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Economic News Release
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Multifactor productivity trends for detailed manufacturing industries, 2004

Internet: http://www.bls.gov/mfp/home.htm	 	USDL xx-xxxx
Technical information: (202) 691-5618			For release: 10:00 a.m. EDT
Media contact: (202) 691-5902 				Tuesday, August 21, 2007


                       MULTIFACTOR PRODUCTIVITY TRENDS
                  FOR DETAILED MANUFACTURING INDUSTRIES, 2005

        The Bureau of Labor Statistics of the U.S. Department of Labor reported today on 
multifactor productivity  output per unit of combined inputs  for four-digit NAICS 
manufacturing industries through the year 2005.  Multifactor productivity rose in roughly 
two-thirds of the 86 detailed manufacturing industries in 2005, slightly fewer than in 
2004.  More industries experienced an increase in multifactor productivity over a longer 
period.  From 1987 to 2005, multifactor productivity increased in three-quarters of the 
manufacturing industries. //PRIN3 ZUNI3PO Test 10302020//  
        
	Multifactor productivity indexes relate the change in output to the change in the 
combination of labor, capital, and intermediate purchases inputs consumed in producing 
that output. Because industry multifactor productivity indexes explicitly account for inputs 
of capital and intermediates as well as labor, they are not influenced by the substitution of 
capital and intermediate inputs for labor, as are measures of labor productivity. Industry 
multifactor productivity indexes measure the joint influences on economic growth of a 
variety of factors, including technological change, returns to scale, enhancements in 
managerial and staff skills, changes in the organization of production, and other 
efficiency improvements.

        The attached tables present multifactor productivity and related series for all four-
digit manufacturing industries that are based, for the first time, on the North American 
Industry Classification System, or NAICS.  Historical data were reconstructed to reflect 
the switch to NAICS, and therefore these measures are not comparable with the detailed 
industry measures previously reported on a 1987 Standard Industrial Classification (SIC) 
basis. 
	 
2004-05 change

        Multifactor productivity rose in 58 industries in 2005, as output rose in 71 
industries and combined inputs rose in 55 industries.  Changes in multifactor productivity 
were broadly distributed and varied greatly across industries, even within 3-digit industry 
groups. (See Table 1 and Chart 1).  Multifactor productivity rose by 3 percent or more in 
29 industries, but declined in 28 industries in 2005.

**Chart 1. Distribution of annual rates of change for multifactor productivity, 2004-2005
        
        Five industries registered double-digit growth in multifactor productivity.  The 
largest increase in multifactor productivity, 27.6 percent, occurred in computer and 
peripheral equipment (NAICS 3341), followed by an increase of 18.9 percent in apparel 
knitting mills (NAICS 3151).  Output rose rapidly in the five industries with the largest 
productivity increases, while combined inputs declined in all five except computer and 
peripheral equipment.  The largest multifactor productivity decline was 10.9 percent in 
railroad rolling stock (NAICS 3365), where output increased but combined inputs rose 
much more rapidly.
        
**Chart 2. Number of industries with multifactor productivity growth, Annually, 2001-
2005
        
        The number of industries with multifactor productivity growth each year 
increased greatly after 2001. (See Chart 2.) While still high compared to 2001, the 58 
industries with multifactor productivity growth in 2005 represent a slight decline from the 
numbers that recorded growth in 2002, 2003, and 2004. Although output rose in 16 more 
industries in 2005 than in 2004, combined inputs increased in 19 more industries than in 
2004.  For most industries, input growth in 2005 was led by increases in intermediate 
purchases.  While capital services increased in 31 industries and labor hours rose in 30 
industries, intermediate purchases increased in 60 industries.

Long-term trends

        From 1987 to 2005, multifactor productivity rose in 65 industries. (See Table 2.)   
Output rose in 69 industries while combined inputs rose in 60 industries. Although more 
industries registered multifactor productivity growth from 1987 to 2005 than did so in 
2005, the average annual change in multifactor productivity was more modest for most 
industries over the long term.   Multifactor productivity grew between 0 percent and 3 
percent per year, on average, in 63 industries, and exceeded 3 percent per year in only 
four industries. (See Chart 3.)
        
**Chart 3. Distribution of annual rates of change for multifactor productivity, 1987-2005

        The five manufacturing industries with the fastest growth in multifactor 
productivity over the period were all in the computer and electronic products subsector 
(NAICS 334).  The multifactor productivity growth of 17.5 percent per year in computer 
and peripheral equipment (NAICS 3341) and 14.9 percent in semiconductors and 
electronic components (NAICS 3344) were much faster than for any other manufacturing 
industry.

        Multifactor productivity declined in nineteen industries from 1987 to 2005.  
However, the average decline over the period was less than 1 percent per year for all but 
three industries. The largest decline in multifactor productivity was 1.8 percent per year 
in tobacco and tobacco products (NAICS 3122).

        Table 3 shows average annual multifactor productivity growth by industry 
between 1987 and 2005 and for various subperiods.  Multifactor productivity grew in 
more industries from 2000 to 2005 than in any of the other periods shown. (See Chart 4.)  
From 2000 to 2005, 68 industries recorded positive multifactor productivity growth, and 
12 industries recorded average annual growth in excess of three percent.  By comparison, 
from 1995 to 2000, 51 industries had positive multifactor productivity growth, with six 
industries growing at an average annual rate greater than three percent.  Average annual 
multifactor productivity growth accelerated in 55 industries in 2000 to 2005 compared to 
1995 to 2000. 
        
**Chart 4. Number of industries with multifactor productivity growth, 1987-2005 and 
selected subperiods

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Last Modified Date: October 30, 2020