Total Factor Productivity for Detailed Industries - 2019

For release 10:00 a.m. (ET) Thursday, August 26, 2021	USDL-21-1545

Technical Information:	(202) 691-5606  •  productivity@bls.gov •  www.bls.gov/mfp 
Media Contact:	(202) 691-5902  •  PressOffice@bls.gov


TOTAL FACTOR PRODUCTIVITY FOR DETAILED INDUSTRIES - 2019


Total factor productivity–defined as output per unit of combined inputs--fell in 61 of the 86 4-digit 
NAICS manufacturing industries in 2019, the U.S. Bureau of Labor Statistics reported today. In 2018 
total factor productivity decreased in 37 manufacturing industries. Among transportation industries, 
total factor productivity increased in air transportation and decreased in line-haul railroads. //QCT Resilio Test 09/28/2023//
 
Eight of the nine largest 4-digit NAICS manufacturing industries (those with employment over 350,000) 
had decreasing total factor productivity in 2019. Only the aerospace products and parts industry had 
rising total factor productivity. Output fell or was unchanged from 2018 in all nine industries, with the 
largest decline occurring in printing and related support activities (-5.7 percent). A rise in combined 
inputs paired with falling or flat output resulted in declining total factor productivity for five of the nine 
industries.

Among all 86 manufacturing industries, 3 industries posted total factor productivity gains greater than 
5.0 percent (see table 1): 
*	Leather and hide tanning and finishing (+8.8 percent)
*	Apparel knitting mills (+5.4 percent)
*	Computer and peripheral equipment (+5.3 percent)

Total factor productivity declined by 7.0 percent or more in 3 manufacturing industries in 2019: 
*	Other leather products (-8.3 percent)
*	Magnetic media manufacturing and reproducing (-7.8 percent)
*	Resin, rubber, and artificial fibers (-7.2 percent)

Total factor productivity increased in one of the two measured transportation industries: 
*	Air transportation (+0.9 percent)
*	Line-haul railroads (-1.9 percent)

Total factor Productivity: Definition and Concepts

Changes in total factor productivity show the relationship between changes in real output and changes in 
the combined inputs of labor, capital, and intermediate purchases (energy, materials, and purchased 
services) used in producing that output. Total factor productivity is also known as total factor 
productivity.

A variety of factors that influence economic growth are not specifically accounted for among measured 
inputs, including technological change, returns to scale, enhancements in managerial and staff skills, 
changes in the organization of production, and other efficiency improvements. Total factor productivity 
reflects these factors. See the technical note for more information.

Components of Total factor Productivity Growth: Output and Combined Inputs

In 2019, output increased in 13 of 86 manufacturing industries, compared to 53 industries in 2018. 
Output increased by 3.0 percent or more in the following 5 industries in 2019:
*	Soaps, cleaning compounds, and toiletries (+5.3 percent)
*	Other textile product mills (+4.9 percent) 
*	Other food products (+4.5 percent)
*	Cut and sew apparel (+3.3 percent)
*	Electrical equipment (+3.2 percent)

Combined inputs of capital, labor, and intermediate purchases rose in 32 of 86 manufacturing 
industries in 2019, compared to 55 industries in 2018. Nearly half of the manufacturing industries saw 
growth in hours worked and capital services (38 industries each) and intermediate purchases (36 
industries).

The following industries had the largest increases in combined inputs in 2019:
*	Animal slaughtering and processing (+4.3 percent)
*	Ship and boat building (+4.0 percent)
*	Boilers, tanks, and shipping containers (+3.8 percent)
*	Other leather products (+3.1 percent) 
*	Electronic instruments (+3.0 percent)

In 2 manufacturing industries, total factor productivity rose more than 5.0 percent despite falling 
output as combined inputs fell more rapidly. This occurred in: 
*	Leather and hide tanning and finishing (+8.8 percent)
*	Apparel knitting mills (+5.4 percent)

In the air transportation industry, output increased 4.0 percent and combined inputs increased 3.1 
percent in 2019. In line-haul railroads, output declined 3.6 percent and combined inputs declined 1.7 
percent.

Trends in Total factor Productivity for Selected Time Periods

Year-to-year movements and long-term trends in industry total factor productivity may reflect cyclical 
changes in the economy. However, long-term average annual percent changes in total factor 
productivity are more reliable indicators of historical trends in industry performance.

More industries saw total factor productivity growth over the long term than the short term. Over the 
long-term period from 1987 to 2019, total factor productivity grew in 60 manufacturing industries, 
compared to only 25 from 2018 to 2019. (See tables 1 and 2.) Average annual rates of change in 
total factor productivity for nearly all manufacturing industries ranged between -2.0 percent and +2.0 
percent over the long term. In contrast, total factor productivity declined by 2.0 percent or more in 42 
industries in 2019. No industry saw an average annual decline of that magnitude from 1987 to 2019.

Between 1987 and 2019, the number of manufacturing industries with growth in total factor productivity 
was highest in 1992, 2003, and 2010. These were years of economic growth following recessions. In 
contrast, relatively few manufacturing industries saw total factor productivity growth in the recession 
years of 2001 and 2009. 

Average annual percent changes in total factor productivity by industry for sub periods between 1987 
and 2019 are shown in table 3. The sub period from 1990 to 1995 saw the greatest number of 
manufacturing industries with total factor productivity growth.

From 1987 to 2019, total factor productivity rose in both air transportation and line-haul railroads by an 
average annual rate of 1.3 percent and 1.7 percent, respectively. While both industries posted gains in 
output, total factor productivity grew more in line-haul railroads because its combined inputs showed 
little change over the long term. (See table 2.)

Total factor Productivity as a Source of Labor Productivity Growth

Multifactor productivity measures differ from the BLS labor productivity measures because they 
compare output to the combined inputs of hours worked, capital, and intermediate purchases. Labor 
productivity relates output only to hours worked. Mathematically, an industry’s labor productivity is 
equal to total factor productivity plus the effects of factor substitution; that is, the combined effects of 
changes in weighted capital services relative to hours worked and weighted intermediate purchases 
relative to hours worked. These factor substitutions are referred to as contribution of capital intensity 
and contribution of intermediate purchases intensity.
 
Eighty out of the 86 manufacturing industries posted gains in labor productivity from 1987 to 2019. 
Among these industries, substitution of intermediate purchases for labor was the leading source of labor 
productivity growth. (See table 4.) Growth in the contribution of intermediate purchases intensity occurs 
when firms purchase a greater share of materials instead of using their own labor. Contribution of 
intermediate purchases intensity may also rise when firms substitute contracted labor for payroll labor.
 
Between 2000 and 2007, total factor productivity growth was the predominant source of labor 
productivity growth in many of the manufacturing industries. In contrast, labor productivity growth was 
driven mostly by contribution of intermediate purchases intensity in the other two sub periods.

Strong growth in total factor productivity was the dominant source of labor productivity growth in the 
industries that manufacture computers and electronic products (computer and peripheral equipment, 
semiconductors and electronic components, and audio and video equipment). Labor productivity growth 
in the two transportation industries, air transportation and line-haul railroads, was also primarily driven 
by total factor productivity growth. The remaining manufacturing industries with high average annual 
growth in labor productivity were mostly fueled by the contribution of intermediate purchases intensity.

Terminology Change for Multifactor Productivity Data
 
The BLS Productivity Program will replace the term multifactor productivity (MFP) with total factor 
productivity (TFP) beginning in the fourth quarter of 2021. This is a change in terminology only and 
will not affect the data or methodology. The use of the term total factor productivity will improve the 
visibility and accessibility of our data and will be accompanied by changes to the BLS website and 
future productivity news releases.

Additional Information

The combined inputs measures for manufacturing industries in this release incorporate new data from 
the BLS International Price Program. Prices for imported materials are a component of intermediate 
purchases, and these prices are now more comprehensive and cover the entire history of the series. 
Accordingly, the total factor productivity and combined inputs series for manufacturing industries have 
been revised for 2018 and all earlier years.

The combined inputs measure for line-haul railroads in this release incorporates additional data from the 
United States Surface Transportation Board (STB). The quantity of leased rail cars, which is a 
component of intermediate purchases, is reported in Schedule 710 of the annual STB reports of U.S. 
Class I railroads. Accordingly, the total factor productivity and combined inputs series for line-haul 
railroads have been revised for 2018 and all earlier years.

The COVID-19 pandemic did not impact the availability of source data used to construct the 
productivity measures in this release. Additional information can be found on the BLS website at 
https://www.bls.gov/covid19/effects-of-covid-19-pandemic-on-productivity-and-costs-
statistics.htm#Multifactor-Productivity.

Access the productivity data dashboard at www.bls.gov/mfp/mfp_by_industry_dashboard.xlsx for
*	Detailed data series: indexes of total factor productivity and related measures
*	Additional years, annual rates of change, and long-term data

More information from the BLS productivity program is available at www.bls.gov/mfp.
*	More detailed capital and intermediate purchases data available upon request

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