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Economic News Release
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Multifactor Productivity Trends In Manufacturing, 2008

For release 10:00 a.m. (EST) Thursday, November 18, 2010	USDL-10-1603
Technical information:	(202) 691-5606  •  mfpweb@bls.gov  •  www.bls.gov/mfp
Media contact:	        (202) 691-5902  •  PressOffice@bls.gov


MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2008


Manufacturing sector multifactor productivity decreased at a 0.7 percent annual
rate in 2008, the U.S. Bureau of Labor Statistics reported today. 
(See chart 1.)  This was the largest annual decline in multifactor productivity
since 2001. (See table 1.)  Multifactor productivity measures the change in 
output per unit of combined inputs.  Multifactor productivity is designed to 
measure the joint influences on economic growth of technological change, 
efficiency improvements, returns to scale, reallocation of resources, and other
factors, allowing for the effects of capital, labor and, in the case of the
manufacturing sector, intermediate inputs (energy, materials, purchased 
business services).  Multifactor productivity, therefore, differs from labor 
productivity (output per hour worked) measures that are published quarterly 
by BLS since it includes information on capital services and other data that 
are not available on a quarterly basis. Durable manufacturing sector multifactor productivity grew 0.3 percent in 2008,
after increasing 4.9 percent in 2007.  Nondurable manufacturing sector 
multifactor productivity fell 1.6 percent in 2008, following a 4.6 percent 
increase in 2007. //PROD5 ZUNI3PO Test 10302020//

Historical trends in manufacturing

Multifactor productivity in manufacturing grew 1.6 percent annually between 
1987 (the starting point of the series) and 2008.  Sectoral output increased 
at a 2.2 percent annual rate over the period and combined inputs rose an 
average of 0.6 percent per year.  Output per hour (labor productivity) grew 
3.5 percent.  For the 2000-2007 period, multifactor productivity in 
manufacturing rose more rapidly than in previous periods, averaging 2.6 percent
per year, outpacing the 2.1 percent growth rate in the 1995-2000 period. 
(See table A.) 

Of the 3.5 percent growth rate in labor productivity in the 1987-2008 period, 
1.6 percent can be attributed to increases in multifactor productivity, 0.6 
percent to the contribution of capital intensity, 0.1 percent to energy 
intensity, 0.8 percent to materials intensity, and 0.4 percent to purchased 
business services intensity.  Multifactor productivity, the contribution of 
intermediate inputs, and the contribution of capital intensity may not sum to
output per hour due to independent rounding. (See table B.)

Fewer industries recorded multifactor productivity, output, and combined input 
increases in 2008 than in any other year since 2001.  Of the 18 industries that
comprise the manufacturing sector, fewer industries each year experienced 
growth in output and combined inputs from 2005 to 2008. (See chart 2.)
 
Revised measures

Previous and revised productivity measures and related data for 2006 and 2007
for the manufacturing, durable goods manufacturing, and nondurable goods 
manufacturing sectors are displayed in table C.  In 2007, multifactor 
productivity growth was revised upward to 5.1 percent from 4.7 percent in the 
manufacturing sector.  Multifactor productivity was also revised upward to 4.6
percent from 3.0 percent in the nondurable manufacturing sector but revised 
downward to 4.9 percent from 6.0 percent in the durable manufacturing sector.  
The revisions in both years were due to comprehensive revisions in source data 
in the revised National Income and Products (NIPA) data released by the 
Bureau of Economic Analysis (BEA) on July 31, 2009.

 
Table A.  Compound annual growth rates for productivity, sectoral output, and 
inputs in the manufacturing sector for selected periods, 1987 to 2008

In percent						
 	            1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
						
Productivity						
   Multifactor 
   productivity1	1.6	 0.2	   1.2	     2.1       2.6	-0.7
   Output per hour  
   of all persons	3.5	 1.8	   3.4	     4.8       3.9	-0.3
   Output per unit 
   of capital services	0.0	-0.1	   0.6	     0.7      -0.1	-5.4
   						
Sectoral Output	        2.2	 2.1	   3.3	     4.7       0.7	-4.4

Inputs
						
   Combined inputs2	0.6	 1.9	   2.1	     2.5      -1.8	-3.7
      Hours3	       -1.2	 0.4	  -0.1	    -0.1      -3.1	-4.0
      Capital services  2.2	 2.3	   2.7	     4.0       0.8	 1.1
      Energy	        0.5	 1.8	   1.6	     5.8      -3.8	-2.6
      Non-energy 
      materials         1.4	 1.7	   3.6	     5.5      -2.2	-5.3
      Purchased business  
      services	        1.1	 5.2	   3.2	     0.6      -0.9	-5.4
						
1Output per unit of combined hours, capital services, energy, materials, 
and purchased business services inputs.
2The growth rate of each input is weighted by its share of current dollar 
costs.
3Hours at work of all persons. 

Table B.  Compound annual growth rates in output per hour of all persons and
contributions of capital intensity, intermediate inputs intensity, and 
multifactor productivity in the manufacturing sector for selected periods, 
1987-2008

In percent						
	            1987-2008 1987-1990 1990-1995 1995-2000 2000-2007 2007-2008
Manufacturing						
						
Output per hour 
of all persons	          3.5	   1.8	    3.4       4.8	3.9	-0.3
						
Contribution of 
capital intensity1	  0.6	   0.3	    0.4       0.7	0.7	 1.0
						
      Contribution of 
      information 
      processing
      equipment 
      and software2	  0.2	   0.2	    0.2       0.4	0.2	 0.3
						
      Contribution
      of all
      other capital
      services            0.3	   0.1	    0.2       0.3	0.5	 0.8

Contribution of 
intermediate inputs3	  1.2	   1.3	    1.7       1.9	0.6	-0.6

      Contribution 
      of energy      
      intensity4	  0.1	   0.0	    0.0       0.2	0.0	 0.1
						
      Contribution 
      of materials    
      intensity5	  0.8	   0.4	    1.1       1.6	0.2	-0.4
						
      Contribution 
      of purchased   
      business 
      services 
      intensity6	  0.4	   0.8	    0.6       0.1	0.4	-0.2
						
Multifactor 
productivity7	          1.6	   0.2	    1.2       2.1	2.6	-0.7
						
1Growth rate in capital services per hour multiplied by capital's share of 
current dollar costs.
2Growth rate of information processing equipment and software per hour 
multiplied by its share of total current dollar costs.
3Growth rate in intermediate inputs per hour multiplied by intermediate inputs 
share of current dollar costs.
4Growth rate in energy services per hour multiplied by energy’s share of 
current dollar costs.
5Growth rate in materials services per hour multiplied by materials’ share of
current dollar costs.
6Growth rate in business services per hour multiplied by business services’
share of current dollar costs.
7 Output per unit of combined hours, capital services, energy, materials, and 
business services inputs.

Table C.  Previous and revised productivity and related measures for the 
2006-2007 and 2005-2006 periods
                                                  Inputs
                                                                       Purc-
                       Multi-   Sect- Com-         Cap-	 	       hased 
                       factor   oral  bined        ital                busi- 
                       Product- out-  In-          Serv-        Mater- ness
Sector                 ivity1   put   puts2 Hours3 ices  Energy ials   services
Annual percent change, 
2006-2007
Manufacturing								
Previous	          4.7	 1.6   -3.0   -1.7   0.5   -2.7	  -8.1	 -0.3
Revised	                  5.1	 2.4   -2.5   -1.7   1.2    6.0	  -7.2	 -0.8
Durable manufacturing							
Previous	          6.0	 2.1   -3.7   -2.1   0.6   -3.8	 -11.1	  0.2
Revised	                  4.9	 3.5   -1.3   -2.1   0.8    8.6	  -4.8	  2.2
Nondurable manufacturing						
Previous	          3.0	 1.1   -1.8   -1.1   0.4   -2.0	  -3.5	 -0.9
Revised	                  4.6	 1.3   -3.2   -1.0   1.4    4.3	  -6.4	 -4.7
								
Annual percent change, 
2005-2006
Manufacturing								
Previous                  2.5	 1.6   -0.9    0.7   0.5   -6.7	  -2.5	 -1.2
Revised	                  2.3	 1.5   -0.7    0.7   0.9   -7.8	  -1.7	 -1.6
Durable manufacturing		 				
Previous                  4.2	 3.1   -1.0    1.1   0.4   -7.5	  -4.0	 -0.9
Revised	                  3.2	 3.1   -0.1    1.1   1.0   -5.0	  -1.4	 -0.4
Nondurable manufacturing						
Previous   	          0.6	-0.1   -0.6    0.1   0.6   -6.3	  -0.5	 -1.5
Revised	                  1.1	-0.1   -1.2    0.0   0.8   -9.6	  -1.2	 -3.1
								
1Output per unit of combined hours, capital services, energy, materials, and 
purchased business services inputs.
2The growth rate of each input is weighted by its share of current dollar 
costs.
3Hours at work of all persons.

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Last Modified Date: October 30, 2020