March 26, 2007 (The Editor’s Desk is updated each business day.)

Multifactor productivity in nonfarm business, 2005

In the private nonfarm business sector, multifactor productivity—output per combined units of labor and capital inputs—rose 1.8 percent in 2005. This was lower than the 2.6-percent increase in 2004.

[Chart data—TXT]

Output increased 3.9 percent in 2005, and the combined inputs of capital and labor increased 2.0 percent.

Labor input grew 1.8 percent in 2005. Capital services grew 2.4 percent. Within capital services, equipment was the fastest growing component. The increase in equipment in 2005 was largely due to capital services of information processing equipment and software rising by 6.7 percent.

Multifactor productivity is designed to measure the joint influences of economic growth on technological change, efficiency improvements, returns to scale, reallocation of resources, and other factors, allowing for the effects of capital and labor.

These data are from the Multifactor Productivity program. Productivity data are subject to revision. To learn more, see "Multifactor Productivity Trends, 2005" (PDF) (TXT), news release USDL 07-0422.