1987-2019
 

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                   
                                1987- 1987- 1990- 2000- 2007- 2018-
                                2019  1990  2000  2007  2019  2019 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.7   0.4   1.5   1.7  -0.3  -1.6
   Labor productivity             2.5   1.8   3.9   4.4   0.4  -1.1
   Sectoral output                1.5   1.8   3.8   1.2  -0.3  -1.1
   Combined inputs2               0.8   1.4   2.3  -0.5   0.1   0.5
   Capital services               2.3   2.7   3.5   1.5   1.8   1.7
   Labor input3                  -0.4   0.4   0.6  -2.4  -0.2   0.1
   Energy                        -2.2  -1.0   3.6  -5.4  -5.3  -8.7
   Materials                      1.3   0.4   4.2   0.5  -0.5   0.2
   Purchased business services    0.4   4.5   0.7  -0.4  -0.4   1.0
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      1.4   0.9   2.2   2.5   0.2  -1.3
   Labor productivity             2.9   2.1   5.2   4.5   0.4  -0.8
   Sectoral output                2.0   1.9   5.5   1.3  -0.3  -0.6
   Combined Inputs2               0.7   1.0   3.2  -1.2  -0.5   0.7
   Capital Services               2.2   2.5   4.0   1.1   1.3   1.5
   Labor input3                  -0.4   0.2   0.9  -2.4  -0.4   0.1
   Energy                        -3.7  -2.9   2.5  -5.7  -7.6 -12.4
   Materials                      1.5   0.8   6.7  -1.2  -1.0   1.3
   Purchased business services    0.2   2.2   1.6   0.0  -1.3   0.4
                                                                                     
  Nondurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1     -0.1  -0.2   0.3   0.6  -0.7  -1.8
   Labor productivity             1.7   1.3   2.3   3.8   0.2  -1.1
   Sectoral output                0.7   1.7   1.6   0.6  -0.3  -1.5
   Combined inputs2               0.7   1.9   1.3   0.0   0.4   0.3
   Capital services               2.4   2.8   3.1   1.8   2.2   2.0
   Labor input3                  -0.4   0.7   0.1  -2.4   0.0   0.0
   Energy                        -1.1   1.1   4.7  -5.3  -3.9  -6.0
   Materials                      0.6   0.6   1.4   1.0  -0.3  -1.0
   Purchased business services    0.7   7.4  -0.2  -1.2   0.8   2.6
                                                                                     
 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.                                                    
                                                                                     
Table D. Difference between revised and previous multifactor productivity 
and related measures, for selected periods 1987-2018

                                                                                     
Average annual growth                                                                
                                                                                     
                                                                         
                                1987- 1987- 1990- 2000- 2007- 2016- 2017-
                                2018  1990  2000  2007  2018  2017  2018 
                                                                                     
  Manufacturing                                                                      
                                                                                     
   Multifactor productivity1      0.0   0.0   0.0   0.0   0.1   0.5  -0.1
   Labor productivity             0.0   0.1   0.0   0.0   0.0   0.1   0.1
   Sectoral output                0.0   0.0   0.0   0.0   0.0   0.1   0.1
   Combined inputs2               0.0   0.0   0.0   0.0  -0.1  -0.4   0.1
   Capital services               0.0   0.0   0.0   0.0   0.0   0.1   0.1
   Labor input3                   0.0  -0.1   0.0   0.0   0.0   0.0   0.0
   Energy                         0.0   0.0   0.0   0.0   0.1  -0.2 -12.6
   Materials                      0.0   0.0   0.0   0.0  -0.1   0.2   0.8
   Purchased business services    0.0   0.0   0.0   0.0  -0.1  -4.7   1.0
                                                                                     
  Durable Manufacturing                                                              
                                                                                     
   Multifactor productivity1      0.1   0.1   0.0   0.0   0.0   1.0  -0.6
   Labor productivity             0.0   0.1   0.0   0.0   0.0   0.1  -0.1
   Sectoral output                0.0   0.0   0.0   0.0  -0.1   0.1  -0.1
   Combined inputs2               0.0   0.0   0.0   0.0  -0.1  -0.9   0.5
   Capital services               0.0   0.0   0.0   0.0   0.0   0.0  -0.2
   Labor input3                   0.0  -0.1   0.0   0.0   0.0   0.0  -0.1
   Energy                         0.0   0.0   0.0   0.0   0.0   5.2 -16.0
   Materials                      0.0   0.0   0.0   0.0  -0.2  -2.4   3.1
   Purchased business services    0.0   0.0   0.0   0.0   0.1  -3.4  -1.2
                                                                                     
  Nondurable Manufacturing                                                           
                                                                                     
   Multifactor productivity1      0.0   0.1   0.0   0.0   0.1  -0.1   0.4
   Labor productivity             0.0   0.0   0.0   0.0   0.0   0.0   0.2
   Sectoral output                0.0   0.0   0.0   0.0   0.1   0.0   0.3
   Combined inputs2               0.0   0.0   0.0   0.0   0.0   0.2  -0.2
   Capital services               0.0   0.0   0.0   0.0   0.0   0.1   0.2
   Labor input3                  -0.1  -0.1   0.0   0.0   0.0   0.0   0.0
   Energy                         0.0   0.0   0.0   0.0   0.2  -4.1 -10.5
   Materials                      0.1   0.0   0.0   0.0   0.1   1.9  -0.8
   Purchased business services   -0.1   0.0   0.0   0.0  -0.3  -6.1   3.1
                                                                                     
 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: November 19, 2020