Economic News Release

Internet: http://www.bls.gov/mfp/home.htm	 	USDL 08-1213
Technical information: (202) 691-5618			For release: 10:00 a.m. EDT
Media contact: (202) 691-5902 				Friday, August 29, 2008


                           MULTIFACTOR PRODUCTIVITY TRENDS 
                            FOR DETAILED INDUSTRIES, 2006

      Multifactor productivity -- defined as output per unit of combined inputs -- 
increased in almost three out of five four-digit NAICS manufacturing industries in 2006.  
More manufacturing industries experienced an increase in multifactor productivity over a 
longer period.  From 1987 to 2006, multifactor productivity increased in almost two-
thirds of manufacturing industries.
      
      This news release now covers two transportation industries, air transportation 
(NAICS 481) and line-haul railroads (NAICS 482111), that were previously published in 
separate reports.  Multifactor productivity increased for both of these transportation 
industries in 2006 and over the longer term.
      
	Multifactor productivity indexes relate the change in output to the change in the 
combined inputs of labor, capital, and intermediate purchases consumed in producing that 
output.  Multifactor productivity measures 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.
	 
2005-06, Manufacturing Industries

      Multifactor productivity rose in 50 of the 86 manufacturing industries in 2006, as 
output rose in 48 industries and combined inputs declined in 35 industries.  Changes in 
multifactor productivity were broadly distributed and varied greatly across industries, 
even within 3-digit industry groups. (See Table 1.)

      The largest increase in multifactor productivity, 23.9 percent, occurred in 
computer and peripheral equipment (NAICS 3341), followed by an increase of 13.5 
percent in communications equipment (NAICS 3342).  Output rose rapidly in those 
industries, greatly exceeding the growth in combined inputs.  Multifactor productivity 
declined 16.0 percent in other nonferrous metal production (NAICS 3314), where 
combined inputs rose although output decreased.  The largest industries had more 
moderate movements in multifactor productivity.  Changes for the twenty largest 
manufacturing industries varied from -4.5 percent to 4.6 percent.
 
      The number of manufacturing industries with annual multifactor productivity 
growth increased slightly in 2006 after dropping from 2004 to 2005. For 
most industries, input growth in 2006 was led by increases in intermediate purchases.  
Purchases of intermediates increased in 54 industries, while capital services increased in 
36 industries and labor hours rose in 37 industries.

2005-06, Transportation Industries

	Multifactor productivity rose 3.6 percent in air transportation (NAICS 481) in 
2006, as output rose and combined inputs fell.  Multifactor productivity rose 2.6 percent 
in line-haul railroads (NAICS 482111), as output and combined inputs both increased.

Historical Trends, Manufacturing Industries

      From 1987 to 2006, multifactor productivity rose in 56 manufacturing industries. 
(See Table 2.)   Output and combined inputs both rose in 67 industries. (The industries 
with increasing output were not always the same as those with increasing inputs.)  
Although more industries registered multifactor productivity growth from 1987 to 2006 
than from 2005 to 2006, the average annual change in multifactor productivity was more 
modest for most industries over the longer term.  On average, multifactor productivity 
grew between 0.1 percent and 3.0 percent per year in 53 industries, and exceeded 3 
percent per year in only three industries.

      The five manufacturing industries with the fastest growth in multifactor 
productivity over the longer period were all in the computer and electronic products 
subsector (NAICS 334).  The multifactor productivity growth rates of 17.2 percent per 
year in computer and peripheral equipment (NAICS 3341) and 14.2 percent in 
semiconductors and electronic components (NAICS 3344) were much faster than those of 
any other manufacturing industry.

      Multifactor productivity declined in 28 industries from 1987 to 2006.  However, 
the average decline over the period was less than 1 percent per year for all but eight 
industries. The largest decline in multifactor productivity over the longer period was 1.9 
percent per year in accessories and other apparel (NAICS 3159).

	Table 3 shows average annual multifactor productivity growth by industry 
between 1987 and 2006 and for various subperiods.  From 2000 to 2006, multifactor 
productivity grew in 63 manufacturing industries, more than in any of the other periods 
shown.  By comparison, 35 manufacturing industries had multifactor productivity growth from
1995 to 2000.  However, multifactor productivity growth from 2000 to 2006 was slower in the
two industries that led manufacturing productivity growth from 1995 to 2000: computer and
peripheral equipment (NAICS 3341) and semiconductors and electronic components (NAICS 3344).

Historical Trends, Transportation Industries

      From 1987 to 2006, multifactor productivity increased 2.6 percent per year in 
line-haul railroads, as output rose 2.6 percent and combined inputs remained unchanged.  
Multifactor productivity rose more slowly in air transportation, 1.2 percent per year, as 
output gains averaging 3.4 percent per year were offset by a 2.3 percent average annual 
increase in combined inputs.
      
Revised Measures

	Revisions to industry multifactor productivity measures in this release mainly 
reflect revisions to trends in intermediate inputs, including materials and purchased 
services.  Those revisions mostly result from the incorporation of data from the 2002 
Benchmark Input-Output (IO) Tables (April, 2008) published by the Bureau of Economic 
Analysis (BEA), U.S. Department of Commerce.  For some industries, the 2002 IO data 
caused large revisions to nominal values of purchased services after 1997.  Revisions also 
reflect the adoption of chain-weighted price indexes for deflating cost of materials, 
purchased services, and materials and supplies inventories, and changes to commodity 
weights for those price indexes based on the 2002 IO data.  For most industries, the new 
data reflect more rapid growth in industry purchases of intermediates, especially services, 
and a resulting slower growth in multifactor productivity.

	The measures for manufacturing industries in this news release incorporate data 
from the 2006 Annual Survey of Manufactures of the Bureau of the Census, U.S. 
Department of Commerce.  The output and labor input measures included in this release 
are the same as those used in the labor productivity measures, most recently updated on 
August 21, 2008.


Additional Information

	Tables containing multifactor productivity and related indexes for the industries 
included in this release are accessible on the Multifactor Productivity website at 
http://www.bls.gov/mfp/home.htm.   More detailed data and information are available 
upon request by sending an email to dipsweb@bls.gov or by calling the Division of 
Industry Productivity Studies (202-691-5618).  Information in this report will be made 
available to sensory-impaired individuals upon request.  Voice phone: 202-691-5618; 
TDD message referral phone number: 1-800-877-8339.