Economic News Release

Multifactor Productivity Trends for Detailed Industries News Release


For release 10:00 a.m. (EDT) Wednesday, September 26, 2012	                                USDL-12-1938

Technical Information:	(202) 691-5618  •  dipsweb@bls.gov  •  www.bls.gov/mfp 
Media Contact:	        (202) 691-5902  •  PressOffice@bls.gov


MULTIFACTOR PRODUCTIVITY TRENDS FOR DETAILED INDUSTRIES, 2010

Multifactor productivity - defined as output per unit of combined inputs - increased in 73 of the 86 
four-digit NAICS manufacturing industries in 2010, the U.S. Bureau of Labor Statistics reported today. 
(See table 1.) This was up from 2009, when multifactor productivity increased in only 17 of those 
industries. More industries recorded multifactor productivity gains in 2010 than in any year since 2004.

Seventeen manufacturing industries recorded double-digit percent increases in multifactor productivity. 
Industries where multifactor productivity rose the most in 2010 were semiconductors and electronic 
components; motor vehicles; leather and hide tanning and finishing; forging and stamping; and cutlery 
and hand tools.

Multifactor productivity rose in both of the transportation industries studied in 2010.  Multifactor 
productivity increased 3.8 percent in air transportation and 7.3 percent in line-haul railroads. 

Multifactor productivity indexes relate the change in real output to the change in the combined inputs of 
labor, capital, and intermediate purchases consumed in producing that output. Multifactor productivity 
growth measures the extent to which output growth has exceeded the growth in inputs, and reflects the 
joint influences on economic growth of a variety of factors, including technological change, returns to 
scale, enhancements in managerial and staff skills, changes in the organization of production, and other 
efficiency improvements.

Output increased in 65 manufacturing industries in 2010, compared to only 7 in 2009.  Double-digit 
percent increases in output occurred in 27 industries, and multifactor productivity rose in all of those 
industries except alumina and aluminum production. For some manufacturing industries, multifactor 
productivity rose despite falling output, as combined inputs fell more rapidly.  These industries include 
printing and related support activities; architectural and structural metals; and railroad rolling stock. 

Combined inputs of capital, labor, and intermediate purchases rose in 43 manufacturing industries in 
2010, compared to 12 industries in 2009. Purchases of intermediate inputs rose in 56 percent of the 
industries, labor hours rose in 47 percent, and capital services rose in 16 percent.

Among the largest manufacturing industries (those with employment over 200,000), multifactor productivity 
increased the most in semiconductors and electronic components, as output surged despite a much smaller 
increase in inputs. Pharmaceuticals and medicines was the only industry where multifactor productivity 
declined among these industries, reflecting a large drop in output with no corresponding decline in inputs.

Multifactor productivity in air transportation increased more in 2010 than in any of the previous 4 years, 
and in line haul railroads it increased more in 2010 than in any other year since 1987. Air 
transportation output increased 4.4 percent and combined inputs grew 0.6 percent. Line-haul railroads 
output rose 12.8 percent and combined inputs increased 5.2 percent.

Year-to-year movements in industry multifactor productivity measures may be erratic, particularly in 
smaller industries. The annual measure based on sample data may differ from measures generated by a 
census of establishments in the industry. Annual changes in an industry's output, labor, capital, and 
intermediate purchases may reflect cyclical changes in the economy as well as long-term trends. As a 
result, long-term multifactor productivity changes tend to be more reliable indicators of industry 
performance than year-to-year changes.

Historical Trends

Between 1987 and 2010, multifactor productivity increased in 46 of 86 manufacturing industries, fewer 
than in 2010. (See table 2.) Output increased in 43 industries over the period while purchases of 
combined inputs rose in 44 industries.  Average rates of change in multifactor productivity for most 
manufacturing industries ranged between -1.9 and 2.0 percent over the long term. In contrast, more 
industries recorded large productivity increases in 2010 than over the long-term; 33 industries posted 
multifactor productivity gains of 6.1 percent or more in 2010, the most since the measures began in 1987.

Table 3 presents the average annual compound rate of change in multifactor productivity by industry 
from 1987 to 2010 and for various subperiods. Multifactor productivity increased in more industries in 
2010 than over any of the previous subperiods shown; the number in 2010 contrasts sharply with the 
number during the 2007-2009 period.
 
From 1987 to 2010 multifactor productivity rose for both transportation industries, although at a more 
moderate rate than in 2010. Multifactor productivity in air transportation grew at an average annual rate 
of 1.1 percent during this period, as output increased more than combined inputs. In line-haul railroads, 
multifactor productivity increased at an average of 2.1 percent per year as output rose and combined 
inputs declined slightly.


                                         Technical Note

Multifactor Productivity:  Multifactor productivity measures for detailed industries are derived by 
dividing an index of real industry output by an index of the combined inputs of labor, capital, and 
intermediate purchases. The multifactor productivity indexes do not measure the specific contributions 
of capital, labor, and intermediate inputs.  Rather, they are designed to reflect the joint influences on 
economic growth of a number of factors, including technological change, returns to scale, improved 
skills of the workforce, better management techniques, or other efficiency improvements.

Output:  Manufacturing industry output is measured as annual sectoral output, the total value, in real 
terms, of goods and services produced for sale outside the industry.  Industry value of production is 
derived by adjusting industry shipments for changes in inventories and subtracting intra-industry 
transfers and resales. For most manufacturing industries, real output is measured by deflating nominal 
value of production, but for some industries physical quantities of output are measured. For air 
transportation and line-haul railroads, output is measured by aggregating passenger-miles and freight ton-
miles with weights based on revenues or operating expenses.

Output measures for manufacturing industries are constructed using data primarily from the economic 
censuses and annual surveys of the Bureau of the Census, U.S. Department of Commerce, together with 
information on price changes chiefly from the Bureau of Labor Statistics (BLS). Output measures for air 
transportation and line-haul railroads are constructed using data primarily from the Bureau of 
Transportation Statistics (BTS) and the Surface Transportation Board (STB), both in the U.S. 
Department of Transportation (DOT), together with information from the Association of American 
Railroads (AAR), AMTRAK, and several other sources.

Combined Inputs:  The index of combined inputs is a Törnqvist index of separate quantity indexes of 
capital, labor, and intermediate purchases (including fuels, electricity, materials, and purchased services). 
The annual growth rates of the various inputs are aggregated using their relative cost shares in total 
industry value of production as weights. The labor weight is based on labor compensation including 
fringe benefits. The weight for intermediate purchases is based on the total cost of materials, fuels, 
electricity, and purchased services. The capital weight is calculated as the value of sectoral production 
minus the costs of labor compensation and intermediate purchases.

Capital Input:  Capital input reflects the flow of services derived from the stock of physical assets. 
Capital services are estimated by calculating productive capital stocks and are assumed to be 
proportional to changes in these capital stocks for each asset. The capital index is a Törnqvist index of 
separate quantity indexes of equipment, structures, inventories, and land.

For manufacturing industries, physical capital is comprised of 26 categories of equipment, 2 categories of 
structures, 3 categories of inventories, and land.  Measures of total capital services for each industry are 
estimated by aggregating the capital stocks of individual asset types. Estimates of investment by asset 
type for each industry are derived using annual capital expenditures for detailed industries from the 
economic censuses and annual surveys of the Bureau of the Census, in combination with benchmark 
capital flow tables and annual detailed asset investment by industry from the Bureau of Economic 
Analysis (BEA). Price changes are removed from the annual investment data before calculating stocks. 
Price deflators for each asset category are constructed by combining detailed price indexes (mostly BLS 
Producer Price Indexes) with weights that reflect each industry’s use of individual asset commodities.

The capital stocks for the different assets are combined using weights based on estimated annual rental 
prices for each asset type, averaged between two time periods. Each rental price reflects the nominal rate 
of return to all assets within the industry and the rates of economic depreciation and revaluation of the 
specific asset. Rental prices are adjusted for the effects of taxes.

For air transportation, a weighted index of 44 types of airframes and 34 types of engines is derived from 
quantities and purchase prices from BTS. For assets other than airframes and engines, capital stocks are 
calculated as is done for manufacturing industries. Inventories of parts and supplies are also included; 
the current dollar series is deflated with a weighted cost index based on data from Airlines for America 
(A4A) and BTS. Indexes for aircraft and engines, non-aircraft assets, and parts and supplies inventories 
are aggregated using cost share weights to derive an overall measure of capital input.

For line-haul railroads, current dollar investment for 10 categories of equipment and 13 categories of 
structures, obtained from STB and AMTRAK, are deflated with BLS PPIs and deflators based on BEA 
data. The capital stocks for each of the items are calculated as is done for manufacturing industries. 
Inventories of materials and supplies are also included. Estimates of investments in land from STB and 
AMTRAK were deflated with price indexes from BEA.

Labor Input:  For manufacturing industries, the primary source of industry employment and hours data 
is the BLS Current Employment Statistics (CES) survey. The CES provides monthly data on the number 
of total and production worker jobs held by wage and salary workers in nonfarm establishments, as well 
as data on the average weekly hours of production workers in those establishments. CES data are 
supplemented with data from the Current Population Survey (CPS) to estimate employment and hours 
of self-employed and unpaid family workers in each industry. Data from the CPS, together with the 
CES data, are also used to estimate the historical average weekly hours of nonproduction workers for 
each industry. CES and CPS data are supplemented or further disaggregated for some industries using 
data from the BLS Quarterly Census of Employment and Wages (QCEW), the Bureau of the Census, or 
other sources. Hours of all persons in an industry are treated as homogeneous and are directly 
aggregated.

For air transportation and line-haul railroads, labor input measures are derived primarily from DOT data. 
For air transportation, annual estimates are based on monthly data from BTS. For line-haul railroads, 
total labor hours for supervisory and nonsupervisory workers are derived from STB data and 
supplemented with data from AAR. For the railroad industry, the labor input measure includes an 
adjustment to remove capitalized labor hours in order to avoid double-counting because some capitalized 
labor costs are embedded in the railroad investment data.

Intermediate Purchases Input:  The index of intermediate purchases is a Törnqvist index of separate 
quantities of materials, purchased services, fuels, and electricity consumed by each industry. Except for 
electricity consumed by manufacturing industries, for which direct quantity data are available, quantities 
are derived by deflating current-dollar values with appropriate price deflators. 

For manufacturing industries, nominal values of materials, fuels and electricity, along with quantities of 
electricity consumed by each industry are obtained from economic censuses and annual surveys of the 
Bureau of the Census. To avoid double counting, an adjustment is made to the materials estimates to 
exclude the value of intra-industry commodity transfers. Purchased business services are estimated using 
annual industry data and benchmark input-output tables from BEA. 

Constant-dollar materials consumed are derived by dividing annual current-dollar industry purchases by 
a weighted price deflator for each industry. Aggregate materials deflators are constructed for each 
industry by combining producer price indexes and import price indexes from BLS for detailed 
commodities.  The deflators are combined using weights based on detailed commodity data from the 
BEA benchmark input-output tables. Aggregate price indexes to deflate purchased business services are 
constructed in a similar manner using consumer price indexes (CPIs), PPIs, and deflators developed by 
BEA. The value of fuels consumed by each industry is deflated with a weighted price deflator based on 
PPIs for individual fuel categories; the weights reflect fuel expenditures by industry from the Energy 
Information Administration (EIA), U.S. Department of Energy.

For air transportation, detailed cost of materials, services, fuels, and electricity from the BTS were 
deflated using cost indexes from A4A. For line-haul railroads, intermediate purchases data from STB 
were supplemented with data from other sources including AAR, AMTRAK, EIA, and the Edison 
Electric Institute. The nominal values were deflated with producer price indexes from BLS and implicit 
price deflators calculated from BEA investment data.

Revisions: This news release incorporates 2010 data and revisions to 2009 data from Annual Survey of 
Manufactures published by the Census Bureau.  This news release also incorporates the annual 
benchmark revisions of the BLS Current Employment Statistics (CES) survey published in February, 
2012. All of the measures for 2010 in this release are preliminary and subject to revision.

Additional Information:  The industries included in this release are classified according to the 2007 
NAICS. While the rates of change reported by BLS in this news release are rounded to one decimal 
place, all industry productivity percent changes are calculated using index numbers rounded to three 
decimal places.

Industry multifactor productivity and related indexes and rates can be accessed by visiting the 
Multifactor Productivity and Costs website at http://www.bls.gov/mfp. Additional data are available 
upon request by calling the Division of Industry Productivity Studies at 202-691-5618 or by sending a 
request by e-mail to dipsweb@bls.gov. Information in this report will be made available to sensory-
impaired individuals upon request. Voice phone: 202-691-5618; TDD message referral phone number: 1-
800-877-8339.

To subscribe to the industry productivity program’s electronic notification service, send an e-mail to 
dipsnews@bls.gov with the word “subscribe” in the subject line.


Table 1.   Industry multifactor productivity and related data, percent change, 2009-2010

                                                                                                Percent change
                                                                2010     --------------------------------------------------------
 NAICS                        Industry                       Employment  Multifactor         Combined  Labor         Intermediate
  code                                                      (thousands)  productivity Output  inputs   Hours Capital  purchases

                             Manufacturing

3111         Animal food                                         51            0.4     -5.8    -6.2    -0.3     0.4      -9.4                                                                      
3112         Grain and oilseed milling                           59            1.3     -1.6    -2.9     0.1    -0.2      -4.3                                                                      
3113         Sugar and confectionery products                    70            1.5      1.8     0.3    -5.4    -0.4       2.5                                                                      
3114         Fruit and vegetable preserving and specialty       173            2.0     -0.4    -2.3     4.8     0.1      -4.7                                                                      
3115         Dairy products                                     133            1.9      1.1    -0.7     0.1     0.3      -1.1                                                                      
3116         Animal slaughtering and processing                 492            2.3     -0.6    -2.9    -0.6    -0.7      -3.6                                                                      
3117         Seafood product preparation and packaging           38            0.6     -2.6    -3.1     7.4    -2.6      -5.1                                                                      
3118         Bakeries and tortilla manufacturing                295            2.3      0.9    -1.4     0.5    -0.3      -2.3                                                                      
3119         Other food products                                166            0.9      1.8     0.9     3.8     2.0      -0.4                                                                      
                                                                                                              
3121         Beverages                                          171            0.3     -0.1    -0.3     3.6     0.1      -1.3                                                                      
3122         Tobacco and tobacco products                        17            1.7      0.4    -1.3    -6.8    -0.6      -4.3                                                                      
                                                                                                              
3131         Fiber, yarn, and thread mills                       29           -3.7      7.4    11.6     8.6    -5.5      15.3                                                                      
3132         Fabric mills                                        60           -0.4      7.6     8.0     9.2    -3.9      12.1                                                                      
3133         Textile and fabric finishing mills                  39            7.7     13.7     5.6    -8.1    -4.9      11.8                                                                      
                                                                                                              
3141         Textile furnishings mills                           61            3.9      0.8    -2.9    -6.7    -3.4      -1.5                                                                      
3149         Other textile product mills                         67            4.6      8.5     3.7    -4.5    -2.1       9.4                                                                      
                                                                                                              
3151         Apparel knitting mills                              24            1.2      7.4     6.0     6.8    -6.0      12.3                                                                      
3152         Cut and sew apparel                                142           -1.1     -1.6    -0.5    -4.7    -5.4       4.8                                                                      
3159         Accessories and other apparel                       13            6.7      1.0    -5.3    -9.3    -5.2      -2.1                                                                      
                                                                                                              
3161         Leather and hide tanning and finishing               4           17.6     52.2    29.4    10.4    -2.5      51.2                                                                      
3162         Footwear                                            12            6.8      5.1    -1.6    -9.1    -3.4      3.8                                                                      
3169         Other leather products                              15           -4.0      1.8     6.0    13.9    -4.3      5.4                                                                      
                                                                                                              
3211         Sawmills and wood preservation                      85           11.1     10.7    -0.4     7.3    -5.1      -1.9                                                                      
3212         Plywood and engineered wood products                64            7.6      5.5    -1.9    -5.2    -5.8      -0.3                                                                      
3219         Other wood products                                216           10.6      3.7    -6.2    -5.8    -4.1      -6.6                                                                      
                                                                                                              
3221         Pulp, paper, and paperboard mills                  112            1.4      2.9     1.5    -3.6    -4.3       6.4                                                                      
3222         Converted paper products                           284            0.6      2.1     1.5     1.3    -2.5       2.5                                                                      
                                                                                                              
3231         Printing and related support activities            525            4.0     -0.3    -4.1    -4.4    -4.5      -3.9                                                                      
                                                                                                             
3241         Petroleum and coal products                        114            1.8      4.0     2.2    -1.1     1.3       2.4                                                                      
                                                                                                              
3251         Basic chemicals                                    143            8.1     19.3    10.4    -0.1    -1.5      16.6                                                                      
3252         Resin, rubber, and artificial fibers                90            4.8     18.9    13.4     0.2    -3.8      19.2                                                                      
3253         Agricultural chemicals                              37           -2.4     -1.2     1.2    -4.4    -0.5       3.1                                                                      
3254         Pharmaceuticals and medicines                      278           -8.9     -8.3     0.7    -0.1    -0.8       2.8                                                                      
3255         Paints, coatings, and adhesives                     57            6.8      9.2     2.2    -0.2    -2.2       3.3                                                                      
3256         Soaps, cleaning compounds, and toiletries          105            3.4      2.3    -1.0     2.5    -1.0      -1.5                                                                      
3259         Other chemical products and preparations            86            6.2     15.5     8.8     2.2     0.3      10.6                                                                      
                                                                                                             
3261         Plastics products                                  504            3.2      8.6     5.2     3.5    -2.2       8.2                                                                      
3262         Rubber products                                    123            3.6     12.0     8.1     3.7    -2.0      12.6                                                                      
                                                                                                             
3271         Clay products and refractories                      51           10.9     14.1     2.9     8.1    -4.5       2.0                                                                      
3272         Glass and glass products                            83            7.2      3.2    -3.7    -3.6    -3.5      -3.8                                                                      
3273         Cement and concrete products                       172            0.6     -0.4    -1.0    -4.2    -3.3       0.9                                                                      
3274         Lime and gypsum products                            14            4.4      0.1    -4.1    -8.6    -3.5      -3.1                                                                      
3279         Other nonmetallic mineral products                  67            9.1      8.3    -0.7    -4.8    -2.4       2.0                                                                      
                                                                                                              
3311         Iron and steel mills and ferroalloy production      87            3.8     28.9    24.2     7.2    -3.1      31.7                                                                      
3312         Steel products from purchased steel                 53            4.2     42.6    36.8    10.3    -3.9      52.0                                                                      
3313         Alumina and aluminum production                     55           -4.7     16.3    22.0     8.2    -4.0      27.0                                                                      
3314         Other nonferrous metal production                   59           10.2     17.2     6.4     7.3     2.4       9.7                                                                      
3315         Foundries                                          112            2.5     16.9    14.1     3.4    -4.2      19.9                                                                      
                                                                                                               
3321         Forging and stamping                                90           14.8     15.1     0.2     5.5    -3.3      -1.1                                                                      
3322         Cutlery and hand tools                              42           14.2     10.6    -3.2    -4.2    -3.3      -2.5                                                                      
3323         Architectural and structural metals                327            6.2     -3.8    -9.4    -5.9    -2.9     -11.6                                                                      
3324         Boilers, tanks, and shipping containers             86           11.3      5.0    -5.7    -3.0    -2.1      -7.3                                                                      
3325         Hardware                                            24           10.5     10.3    -0.2     0.6    -4.5       0.0                                                                      
3326         Spring and wire products                            42           10.3      9.3    -0.8     1.0    -3.2      -1.3                                                                      
3327         Machine shops and threaded products                329           11.3     14.7     3.0     6.7    -0.6       1.5                                                                      
3328         Coating, engraving, and heat treating metals       123           10.7     15.1     4.0     6.7    -2.7       4.6                                                                      
3329         Other fabricated metal products                    255            5.3      5.1    -0.2     4.0    -1.9      -1.5                                                                      
                                                                                                             
3331         Agriculture, construction, and mining machinery    209           11.2     15.6     4.0     3.9     0.8       5.2                                                                      
3332         Industrial machinery                               102            9.0     26.9    16.4     5.3    -3.0      23.6                                                                      
3333         Commercial and service industry machinery           92            2.5      1.9    -0.6    -2.4    -1.2       0.3                                                                      
3334         HVAC and commercial refrigeration equipment        126            7.9      5.4    -2.3    -0.2    -0.1      -3.6                                                                      
3335         Metalworking machinery                             158            4.0     15.8    11.3     6.6    -3.5      16.3                                                                      
3336         Turbine and power transmission equipment            92           12.4     10.0    -2.1    -1.3    -1.4      -2.5                                                                      
3339         Other general purpose machinery                    230            4.2      7.9     3.5     1.4    -2.1       5.9                                                                      
                                                                                                              
3341         Computer and peripheral equipment                  158           -8.4    -22.5   -15.4    -5.1    -4.3     -21.8                                                                      
3342         Communications equipment                           118           -2.2      2.3     4.6    -5.9     1.1      10.6                                                                      
3343         Audio and video equipment                           20           -2.2     -7.7    -5.6   -13.8    -9.4      -2.7                                                                      
3344         Semiconductors and electronic components           374           28.9     32.1     2.5    -0.5    -1.3       9.9                                                                      
3345         Electronic instruments                             409            3.4      6.4     2.9    -2.7    -0.7       8.5                                                                      
3346         Magnetic media manufacturing and reproduction       26            3.8      3.5    -0.3   -10.8    -6.6       6.6                                                                      
                                                                                                              
3351         Electric lighting equipment                         46           -4.9     -0.1     5.1    -1.7    -0.9       9.2                                                                      
3352         Household appliances                                60           -4.3      0.1     4.6     0.1    -3.4       8.0                                                                      
3353         Electrical equipment                               137           -2.6     -2.7    -0.1     1.2    -3.4       0.5                                                                      
3359         Other electrical equipment and components          119            5.9     15.6     9.1    -1.9    -2.8      16.8                                                                      
                                                                                                               
3361         Motor vehicles                                     153           18.7     39.9    17.9    11.0     4.2      21.3                                                                      
3362         Motor vehicle bodies and trailers                  109            0.7     17.3    16.5    11.2    -4.8      18.7                                                                      
3363         Motor vehicle parts                                425            7.1     27.4    18.9     8.8    -6.8      23.7                                                                      
3364         Aerospace products and parts                       481            8.2      2.6    -5.1    -4.5     1.7      -6.7                                                                      
3365         Railroad rolling stock                              19           10.2     -7.1   -15.7   -16.3    -0.1     -16.1                                                                      
3366         Ship and boat building                             127            1.5     -0.6    -2.1    -4.4     1.1      -1.0                                                                      
3369         Other transportation equipment                      34            2.3    -12.1   -14.0   -14.3    -5.9     -14.9                                                                      
                                                                                                               
3371         Household and institutional furniture              247            8.6      0.1    -7.8    -9.4    -4.1      -7.3                                                                      
3372         Office furniture and fixtures                      102            3.6     -4.4    -7.8    -5.3    -3.4     -10.7                                                                      
3379         Other furniture-related products                    37            3.5     -1.9    -5.2    -4.6    -3.6      -6.0                                                                       
                                                                                                              
3391         Medical equipment and supplies                     313            2.5      2.6     0.1    -3.6     2.3       0.6                                                                      
3399         Other miscellaneous manufacturing                  308            7.6      5.9    -1.6    -4.4    -2.0      -0.1                                                                      
                                                                                                              
                           Transportation                                                                                                         
                                                                                                              
481          Air Transportation                                 391            3.8      4.4     0.6    -2.1    -0.5       3.4                                                                      
482111       Line-Haul Railroads                                172            7.3     12.8     5.2     4.4     2.0       8.4