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.