April 4, 2012 (The Editor’s Desk is updated each business day.)
Private business multifactor productivity up in 2010
Private nonfarm business sector multifactor productivity increased at a 3.5 percent annual rate in 2010. This was the largest increase recorded in the series, which began in 1987. The multifactor productivity gain in 2010 reflected a 4.0 percent increase in output and 0.5 percent increase in the combined inputs of capital and labor.
In 2010, capital services grew by 0.4 percent, and labor input—which is the combined effect of hours worked and labor composition—grew 0.5 percent. The combination of fast-rising output and a modest increase in capital services caused output per unit of capital services to rise 3.6 percent, the largest gain since the series began in 1987.
Multifactor productivity in private nonfarm business grew 0.9 percent annually from 1987 to 2010. For the 2007–2010 period, multifactor productivity grew 0.3 percent, due to a 0.9 percent decline in output coupled with a 1.2 percent decline in combined inputs. In contrast, the 3.5 percent increase in multifactor productivity in 2010 was a result of an increase in output much larger than the increase in combined inputs. The 4.0 percent rise in output over the year represents the largest increase since 2004.
Multifactor productivity measures the change in output per unit of combined capital and labor input. It is designed to measure the joint influences of technological change, efficiency improvements, returns to scale, reallocation of resources, and other factors on economic growth, 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 — 2010," news release USDL-12-0494 (HTML) (PDF). A change in multifactor productivity reflects the change in output that cannot be accounted for by the change in combined inputs of labor and capital.
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