Multifactor Productivity Trends In Manufacturing, 2010

For release 10:00 a.m.  (EDT) Tuesday, June 26, 2012	USDL-12-1288
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2010


Manufacturing sector multifactor productivity increased at an annual rate of
7.5 percent in 2010, the U.S. Bureau of Labor Statistics reported today. 
This was the largest increase recorded in the series, which began in 1987. 
(See chart 1, table A.) The multifactor productivity gain in 2010 reflected 
a 6.4 percent increase in output and a 1.1 percent decrease in combined 
inputs. 

Multifactor productivity measures the change in output per unit of combined 
inputs. Multifactor productivity in manufacturing 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 intermediate inputs 
(energy, materials, purchased business services). Multifactor productivity 
measures differ from labor productivity (output per hour worked) measures 
that are published quarterly by BLS because multifactor productivity measures
include information on capital services and intermediate inputs. Also, data 
needed to construct multifactor productivity are not available on a quarterly
basis.

Durable manufacturing sector multifactor productivity increased 12.7 percent 
in 2010, following a decline of 4.7 percent in 2009. This was the largest
increase recorded in the series, which began in 1987.  Nondurable
manufacturing sector multifactor productivity increased 2.7 percent in
2010, following a 0.9 percent decrease in 2009.  The gain in 2010 was 
the largest increase since 2003. (See table C, table 3.)

Historical trends in manufacturing

Multifactor productivity in manufacturing grew 1.5 percent annually from 
1987 to 2010 as sectoral output increased at a faster rate, 1.7 percent, 
than combined inputs, 0.2 percent. During the same period, output per hour
(labor productivity) increased 3.4 percent. (See table A.) Of the 3.4 
percent growth rate in labor productivity, multifactor productivity added 
1.5 percent, capital intensity contributed 0.6 percent, materials intensity
added 0.8 percent, and purchased business services intensity added a 0.5 
percent increase. The contribution of energy intensity was unchanged. 
(See table B.)

For the 2007-2010 period, multifactor productivity rose at an annual rate of
1.3 percent compared to a 2.0 percent annual growth rate in the 2000-2007 
period. The multifactor productivity average annual growth rate in 2007-2010
would have been significantly lower had it not been buoyed by the sharp 
increase of 7.5 percent in 2010.

In 2010, the number of manufacturing industries that exhibited increasing 
multifactor productivity, output, and combined inputs grew from the previous
year.  Fourteen out of eighteen manufacturing industries exhibited increases
in multifactor productivity, fifteen showed increasing output, and seven 
showed increasing combined inputs. (See chart 2.)  Only four manufacturing 
industries exhibited a decrease in multifactor productivity in 2010: textile
mills and textile product mills, paper products, primary metals, and 
electrical equipment, appliances, and components. (See table 3.)
 
Revised measures

Previous and revised productivity measures and related data for 2008 and 2009
for the manufacturing, durable manufacturing, and nondurable manufacturing 
sectors are displayed in table C.  In 2009, multifactor productivity in 
manufacturing was revised to a decline of 2.8 percent compared to a decline 
of 5.7 percent as previously reported.  In the nondurable manufacturing 
sector, multifactor productivity fell 0.9 percent compared to the previously
reported decline of 3.1 percent.  Multifactor productivity in the durable 
manufacturing sector was revised to a decline of 4.7 percent instead of a 
decline of 8.0 percent.  The upward revision of multifactor productivity in 
all three sectors was largely the result of a downward revision in the growth
of combined inputs in all three sectors.  The revisions in both years were due
to the annual revision of the National Income and Product Accounts (NIPA) 
released on December 13, 2011.

Table A.  Compound annual growth rates for productivity, sectoral output, and 
inputs in the manufacturing sector for selected periods, 1987-2010

In percent						
 	                1987- 1987- 1990- 1995- 2000- 2007- 2009-
			2010  1990  1995  2000  2007  2010  2010
Productivity						
   Multifactor 
   productivity1	 1.5   0.3   1.2   1.8   2.0   1.3   7.5
   Output per hour  
   of all persons	 3.4   1.8   3.4   4.8   3.9   1.9   6.5
   Output per unit 
   of capital services	-0.2  -0.1   0.7   0.8   0.3  -4.7   6.7
   						
Sectoral Output	         1.7   2.1   3.3   4.6   0.7  -4.0   6.4

Inputs
						
   Combined inputs2	 0.2   1.9   2.1   2.8  -1.3  -5.3  -1.1
      Labor hours3      -1.7   0.4  -0.1  -0.1  -3.1  -5.8  -0.1
      Capital services   1.9   2.3   2.6   3.8   0.4   0.7  -0.3
      Energy	        -0.4   1.9   1.7   5.9  -3.9  -7.7   2.9
      Materials          0.9   1.6   3.7   5.9  -1.1  -7.4  -3.7
      Purchased business  
      services	         0.9   5.3   3.2   1.3   0.2  -6.2   0.4
						
1Output per combined units of hours, capital services, energy, materials, 
and purchased business services.
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, 
1987-2010

In percent						
	                    1987- 1987- 1990- 1995- 2000- 2007- 2009-
			    2010  1990  1995  2000  2007  2010  2010
Manufacturing						
						
Output per hour 
of all persons	             3.4   1.8   3.4   4.8   3.9   1.9   6.5
						
Contribution of 
capital intensity1	     0.6   0.3   0.4   0.7   0.6   1.3  -0.1
						
      Contribution of 
      information 
      processing
      equipment 
      and software2	     0.2   0.2   0.2   0.3   0.1   0.3   0.0
						
      Contribution
      of all
      other capital
      services               0.4   0.2   0.2   0.3   0.5   1.0  -0.1

Contribution of 
intermediate inputs3	     1.3   1.2   1.8   2.2   1.2  -0.7  -0.9

      Contribution 
      of energy      
      intensity4	     0.0   0.0   0.0   0.2   0.0  -0.1   0.1
						
      Contribution 
      of materials    
      intensity5	     0.8   0.4   1.1   1.8   0.6  -0.5  -1.1
						
      Contribution 
      of purchased   
      business 
      services 
      intensity6	     0.5   0.8   0.6   0.3   0.6  -0.1   0.1
						
Multifactor 
productivity7	             1.5   0.3   1.2   1.8   2.0   1.3   7.5
						
1Capital services per hour multiplied by capital's share of current dollar
costs.
2Information processing equipment and software per hour multiplied by its  
share of total current dollar costs.
3Intermediate inputs per hour multiplied by intermediate inputs share of
current dollar costs.
4Energy per hour multiplied by energy’s share of current dollar costs.
5Materials per hour multiplied by materials’ share of current dollar costs.
6Purchased business services per hour multiplied by purchased business’
services' share of current dollar costs.
7Output per combined units of hours, capital services, energy, materials,  
and purchased business services.

Table C.  Previous and revised productivity and related measures for the 
2008-2009 and 2007-2008 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, 
2008-2009
Manufacturing								
Previous	         -5.7 -12.5   -7.2  -12.6   1.2  -11.4	 -8.0	-5.3
Revised	                 -2.8 -12.9  -10.4  -13.0   0.1	 -24.1	-13.1   -9.1
Durable manufacturing							
Previous	         -8.0 -19.3  -12.3  -15.1   1.5	 -22.3	-17.3	-9.8
Revised	                 -4.7 -20.3  -16.3  -15.4  -0.1	 -28.0	-26.8  -13.4
Nondurable manufacturing						
Previous	         -3.1  -6.6   -3.6   -8.3   1.1	  -4.4	 -4.8    0.4
Revised	                 -0.9  -6.4   -5.6   -8.6   0.2	 -21.4	 -6.6	-2.4
								
Annual percent change, 
2007-2008
Manufacturing								
Previous                 -0.1  -4.4   -4.3   -4.0   2.8	   3.9	 -5.0  -11.9
Revised	                 -0.4  -4.5   -4.1   -4.0   2.4	   0.7	 -5.1	-9.6
Durable manufacturing		 				
Previous                  2.2  -5.7   -7.7   -4.2   1.7	   0.4	-12.6  -14.3
Revised	                  0.6  -5.8   -6.3   -4.2   1.3	  -1.8	-11.1	-9.0
Nondurable manufacturing						
Previous   	         -2.2  -3.5   -1.3   -3.7   3.6	   6.3	 -0.9	-8.7
Revised	                 -1.3  -3.6   -2.3   -3.6   3.2	   2.4	 -2.1  -10.6
								
1Output per combined units of hours, capital services, energy, materials, and 
purchased business services.
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: June 26, 2012