Total Factor Productivity in Major Industries News Release

For release 10:00 a.m. (ET) Thursday, November 19, 2020	USDL-XX-XXXX
Technical information:(202) 691-5606 • productivity@bls.gov • www.bls.gov/mfp
Media contact:	      (202) 691-5902  • PressOffice@bls.gov

TOTAL FACTOR PRODUCTIVITY IN MAJOR INDUSTRIES – 2019 

Total factor productivity rose in 12 of the 20 industries measured in 2019,
the U.S. Bureau of Labor Statistics (BLS) reported today.  The largest annual
increases were in the mining, management of companies and enterprises, and 
utilities industries, with increases of 4.2 percent, 3.7 percent, and 3.0 
percent, respectively. (See chart 1 and table 1). In 2018, total factor 
productivity (TFP) increased in 14 of the 20 industries. 

Total factor productivity is defined as output per unit of combined inputs. 
TFP shows the relationship between real output and changes in the combined 
inputs of capital services, labor input, and intermediate purchases (energy,
materials, and purchased services) used in producing that output. It reflects
a variety of factors that influence economic growth not specifically 
accounted for among measured inputs, including: technological change, 
changes in the organization of production, and other efficiency 
improvements.  

The TFP increase in 2019 was dispersed among the 20 major industries measured.
TFP increases are most often achieved by the change in output outpacing the 
change in combined inputs, as with the mining industry in 2019 when output 
increased 6.5 percent and combined inputs increased 2.2 percent leading to 
an increase in TFP of 4.2 percent. However, TFP increases can also be 
achieved when the change in combined inputs declines more than the change
in output, as was the case with utilities. For this industry, combined inputs
declined 4.7 percent and output declined 1.8 percent, leading to a TFP 
increase of 3.0 percent. TFP declines occurs when the change in output is
less than of the change in combined inputs. Wholesale trade experienced 
the largest TFP decline in 2019 (-2.2 percent) as output declined 2.1 percent
and combined inputs grew at 0.1 percent.  
 
Total factor productivity and KLEMS as sources of labor productivity trends
Total factor productivity annual measures differ from BLS quarterly labor 
productivity, or output per hour measures, because the former also includes 
information on capital intensity, shifts in the composition of the workforce,
energy, materials, and purchased services. Labor productivity relates output
to only hours worked and is equal to total factor productivity plus the 
effects of factor substitution. Thus, an increase in labor productivity can 
be expressed as the sum of six components: 

•Total factor productivity (TFP)       •Contribution of energy (E)
•Contribution of capital intensity (K) •Contribution of materials (M)
•Contribution of labor composition (L) •Contribution of purchased services (S)

The contribution of each KLEMS input is definied as the ratio of the weighted
services provided by that input to hours worked in the production process. 
By examining input contributions the substitution effect of increased use of
an input on an industry’s labor producitivty can be measured.  

Chart 2 illustrates sources of labor productivity trends in 2019 for each 
industry. The information industry had the largest increase in labor 
productivity in 2019, increasing 6.6 percent, driven by an increase in 
capital of 2.9 percent. While the education industry had the largest decline
in 2019, decreasing 3.5 percent, driven by a 2.4-percent decline in services. 

TFP and input contributions to output 

The nation's output growth can be viewed as the sum of three components:
total factor productivity, and the contributions of capital services and 
labor input. In the most recent business cycle (2007-2019) the deceleration
of output was mainly driven by the deceleration in TFP and a modest 
deceleration of the use of capital services. 

Industry level data can be used to further explain any changes in the private
business sector output. Chart 4 aggregates industries into one of four 
sectors: goods producing, information communication technologies (ITC) 
finance, insurance, and real estate (FIRE); and service producing. 
(See technical note for industry makeup.)

TFP contribution

The contribution of total factor productivity growth to private business
output growth has declined from 1.12 percentage points in 2000-2007 to 0.33
percentage points in 2007-2019. This decline can be attributed to negative
contribution from manufacturing industries within the goods producing sector 
and a steep decline in ICT TFP contribution. Within ICT, computer and 
electronic products TFP has slowed substantially and now only contributes 
0.06 percentage points to private business output growth compared to 0.24 
percentage points in the previous business cycle.

Capital contribution

Capital services contribution to output growth gradually declined over the 
three business cycles, declining from 1.39 percentage points in 1990-2000 to 
0.83 percentage points in the current business cycle. The decline in the 
contribution of capital from both the services industry and the finance, 
insurance, and real estate (FIRE) sectors are the main drivers – as the fall
out of the financial crisis and housing collapse during the 2007-2009 period
impacted this sector.

Labor contribution
During the 2000-2007 business cycle, the contribution of labor input to
private business output growth declined over a full percentage point from
1.34 to just 0.23 percentage points. During the 2000-2007 business cycle 
labor input contributed -0.13 percentage points in goods producing industries
and -0.13 percentage points for ICT industries. During the 2007-2019 business
cycle labor input only contributed -0.01 percentage points to goods producing
industreis and 0.05 percentage points to ICT industries. 

Technical Notes 

Information and computer technologies (ICT) Sector 

Information and computer technologies (ICT) is made up of the following 
industries (and removed from their usual category), NAICS 334 (Computer 
and electronic products), NAICS 517 (Telecommunications), NAICS 5415 
(Computer systems design and related services), and NAICS 51 (Information)
except traditional paper publishers. This definition is generally comparable
to that used by the Organization for Economic Cooperation and Development 
(OECD), which defines the ICT sector using the International Standard 
Industrial Classification (ISIC) (OECD 2011).

Capital Services 

Data on investment for fixed assets are obtained from BEA. Data on 
inventories are estimated using data from BEA and additional information
from IRS Corporation Income Returns. Data for land in the farm industry 
are obtained from USDA. Nonfarm industry detail for land is based on IRS
book value data. Current-dollar value-added data, obtained from BEA, are
used in estimating capital rental prices. 

Labor Input 

Hours at work data reflect Productivity and Costs data as of the September
3, 2020 “Productivity and Costs” news release (USDL-20-1649). The growth 
rate of labor composition is defined as the difference between the growth 
rate of weighted labor input and the growth rate of the hours.

Intermediate Inputs 

Data on intermediate inputs are obtained from BEA based on BEA annual 
input-output tables. Tornqvist indexes of each of these three input classes
are derived at the NAICS industry level and then aggregated to the 
industries. Materials inputs are adjusted to exclude transactions between
establishments within the same industry.
	
Sectoral Output 


The output concept used to measure total factor productivity for industries
is “sectoral output”. Sectoral output equals gross output (sales, receipts,
and other operating income, plus commodity taxes plus changes in 
inventories), excluding transactions between establishments within the
same industry. This is not the same output measure used for private
business and private nonfarm business is “real value-added output”, 
described below in “Real Value-Added Output” section. 

Industry output measures for 2018 and earlier years are constructed 
primarily using data from the economic censuses and annual surveys of
the U.S. Census Bureau together with data on price changes primarily
from BLS. These measures have been revised due to new and revised data
from the Bureau of Economic Analysis, used in part to construct 
intra-industry transactions. Manufacturing industry output for 2019 is 
estimated based on historical relationships between BLS industrial 
output, BLS price indexes, and data on industrial production from the
Federal Reserve Board. Data from the Quarterly Services Survey from 
the Census Bureau are used to construct preliminary output measures 
for 2019 for some industries.

Real Value-Aded Output Concept Used for Private Business and 
Private Nonfarm Business Sectors

Real value-added output in private business equals gross domestic 
product less general government, government enterprises, private 
households (including the rental value of owner-occupied real estate),
and non-profit institutions. Real value-added output excludes intermediate
transactions between businesses.

Other information 

Comprehensive tables containing more detailed data than that which 
is published in this press release are available upon request at 
202-691-5606 or at www.bls.gov/mfp/mprdload.htm. Industry specific 
contributions to output are available at 
www.bls.gov/mfp/contributions-to-output.htm.

More detailed information on methods, limitations, and data sources
of capital and labor are provided in BLS Bulletin 2178 
(September 1983), Trends in Multifactor Productivity, 1948-81 and
on the BLS Multifactor Productivity website under the title 
“Technical Information About the BLS Multifactor Productivity Measures”
for Major Industrys and 18 NAICS industry Manufacturing Industries at
www.bls.gov/mfp/mprtech.pdf. 

General information is available on the BLS Multifactor Productivity
website at www.bls.gov/mfp/mprover.htm. Additional data not contained
in the release can be obtained in print or at www.bls.gov/mfp. 
A number of comprehensive tables set up as zip files can be obtained
at www.bls.gov/mfp/mprdload.htm. Methods for measuring manufacturing
multifactor productivity are discussed in the July 1995 issue of the
Monthly Labor Review, "Measurement of productivity growth in U.S. 
manufacturing”. See www.bls.gov/mfp/mprgul95.pdf.

 
 Table 1. Total factor productivity and related data, 2019  
 
Industry
2012 NAICS Code
Percent change
TFP
Output
Combined Inputs
Capital Input
Labor Input
Intermediate Inputs[1]
 
Agriculture,forestry,fish,and hunting
11
-0.3
0.5
0.8
0.2
1.3
1.1
Mining
21
4.5
6.5
1.9
0.4
4.9
2.4
Utilities
22
3.0
-1.8
-4.7
2.5
-1.8
-11.3
Construction
23
-1.4
-0.7
0.7
3.3
2.5
-1.4
Manufacturing
31-33
-1.6
-1.1
0.5
1.7
-0.1
0.1
Durable manufacturing
321,327,33
-1.2
-0.6
0.6
1.5
-0.1
0.7
Nondurable manufacturing
31,322-326
-1.7
-1.5
0.2
2.0
-0.1
-0.4
Wholesale trade
42
-2.1
-2.1
0.0
3.2
0.6
-2.1
Retail trade
44,45
1.7
2.3
0.5
2.1
-1.6
1.9
Transportation and warehousing
48-49
0.0
2.1
2.1
3.7
3.8
-0.3
Information
51
1.7
6.2
4.4
7.3
0.2
4.3
Finance and insurance
52
-1.1
1.9
3.0
3.5
0.6
5.9
Real estate and rental and leasing
53
0.4
2.8
2.4
2.1
2.6
2.6
Professional and technical services
54
1.5
3.7
2.2
5.2
2.1
1.2
Management of companies
55
3.9
6.3
2.3
0.4
0.9
4.7
Admin and waste services
56
1.1
3.5
2.4
3.2
0.2
5.2
Educational services
61
-0.5
0.1
0.6
2.5
3.1
-1.5
Health care and social assistance
62
0.7
2.3
1.7
3.0
2.0
1.2
Arts,entertainment, and recreation
71
1.5
2.1
0.5
3.4
-2.5
1.9
Accommodation and food services
72
-0.1
1.5
1.6
1.5
1.7
1.5
Other services, except government
81
1.3
-0.8
-2.2
1.4
-1.0
-3.6
[1] Intermediate inputs is an aggregation of energy, materials and services

 
 Table 2. Total Factor Productivity Intermediate Inputs, 2019  
 
Industry
2012 NAICS Code
Percent change
Energy Input
Materials Input
Services Input
 
Agriculture,forestry,fish,and hunting
11
-7.2
3.0
0.8
Mining
21
-1.2
-3.5
6.5
Utilities
22
-14.8
2.2
-9.2
Construction
23
-6.7
-1.2
-0.9
Manufacturing
31-33
-8.7
0.2
1.0
Durable manufacturing
321,327,33
-12.4
1.3
0.4
Nondurable manufacturing
31,322-326
-6.0
-1.0
2.6
Wholesale trade
42
-10.0
0.0
-2.0
Retail trade
44,45
-8.0
-1.0
3.0
Transportation and warehousing
48-49
-8.0
10.9
0.0
Information
51
-2.9
1.5
5.2
Finance and insurance
52
-2.3
0.7
6.3
Real estate and rental and leasing
53
-1.4
-0.2
3.3
Professional and technical services
54
-7.6
-1.2
1.9
Management of companies
55
-2.3
-2.0
5.7
Admin and waste services
56
1.7
3.1
5.9
Educational services
61
-13.8
5.6
-2.2
Health care and social assistance
62
-5.7
-0.6
2.0
Arts,entertainment, and recreation
71
-3.7
-1.8
3.1
Accommodation and food services
72
-6.4
-0.8
3.1
Other services, except government
81
-13.0
-3.2
-3.5

 
 Table 3. Total factor productivity and related data, 1987-2019  
 
Industry
2012 NAICS Code
Average annual percent change
TFP
Output
Combined Inputs
Capital Input
Labor Input
Intermediate Inputs[1]
 
Agriculture,forestry,fish,and hunting
11
1.2
1.2
0.1
0.3
0.0
-0.1
Mining
21
1.6
2.0
0.4
-0.1
0.3
1.8
Utilities
22
0.7
1.4
0.6
1.7
-0.4
0.1
Construction
23
-0.7
0.5
1.3
3.0
1.4
0.9
Manufacturing
31-33
0.7
1.5
0.7
2.3
-0.4
0.8
Durable manufacturing
321,327,33
1.4
2.0
0.7
2.2
-0.4
0.9
Nondurable manufacturing
31,322-326
-0.1
0.7
0.7
2.4
-0.4
0.5
Wholesale trade
42
1.1
3.6
2.5
3.4
0.7
4.0
Retail trade
44,45
1.1
3.0
1.9
3.7
0.6
2.8
Transportation and warehousing
48-49
0.7
2.8
2.1
1.9
1.7
2.6
Information
51
0.8
5.1
4.3
6.5
0.8
5.1
Finance and insurance
52
0.0
2.9
2.9
5.0
1.5
3.2
Real estate and rental and leasing
53
-0.1
3.1
3.2
3.0
1.4
3.9
Professional and technical services
54
0.4
4.0
3.6
7.2
2.6
4.8
Management of companies
55
0.1
3.0
2.9
2.8
1.4
5.5
Admin and waste services
56
0.3
4.4
4.1
6.7
2.8
5.6
Educational services
61
-0.2
3.9
4.1
4.6
6.5
3.1
Health care and social assistance
62
-0.5
3.4
3.8
4.4
3.4
4.1
Arts,entertainment, and recreation
71
0.3
3.5
3.2
2.9
2.1
4.4
Accommodation and food services
72
0.3
2.3
2.0
2.0
1.8
2.4
Other services, except government
81
-0.2
1.9
2.1
2.5
1.2
3.1
[1] Intermediate inputs is an aggregation of energy, materials and services

 
 Table 4. Total Factor Productivity Intermediate Inputs, 1987-2019  
 
Industry
2012 NAICS Code
Average annual percent change
Energy Input
Materials Input
Services Input
 
Agriculture,forestry,fish,and hunting
11
0.1
0.7
-0.5
Mining
21
0.3
2.3
1.8
Utilities
22
-0.5
-0.5
2.6
Construction
23
2.2
1.4
-0.6
Manufacturing
31-33
-2.2
1.3
0.4
Durable manufacturing
321,327,33
-3.7
1.5
0.2
Nondurable manufacturing
31,322-326
-1.1
0.6
0.7
Wholesale trade
42
1.4
3.0
4.2
Retail trade
44,45
0.3
2.7
3.0
Transportation and warehousing
48-49
0.4
3.7
3.3
Information
51
1.8
4.1
6.1
Finance and insurance
52
3.4
0.6
3.3
Real estate and rental and leasing
53
9.5
0.5
4.1
Professional and technical services
54
1.2
5.1
4.8
Management of companies
55
3.5
10.2
5.2
Admin and waste services
56
0.5
4.4
6.3
Educational services
61
1.8
3.3
3.1
Health care and social assistance
62
0.5
2.0
5.4
Arts,entertainment, and recreation
71
2.5
5.3
4.4
Accommodation and food services
72
1.8
-0.2
4.7
Other services, except government
81
-1.0
2.4
3.8

 
 Table 5. Sources of labor productivity, 2019  
 
Industry
2012 NAICS Code
Percent Change
Percentage Point
Labor Productivity
TFP
Capital Intensity
Labor Composition
Energy Intensity
Materials Intensity
Services Intensity
 
Agriculture,forestry,fish,and hunting
11
-0.4
-0.3
-0.3
0.1
-0.3
0.4
0.0
Mining
21
4.7
4.5
-0.6
0.5
-0.1
-0.7
1.0
Utilities
22
-0.1
3.0
1.6
0.0
-3.3
0.2
-1.4
Construction
23
-3.1
-1.4
0.1
0.0
-0.2
-1.3
-0.3
Manufacturing
31-33
-0.9
-1.6
0.5
0.0
-0.1
0.1
0.2
Durable manufacturing
321,327,33
-0.6
-1.2
0.4
0.0
-0.1
0.4
0.1
Nondurable manufacturing
31,322-326
-1.0
-1.7
0.6
0.1
-0.1
-0.2
0.4
Wholesale trade
42
-2.4
-2.1
0.7
0.1
-0.1
0.0
-1.0
Retail trade
44,45
3.9
1.7
0.5
0.0
-0.1
0.0
1.7
Transportation and warehousing
48-49
-2.2
0.0
-0.1
-0.3
-1.0
0.3
-1.2
Information
51
6.3
1.7
2.9
0.1
0.0
0.1
1.4
Finance and insurance
52
1.5
-1.1
0.9
0.1
0.0
0.0
1.6
Real estate and rental and leasing
53
0.8
0.4
0.0
0.0
-0.2
-0.1
0.5
Professional and technical services
54
1.4
1.5
0.3
-0.1
0.0
-0.2
-0.1
Management of companies
55
6.2
3.9
0.0
0.5
0.0
-0.1
1.9
Admin and waste services
56
3.9
1.1
0.3
0.3
0.0
0.3
1.8
Educational services
61
-3.1
-0.5
-0.1
-0.1
-0.4
0.2
-2.2
Health care and social assistance
62
0.8
0.7
0.1
0.2
-0.1
-0.3
0.1
Arts,entertainment, and recreation
71
4.2
1.5
1.1
-0.2
0.0
0.0
1.7
Accommodation and food services
72
0.2
-0.1
0.0
0.2
-0.2
-0.2
0.5
Other services, except government
81
0.1
1.3
0.1
0.0
-0.1
-0.3
-0.8

 
 Table 6. Industry Contributions[1] to Private Business Output by component  
 
Industry
2012 NAICS Code
Percentage Point, 1990-2000
TFP
Captial
Labor
 
Goods producing industries[2]
11-33
-0.016
0.265
0.164
Agriculture, Forestry, Fishery, and hunting
11
0.055
-0.006
0.004
Mining
21
0.010
-0.004
-0.017
Utilities
22
-0.024
0.021
-0.009
Construction
23
-0.059
0.040
0.121
Manufacturing
MN
0.574
0.289
0.074
Durable Manufacturing[2]
DM
0.519
0.163
0.067
Nondurable Manufacturing
NM
0.055
0.126
0.007
ICT
51*
0.489
0.240
0.174
Information[3]
51
-0.074
0.201
0.102
FIRE
52-53
-0.030
0.444
0.167
Finance and insurance
52
0.089
0.229
0.152
Real estate and rental and leasing
53
-0.119
0.214
0.015
Services
42-49,54-81
0.458
0.437
0.835
Wholesale trade
42
0.257
0.090
0.062
Retail trade
44, 45
0.248
0.071
0.081
Transportation and Warehousing
48-49
0.078
0.024
0.076
Professional and technical services[4]
54
-0.067
0.076
0.253
Management of companies
55
-0.018
0.007
0.028
Admin and waste services
56
-0.022
0.038
0.137
Educational services
61
0.010
0.002
0.011
Health care and social assistance
62
-0.109
0.047
0.155
Arts, entertainment, and recreation
71
-0.003
0.015
0.017
Accommodation and food services
72
0.029
0.023
0.050
Other services, except government
81
0.044
0.007
0.028
[1] Contributions may not sum due to aggregation, rounding, and integration of the top line to industry
[2] Goods producing except for Computer and electronic products (NAICS 334)
[3] Information and communication technology sector (NAICS 51), less publishing industries (NAICS 5111), plus computer and electronic products (NAICS 334) and Computer systems design and related services (NAICS 5415)
[4] Service providing sector, except for Computer systems design and related services (NAICS 5415)

 
 Table 7. Industry Contributions[1] to Private Business Output by component  
 
Industry
2012 NAICS Code
Percentage Point, 2000-2007
TFP
Captial
Labor
 
Goods producing industries[2]
11-33
0.285
0.170
-0.128
Agriculture, Forestry, Fishery, and hunting
11
0.018
0.010
-0.008
Mining
21
0.054
-0.004
0.017
Utilities
22
0.071
0.020
-0.007
Construction
23
-0.174
0.052
0.075
Manufacturing
MN
0.560
0.111
-0.269
Durable Manufacturing[2]
DM
0.465
0.039
-0.186
Nondurable Manufacturing
NM
0.095
0.072
-0.083
ICT
51*
0.542
0.153
-0.085
Information[3]
51
0.294
0.191
-0.065
FIRE
52-53
0.013
0.317
0.095
Finance and insurance
52
-0.007
0.179
0.073
Real estate and rental and leasing
53
0.020
0.137
0.022
Services
42-49,54-81
0.281
0.458
0.346
Wholesale trade
42
0.113
0.071
0.010
Retail trade
44, 45
0.078
0.086
-0.008
Transportation and Warehousing
48-49
0.068
0.017
0.004
Professional and technical services[4]
54
0.022
0.108
0.122
Management of companies
55
-0.018
0.006
0.003
Admin and waste services
56
0.090
0.039
0.028
Educational services
61
-0.017
0.008
0.038
Health care and social assistance
62
-0.003
0.038
0.151
Arts, entertainment, and recreation
71
-0.005
0.011
0.004
Accommodation and food services
72
0.016
0.010
0.032
Other services, except government
81
-0.058
0.008
0.007
[1] Contributions may not sum due to aggregation, rounding, and integration of the top line to industry
[2] Goods producing except for Computer and electronic products (NAICS 334)
[3] Information and communication technology sector (NAICS 51), less publishing industries (NAICS 5111), plus computer and electronic products (NAICS 334) and Computer systems design and related services (NAICS 5415)
[4] Service providing sector, except for Computer systems design and related services (NAICS 5415)

 
 Table 8. Industry Contributions[1] to Private Business Output by component  
 
Industry
2012 NAICS Code
Percentage Point, 2007-2019
TFP
Captial
Labor
 
Goods producing industries[2]
11-33
-0.092
0.183
-0.011
Agriculture, Forestry, Fishery, and hunting
11
0.033
0.003
0.003
Mining
21
0.091
0.020
0.009
Utilities
22
0.034
0.031
0.002
Construction
23
-0.064
0.004
-0.006
Manufacturing
MN
-0.128
0.138
-0.030
Durable Manufacturing[2]
DM
0.006
0.048
-0.029
Nondurable Manufacturing
NM
-0.134
0.089
-0.001
ICT
51*
0.187
0.227
0.045
Information[3]
51
0.103
0.245
-0.008
FIRE
52-53
0.062
0.143
0.061
Finance and insurance
52
-0.047
0.083
0.047
Real estate and rental and leasing
53
0.109
0.060
0.014
Services
42-49,54-81
0.168
0.277
0.391
Wholesale trade
42
-0.038
0.054
0.005
Retail trade
44, 45
0.035
0.030
0.002
Transportation and Warehousing
48-49
-0.002
0.023
0.048
Professional and technical services[4]
54
0.112
0.044
0.138
Management of companies
55
0.046
0.004
0.047
Admin and waste services
56
0.021
0.022
0.034
Educational services
61
-0.004
0.008
0.010
Health care and social assistance
62
0.028
0.038
0.118
Arts, entertainment, and recreation
71
0.010
0.008
0.004
Accommodation and food services
72
0.003
0.010
0.041
Other services, except government
81
-0.019
0.003
0.007
[1] Contributions may not sum due to aggregation, rounding, and integration of the top line to industry
[2] Goods producing except for Computer and electronic products (NAICS 334)
[3] Information and communication technology sector (NAICS 51), less publishing industries (NAICS 5111), plus computer and electronic products (NAICS 334) and Computer systems design and related services (NAICS 5415)
[4] Service providing sector, except for Computer systems design and related services (NAICS 5415)