July 12, 2001 (The Editor’s Desk is updated each business day.)

Mixed multifactor productivity progress in biggest manufacturing industries

The multifactor productivity performance was mixed between 1987 and 1996 in the 10 largest manufacturing industries for which the Bureau of Labor Statistics publishes data. 

[Chart data—TXT]

Multifactor productivity—measured as output per unit of combined labor, capital, and intermediate purchases inputs—increased in five of these industries in the 1987-96 period. The industries with the highest rates of multifactor productivity were electronic components and accessories and computer and office equipment.

In two of the 10 largest manufacturing industries, there was no change in multifactor productivity over the period, while three industries recorded declines.

In each of the 10 industries, labor productivity growth exceeded multifactor productivity growth between 1987 and 1996. This indicates that, in each industry, the ratio of capital to labor rose and/or the ratio of intermediate purchases to labor rose during this period. (Intermediate inputs include materials, fuels, electricity, and services.)

These data are a product of the BLS Industry Productivity program. Multifactor productivity reflects influences such as changes in technology, economies of scale, changes in capacity utilization, improvements in labor and management skill, and changes in organizational efficiency. Additional information is available in "Multifactor productivity trends in manufacturing industries, 1987-96," by Ziaul Z. Ahmed and Patricia S. Wilder, Monthly Labor Review, June 2001.