Economic News Release

Multifactor Productivity Trends News Release


Internet address:	http://www.bls.gov/mfp	            USDL 09-0302
Historical, technical		For Release 10:00 AM EDT
information:	(202) 691-5606	Wednesday, March 25, 2009
Media contact:	(202) 691-5902	
		

MULTIFACTOR PRODUCTIVITY TRENDS, 2007

Private Business and Private Nonfarm Business

Multifactor productivity, defined as output per combined units of labor and 
capital inputs, grew at an annual rate of 0.4 percent in the private business
sector and 0.2 percent in the private nonfarm business sector for 2007, the 
Bureau of Labor Statistics (BLS) and the U.S. Department of Labor reported 
today.

					2006-07	
        Private business sector	          0.4	
	Private nonfarm business sector	  0.2	


Growth in multifactor productivity in the private business sector for 2007
was the slowest annual rate of growth since 2001 and for the private nonfarm
business sector was the slowest since 1995.  The 2006-07 annual changes are
summarized in table A, and further detail and historical measures are shown 
in tables 1 through 6.  

Multifactor productivity is designed to measure the joint influences of 
technological change, efficiency improvements, returns to scale, reallocation
of resources, and other factors on economic growth while allowing for the 
effects of capital and labor.  Multifactor productivity, therefore, differs
from the labor productivity (output per hour worked) measures that are 
published quarterly by BLS since it includes information on capital services 
and other data that are not available on a quarterly basis.   Additionally, 
multifactor productivity measures for the private business and private 
nonfarm business sectors account for shifts in the composition of labor.  
Estimates of labor composition are not included in the quarterly labor 
productivity measures.

In private business and private nonfarm business, the change in multifactor
productivity reflects the difference between the change in real gross domestic
product for the sector and the change in labor and capital inputs engaged 
in the production of this output.  The output measures for private business
and private nonfarm business are similar to the indexes of output for business
and nonfarm business used in the quarterly labor productivity measures, 
differing only in that the output of government enterprises is excluded.
 
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.  
In contrast, a change in labor productivity reflects the change in output 
that cannot be accounted for by the change in hours of all persons engaged
in production.

Private business sector

Chart 1 shows the annual indexes of multifactor productivity, output per hour
worked, and output per unit of capital services during the 1987-2007 period 
for the private business sector.  Over the last 20 years, capital services 
have grown more rapidly than hours in private business, and the skills of 
workers -- as measured by their age and education, which implicitly measure 
their work experience -- also have risen over this period.  These shifts 
toward more capital intensive production and toward workers with more human
capital have supplemented labor productivity growth, usually allowing output
per hour to grow at a faster rate than multifactor productivity.

Multifactor productivity rose 0.4 percent in 2007 (see table A).  The 
multifactor productivity gain in 2007 reflected a 2.1-percent increase in
output and a 1.7-percent increase in the combined inputs of capital and
labor (see table 3).

Continuing the relatively slow growth of the last six years, capital services
grew by 2.7 percent.  Labor input rose 1.1 percent, less than half of the 
growth of the previous year, 2.4 percent.  Hours rose 0.5 percent, a sharp 
drop from 2.1 percent of the previous year.  The capital-labor ratio 
(capital services per hour of all persons) increased by 2.3 percent, the 
highest rate of growth since 2003. 

 
Equipment capital services grew 4.6 percent in 2007, much more rapidly than
other broad categories of capital assets (see table 5).  Within equipment, 
services of computers and related equipment grew 17.3 percent, software 6.1
percent, communication equipment 5.6 percent, other information processing 
equipment and software (IPES) 4.4 percent, and all other equipment 2.4 
percent.  The rates of increase in information processing and software 
continue to be markedly lower than the huge increases observed in the 
1995-2000 period.   The lone exception is other information processing 
equipment and software, which includes office and accounting machinery, 
medical equipment, and photocopying, electromedical and nonmedical 
instruments. 

 Services of structures grew 1.3 percent in 2007, the highest growth rate 
 since they grew 1.4 percent in 2002.  Inventories grew at an annual rate of
 0.8 percent in 2007, down from 2.7 percent in 2006.

Table A.  Productivity and related data, percent changes 2006-07


				       Private Business1       Private Nonfarm 
                                                               Business1
Productivity		
    Multifactor productivity2	                  0.4	          0.2
    Output per hour of all persons	          1.6	          1.4
    Output per unit of capital services	         -0.7	         -0.9
		
Output	                                          2.1	          2.0
		
Inputs		
    Labor input3	                          1.1	          1.2
        Hours	                                  0.5	          0.5
        Labor composition4	                  0.7	          0.7
    Capital services	                          2.7	          2.9
    Combined units of labor and capital inputs5	  1.7	          1.8
		
Analytic ratio:		
    Capital services per hour of all persons	  2.3	          2.4
 
1  Excludes government enterprises.
2  Output per unit of combined labor and capital inputs.
3  Index of hours at work; hours at work by education and experience group are 
   weighted by each
   group’s share of labor compensation.
4  Ratio of labor input to hours.
5  Labor input index combined with capital service input index, weighted by 
   labor's and capital's shares of nominal output.

Labor input reflects the change in hours at work adjusted for the effects of 
changing labor composition.  As mentioned previously, labor input rose 1.1 
percent.  This increase in labor input was due to an increase in hours at work
of 0.5 percent and a contribution from labor composition of 0.7 percent 
(see table A).   Changes in labor composition, as measured by shifts in the 
age and educational attainment of the workforce, showed the largest rate of 
growth since 1992.  See “Changes in the Composition of Labor for BLS 
Multifactor Productivity Measures, 2007”, available at 
http://www.bls.gov/mfp/mprlabor.pdf .  

Labor productivity (output per hour worked) increased 1.6 percent in 2007, 
speeding up after four consecutive years in which the growth rate of labor
productivity decelerated.  Capital productivity 
output per unit of capital services) decreased at a rate of -0.7 percent, 
the first decline since 2002.

Private nonfarm business sector

Multifactor productivity in the private nonfarm business sector rose 0.2
percent in 2007 (see table A), the slowest rate of growth since 1995.  Output 
increased 2.0 percent and the combined inputs of capital and labor increased 
1.8 percent.  

Labor input in 2007 grew less than half of the previous year, 1.2 percent, 
compared to 2.6 percent recorded in 2006.  Capital services grew 2.9 percent,
the same as in 2006.  Within capital services, equipment was the fastest 
growing component (see table 6).  The increase in equipment in 2007 was 
largely due to capital services of information processing equipment and 
software, which rose by 7.4 percent.  As in previous years, the fastest 
growth in equipment was in computers and related equipment, which grew 17.3
percent.

Labor productivity grew at a 1.4-percent annual rate and capital productivity
fell at a 0.9- percent annual rate.  Capital services per hour increased at 
the rate of 2.4 percent.


Historical trends in the private business and private nonfarm business sectors

Labor productivity (output per hour worked) differs from multifactor 
productivity (output per unit of combined capital and labor inputs) in the 
treatment of both capital and hours.  Labor productivity measures do not 
explicitly account for the effects of capital nor do they account for changes
in the composition of labor on output growth.  As a result, changes in capital 
intensity (the capital-hours ratio) and labor composition can influence labor
productivity growth.  In addition, the labor input measure used to calculate 
multifactor productivity reflects the combined effects of changes in hours at
work and of shifts in the composition of the workforce.  Therefore, 
multifactor productivity accounts for changes in labor composition as well. 
Historical trends in labor productivity growth can be viewed as the sum of 
three components: multifactor productivity growth, the contribution of 
increased capital intensity, and the contribution of shifts in labor
composition. 

The relationship between labor productivity growth and these three components 
can be seen in table B and chart 2.  Chart 2 clearly shows the major changes 
in the relative contributions of multifactor productivity and of capital 
intensity in the latter half of the 1990s.  These contributions have continued 
to be relatively high for the 2000-2007 period.

The contribution of capital intensity equals the change in the capital-hours 
ratio multiplied by capital's share of total payments to inputs.  The 
contribution of labor composition equals the difference between the growth 
rate of labor input and the growth rate of hours multiplied by labor's share
of total payments.  Historically, capital's share has been slightly less than
a third of total payments.
 
The description that follows focuses exclusively on the private business 
sector.  Trends in the private nonfarm business sector were similar to those
in the private business sector in each period.

Over the 1987-2007 period, output per hour worked grew at an annual rate of 
2.2 percent in private business (see table B).  Of the 2.2 percent growth rate
in labor productivity, 1.0 percent can be attributed to increases in 
multifactor productivity, 0.8 percent to the contribution of capital 
intensity, and 0.3 percent to changes in labor composition.  Output per hour
worked accelerated from a 1.5 percent annual growth rate in the 1990-95 period
to 2.7 percent in the 1995-2000 period. For the 2000-07 period, output per 
hour grew at nearly the same rate as the previous period, 2.6 percent.

Over the 1987-90 and 1990-95 periods, all productivity measures showed similar
rates of growth.  Multifactor productivity increased at an average annual rate
of 0.6 percent in the 1987-90 period while rising 0.5 percent in the 1990-95
period.  Labor productivity grew at an average annual rate of 1.6 percent 
during the 1987-90 period while rising 1.5 percent in the 1990-1995 period. 
In both periods, increasing capital intensity contributed 0.6 percent to
output per hour worked.  Information processing equipment contributed 0.5
percent in the 1987-90 period and 0.4 percent in the 1990-95 period.  The 
contribution of labor composition rose at an average annual rate of 0.4 
percent in the 1987-90 period and 0.5 percent in the 1990-95 period.

In the latter half of the 1990s, productivity growth accelerated.  Multifactor
productivity growth increased 1.3 percent and output per hour growth increased
2.7 percent, a sharp increase from the previous period.  The contribution of 
capital intensity doubled from the 1990-95 period, rising an average of 1.2 
percent per year from 1995 to 2000.  The contribution of information processing
equipment rose to 0.9 percent, while the contribution of other capital services
grew 0.2 percent.  The contribution of labor composition dropped 0.3 percentage
points from the previous period to 0.2 percent.

In the 2000-07 period, multifactor productivity growth increased to 1.5 
percent, an additional 0.2 percentage points from the 1995-2000 period.  
Labor productivity rose an average of 2.6 percent per year.  The contribution
of capital intensity dropped 0.3 percentage points from the previous period to 
0.9 percent.  The contribution of information processing equipment dropped to
0.5 percent from 0.9 percent in the 1995-2000 period.  At the same time, the
contribution of other capital services rose to 0.3 percent.  The contribution 
of labor composition growth increased at the same rate as the previous period,
0.2 percent.
 
Table B.  Compound average annual rates of growth in output per hour of all 
persons and the contributions of capital intensity, labor composition, and
multifactor productivity, by major sector, selected periods, 1987-2007

(Percent per year)

	                      1987-07 1987-90 1990-95 1995-00 2000-07 2006-07
Private business1						
						
Output per hour 
of all persons	                2.2	1.6	1.5	2.7	2.6	1.6
						
Contribution of 
capital intensity2	        0.8	0.6	0.6	1.2	0.9	0.7
						
  Contribution of 
  information 
  processing equipment 
  and software3	                0.6	0.5	0.4	0.9	0.5	0.5
						
  Contribution of all
  other capital services        0.2	0.2	0.1	0.2	0.3	0.3
						
Contribution of 
labor composition4	        0.3	0.4	0.5	0.2	0.2	0.5
						
Multifactor productivity5	1.0	0.6	0.5	1.3	1.5	0.4

Private nonfarm business1						
						
Output per hour 
of all persons	                2.1	1.5	1.6	2.5	2.5	1.4
						
Contribution of 
capital intensity2	        0.8	0.6	0.6	1.2	0.9	0.8
						
  Contribution of 
  information processing 
  equipment and software3	0.6	0.5	0.5	0.9	0.5	0.5
						
  Contribution of all
  other capital services	0.2	0.1	0.1	0.2	0.3	0.3
						
Contribution of 
labor composition4	        0.3	0.4	0.5	0.2	0.2	0.5
						
Multifactor productivity5	1.0	0.5	0.5	1.1	1.4	0.2
						
   Contribution of R&D to
   multifactor productivity	0.2	0.2	0.2	0.2	0.2	0.2

1 Excludes government enterprises.
2 Growth rate in capital services per hour multiplied by capital's share of 
  current dollar costs.
3 Growth rate of information processing equipment and software per hour 
  multiplied by its share of total costs.
4 Growth rate of labor composition (the growth rate of labor input less the
  growth rate of the hours of all persons)
  multiplied by labor's share of current dollar costs.
5 Output per unit of combined labor and capital inputs.

Note: Multifactor productivity plus contribution of capital intensity and 
labor composition may not sum to output per hour due to independent rounding.
Contribution of information processing equipment and all other capital may 
not sum to the contribution of capital intensity due to independent rounding.

  
Note: Multifactor productivity plus contribution of capital intensity and 
labor composition may not sum to output per hour due to independent rounding.  

Contribution of research and development to multifactor productivity in the 
private nonfarm business sector

While multifactor productivity reflects many influences, technological change
is one of the primary contributors.  For the private nonfarm business sector,
BLS also reports estimates of the impact on multifactor productivity growth 
of firms' spending for research and development (R&D) on all firms within the
same industries.  Because many people associate research and development 
spending and the resulting technological improvements with productivity, 
multifactor productivity has not been adjusted to exclude the effects of 
research and development.  The contribution of research and development 
averaged 0.2 percent per year for the entire 1987-2007 period, or around 20
percent of total multifactor productivity growth (see table B).  The 
contribution of research and development did not vary measurably over time, 
contributing 0.2 percent per year during each time period.  Tables of 
contributions of research and development to multifactor productivity in the
private nonfarm business sector can be found at 
http://www.bls.gov/mfp/rdtable.pdf. 

 
Table C.  Annual rates of growth of the previous and revised multifactor 
productivity measures in the private business sector for the 1988-2007 
period

      (Percent per year)

	Multifactor Productivity
Year	Previous     Revised
1988	   0.7	       0.8
1989	   0.3	       0.2
		
1990	   0.6	       0.6
1991	  -0.7	      -0.8
1992	   2.6	       2.6
1993	   0.2	       0.1
1994	   0.8	       0.8
		
1995	  -0.3	      -0.2
1996	   1.7	       1.7
1997	   0.9	       0.9
1998	   1.3	       1.3
1999	   1.3	       1.4
		
2000	   1.3	       1.2
2001	   0.1	       0.4
2002	   1.7	       2.1
2003	   2.6	       2.8
2004	   2.5	       2.7
		
2005	   1.6	       1.3
2006	   0.5	       0.6
2007	   0.7	       0.4


Revised Measures

Previous and revised multifactor productivity data for 1988-2007 for the 
private business and private nonfarm business sectors are displayed in table C.
The differences in 2007 are largely due to the fact that previous results were
based on preliminary information.  The 0.4-percent change in multifactor 
productivity growth for the private business sector was somewhat lower than 
the 0.7-percent change reported on May 6, 2008, based on preliminary 
information.  This was due to a downward revision of output to 2.1 from 2.3 
percent and a slight upward revision of combined inputs to 1.7 from 1.6 
percent.  

Revisions to earlier years were due to updated and revised data sources, 
improved measures of rates of return on capital stock, and, to a larger 
extent, improved methodology in labor composition, described in “Changes in 
the Composition of Labor for BLS Multifactor Productivity Measures, 2007”,
available at http://www.bls.gov/mfp/mprlabor.pdf .

 
Notes

Private business and private nonfarm business output series through 2007
reflect the annual revisions to the National Income and Product Accounts 
(NIPA), announced by the Bureau of Economic Analysis (BEA) in August 2008.

Multifactor productivity measures for the private business and private 
nonfarm business sectors are developed from data based on the 1997 North 
American Industry Classification System (NAICS).  These measures are not
comparable with the measures for the private business and private nonfarm
business sectors previously developed using data on a 1987 Standard 
Industrial Classification (SIC) basis.  This is because major sector
multifactor productivity measures are aggregated from industry detail
data that are largely unavailable on a NAICS basis before 1987. 
In addition, the hours of employees, proprietors and unpaid family workers, 
which are collected on a 2007 NAICS basis, are converted to a 1997 NAICS 
basis for this report.  

BLS prepared multifactor productivity measures from three-digit NAICS 
detail.  Most critical data were not reported on a NAICS basis for years prior
to 1998.  Detailed GDP by industry data are available from 1998 forward, 
but for 1987-97, many of the income components needed to construct capital
rental prices were obtained by applying 1997 SIC-to-NAICS conversion
factors to SIC data and adjusting to the resulting NAICS totals.  A 
similar procedure was applied to manufacturing inventories.  Detailed 
nonmanufacturing inventories were constructed using total inventory for
the private business sector and nonmanufacturing industry shares of total
inventory derived from the IRS book value of inventories reported for 
NAICS industries.  Land data were only available from 1998 to 2005 on a 
NAICS basis.  As a consequence, land estimates from 1987 to 1997 were 
calculated using a combination of SIC to NAICS conversion factors and more
detailed IRS data.  Data for 2006 and 2007 were extrapolated using detailed
IRS data for 2005. 

The Bureau of Labor Statistics uses Current Population Survey (CPS) data 
to measure the hours of nonfarm proprietors, unpaid family workers, and 
all persons working in the farm sector.  The CPS features measures of 
employment that count each person only once and classify each person 
according to his or her primary job.  However, the CPS also collects more 
detailed information on employment and hours worked at primary jobs and 
all other jobs, separately.  The BLS productivity measures use the more 
detailed information on employment and hours to assign all hours worked 
to the correct industrial sector.   
Labor composition measures have been updated through 2007.  A new,
simplified procedure to calculate labor composition is being implemented
this year to replace the previous methodology.  BLS has removed the 
experience coefficient from its labor composition estimates and uses 
actual wage averages rather than imputed wage averages in its estimates. 
A brief description, “Changes in the Composition of Labor for BLS Multifactor
Productivity Measures, 2007”, is available at 
http://www.bls.gov/mfp/mprlabor.pdf.

Comprehensive tables containing additional data not included in this news
release are available at http://www.bls.gov/mfp/mprdload.htm or in print
upon request.



Summary of Methods

The following note describes the major data sources and the procedures 
used in deriving BLS multifactor productivity indexes.  More detailed 
information on methods, limitations, and data sources is provided in BLS 
Bulletin 2178 (September 1983), "Trends in Multifactor Productivity,
1948-81.", and on the BLS Multifactor Productivity website under the 
title “Technical Information About the BLS Multifactor Productivity Measures”
for Major Sectors and 18 NAICS 3-digit Manufacturing Industries at
http://www.bls.gov/mfp/mprtech.pdf. General information is available on 
the BLS Multifactor Productivity website at
http://www.bls.gov/mfp/mprover.htm.   Additional data not contained in 
the release can be obtained in print or at http://www.bls.gov/mfp. 
A number of comprehensive tables set up as zip files can be obtained at
http://www.bls.gov/mfp/mprdload.htm.  Included in the additional data 
available in the home page is a zip file containing selected multifactor
productivity data that links 1948-87 SIC data to NAICS data from 1987 
forward.   This file includes data for the private business and private
nonfarm business sectors. 

Capital Input:   Capital input measures the services derived from the 
stock of physical assets and software.  The assets included are fixed
business equipment, structures, inventories, and land.  Among equipment, 
BLS provides additional detail for information processing equipment and
software (IPES).  IPES is composed of four broad classes of assets: 
computers and related equipment, software, communications equipment, and
other IPES equipment.  Computers and related equipment includes mainframe
computers, personal computers, printers, terminals, tape drives, storage
devices, and integrated systems.  Software is comprised of pre-packaged,
custom, and own-account software.  Communications equipment is not further
differentiated.  Other IPES includes medical equipment and related 
instruments, electromedical instruments, nonmedical instruments,
photocopying and related equipment, and office and accounting machinery.
Structures include nonresidential structures and residential capital that
is rented out by profit-making firms or persons.

Financial assets are excluded from capital input measures, as are 
owner-occupied residential structures.  The aggregate capital input measures
are obtained by Tornqvist aggregation of the capital stocks for each asset 
type within each of 60 NAICS industry groupings using estimated rental prices 
for each asset type.  Each rental price reflects the nominal rate of return 
to all assets within the industry and rates of economic depreciation and 
revaluation for the specific asset; rental prices are adjusted for the 
effects of taxes.  Current-dollar capital costs can be defined as each 
asset’s rental price multiplied by its constant-dollar stock, adjusting for
capital composition effects.  Data on investments in physical assets are
obtained from BEA.  Data on inventories are obtained from BEA using additional
information from IRS Corporation Income Returns.  Estimates for land in the 
farm sector are obtained from USDA.  Nonfarm industry detail is based on IRS
book value data.  Current-dollar gross product originating (GPO) data, 
obtained from BEA, are used in estimating capital rental prices.

Labor Input:    Labor input in private business and private nonfarm business
is obtained by chained superlative (Tornqvist) aggregation of the hours at 
work by all persons, classified by age, education, and gender with weights 
determined by their shares of labor compensation.  Hours paid of employees 
are largely obtained from the Current Employment Statistics program  (CES). 
These hours of employees are then converted to an at-work basis by using 
information from the Employment Cost Index (ECI) of the National Compensation
Survey (NCS) and the Hours at Work Survey.  Hours at work for nonproduction
and supervisory workers are derived using data from the CPS, the CES, and the
NCS.  The hours at work of proprietors, unpaid family workers, and farm 
employees are derived from the Current Population Survey.  Hours at work data
reflect Productivity and Costs data as of the March 5, 2009 news release.  
Therefore it reflects the benchmark revisions to the CES and other revisions 
to hours released on February 6, 2009.  The growth rate of labor composition
is defined as the difference between the growth rate of weighted labor input 
and the growth rate of the hours of all persons. Additional information
concerning data sources and methods of measuring labor composition can be 
found in BLS Bulletin 2426 (December 1993), "Labor Composition and U.S. 
Productivity Growth, 1948-90." 

Combined Inputs:  Labor and capital input are combined using Tornqvist weights
that represent each component's share of total costs.  Total costs are defined
as the value of output (Gross Product Originating) less a portion of taxes on
production and imports.  Most taxes on production and imports, such as excise 
taxes, are excluded from costs; however, property and motor vehicle taxes 
remain in total costs.  The index uses changing weights: The share in each 
year is averaged with the preceding year's share.

Output:  This release presents data for the private business and private 
nonfarm business sectors.  The private business sector, which accounted for
approximately 77 percent of gross domestic product in 2000, includes all of
gross domestic product except the output of general government, government 
enterprises, non-profit institutions, the rental value of owner-occupied real
estate, and the output of paid employees of private households.  
Additionally, the private nonfarm business sector excludes farms from the 
private business sector, but includes agricultural services.  Multifactor 
measures exclude government enterprises, while the BLS quarterly Productivity
and Cost series include them.
 
Multifactor Productivity:  Multifactor productivity measures describe the 
relationship between output in real terms and the inputs involved in its 
production.  They do not measure the specific contributions of labor,
capital, or any other factor of production.  Rather, multifactor productivity
is designed to measure the joint influences of output, capital, and labor on
economic growth of technological change, efficiency improvements, returns to 
scale, reallocation of resources due to shifts in factor inputs across 
industries, and other factors.

The multifactor productivity indexes for private business and private nonfarm
business are derived by dividing an output index by an index of labor input 
and capital services.  The output indexes are computed as chained superlative 
indexes (Fisher Ideal indexes) of components of real output.  For the years 
1987 to 2007, BEA supplies the output indexes.  BLS adjusts these to remove 
the output of government enterprises.
 
Research and development:  The stock of research and development in private
nonfarm business is derived by cumulating constant dollar measures of 
research and development expenditures and allowing for depreciation.  Current
dollar expenditures for privately financed research and development for 
the years 1987-2007 are obtained from annual issues of Research and 
Development in Industry published by the National Science Foundation.  
BLS develops price deflators and estimates of the rate of depreciation. 
Further description of these data and methods can be found in BLS Bulletin
2331 (September 1989), "The Impact of Research and Development on 
Productivity Growth."  BLS measures of year-to-year contributions of 
research and development to the private nonfarm business sector and measures 
of the stock of research and development are available at 
http://www.bls.gov/mfp/rdtable.pdf .


Table 1. Private business sector: Indexes of productivity and related 
measures, 1987-2007

Indexes 2000=100

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1987    77.3    108.1   89.9    62.4    75.5    57.8    69.5    71.5
1988    78.5    108.7   90.6    65.2    78.1    60.0    71.9    72.2
1989    79.3    108.5   90.8    67.6    80.6    62.3    74.4    73.1

1990    81.0    106.8   91.4    68.6    80.5    64.3    75.1    75.9
1991    82.4    103.2   90.7    68.1    79.7    66.0    75.1    79.9
1992    86.0    105.0   93.1    70.9    80.5    67.5    76.2    81.8
1993    86.4    105.2   93.2    73.2    83.0    69.6    78.6    82.1
1994    87.2    106.6   93.9    76.8    86.7    72.1    81.9    81.8

1995    87.4    105.3   93.7    79.2    89.0    75.2    84.5    83.1
1996    90.0    105.3   95.3    82.8    90.8    78.7    86.9    85.5
1997    91.7    105.3   96.2    87.2    94.4    82.9    90.7    87.1
1998    94.3    103.8   97.4    91.5    96.5    88.2    93.9    90.9
1999    97.2    102.3   98.8    96.2    98.8    94.1    97.4    95.0

2000   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2001   102.8     96.0  100.4   100.5    98.2   104.6   100.0   107.0
2002   107.1     94.7  102.5   102.0    96.2   107.7    99.5   113.1
2003   111.2     95.5  105.4   105.2    95.8   110.2    99.9   116.5
2004   114.5     97.2  108.2   109.7    96.9   112.9   101.4   117.8

2005   116.6     98.1  109.7   113.6    98.8   115.8   103.6   118.9
2006   117.6     98.4  110.3   117.1   101.2   119.1   106.2   119.6
2007   119.5     97.7  110.7   119.5   102.3   122.3   108.0   122.3

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 2. Private nonfarm business sector: Indexes of productivity and related 
measures, 1987-2007

Indexes 2000=100

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1987    78.0    110.1   90.7    62.4    74.9    56.7    68.8    70.8
1988    79.3    111.0   91.7    65.3    77.5    58.8    71.3    71.4
1989    79.9    110.6   91.7    67.6    80.1    61.2    73.8    72.3

1990    81.4    108.6   92.0    68.6    80.2    63.2    74.6    75.0
1991    82.9    104.7   91.3    68.1    79.2    65.0    74.6    79.1
1992    86.3    106.2   93.5    70.8    80.1    66.6    75.7    81.2
1993    86.7    106.5   93.7    73.2    82.7    68.7    78.2    81.4
1994    87.7    107.7   94.4    76.7    86.1    71.3    81.3    81.5

1995    88.2    106.5   94.5    79.3    88.4    74.5    83.9    82.8
1996    90.5    106.1   95.8    82.8    90.4    78.1    86.5    85.3
1997    92.0    105.8   96.5    87.2    94.0    82.4    90.4    86.9
1998    94.5    104.2   97.7    91.5    96.3    87.8    93.7    90.7
1999    97.3    102.6   99.0    96.3    98.8    93.9    97.3    94.8

2000   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2001   102.7     96.0  100.4   100.5    98.4   104.7   100.2   107.0
2002   107.1     94.5  102.5   102.1    96.4   107.9    99.6   113.2
2003   111.1     95.2  105.2   105.2    96.0   110.5   100.0   116.7
2004   114.2     96.9  108.0   109.6    97.1   113.1   101.5   117.8

2005   116.1     97.7  109.3   113.5    99.1   116.1   103.8   118.9
2006   117.2     97.9  109.9   117.1   101.6   119.6   106.6   119.7
2007   118.9     97.0  110.1   119.4   102.8   123.1   108.4   122.6

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 3. Private business sector: Compound average annual rates of
growth in productivity and related measures, 1988-2007

Percent per year

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1988    1.6     0.5     0.8     4.4     3.4     3.9     3.5     1.1
1989    1.0    -0.2     0.2     3.7     3.2     3.9     3.4     1.2

1990    2.2    -1.6     0.6     1.5    -0.1     3.2     0.9     3.8
1991    1.7    -3.3    -0.8    -0.7    -1.0     2.7     0.1     5.2
1992    4.3     1.8     2.6     4.1     1.0     2.3     1.4     2.5
1993    0.5     0.2     0.1     3.2     3.1     3.1     3.1     0.3
1994    1.0     1.3     0.8     5.0     4.5     3.6     4.2    -0.4

1995    0.2    -1.3    -0.2     3.0     2.7     4.3     3.2     1.5
1996    2.9     0.0     1.7     4.6     2.0     4.6     2.8     2.9
1997    1.9     0.0     0.9     5.3     3.9     5.3     4.4     1.9
1998    2.8    -1.4     1.3     4.9     2.3     6.4     3.6     4.3
1999    3.1    -1.4     1.4     5.2     2.4     6.7     3.7     4.5

2000    2.9    -2.2     1.2     3.9     1.2     6.3     2.7     5.3
2001    2.8    -4.0     0.4     0.5    -1.8     4.6     0.0     7.0
2002    4.2    -1.4     2.1     1.5    -2.0     2.9    -0.5     5.6
2003    3.9     0.8     2.8     3.1    -0.5     2.3     0.4     3.1
2004    3.0     1.8     2.7     4.2     1.1     2.4     1.5     1.1

2005    1.8     0.9     1.3     3.6     2.0     2.6     2.2     0.9
2006    0.9     0.3     0.6     3.1     2.4     2.8     2.5     0.6
2007    1.6    -0.7     0.4     2.1     1.1     2.7     1.7     2.3

See footnotes following table 4.
Source: Bureau of Labor Statistics



Table 4. Private nonfarm business sector: Compound average annual rates of
growth in productivity and related measures, 1988-2007

Percent per year

       Output                                          Combined              
       per     Output  Multi-                          units of              
       hour    per     factor                  Capital capital Capital       
       of all  unit of Product-        Labor   Serv-   and     per hour of   
Year   persons capital ivity2  Output3 Input4  ices5   labor6  all persons   

1988    1.7     0.9     1.0     4.6     3.5     3.8     3.6     0.9
1989    0.7    -0.4     0.0     3.5     3.3     3.9     3.5     1.2

1990    1.9    -1.8     0.4     1.5     0.1     3.4     1.1     3.8
1991    1.8    -3.5    -0.8    -0.8    -1.1     2.9     0.0     5.5
1992    4.1     1.4     2.4     3.9     1.0     2.5     1.5     2.6
1993    0.5     0.3     0.2     3.5     3.3     3.2     3.3     0.2
1994    1.1     1.1     0.8     4.8     4.1     3.7     4.0     0.1

1995    0.6    -1.1     0.1     3.3     2.7     4.5     3.2     1.7
1996    2.6    -0.3     1.4     4.5     2.2     4.8     3.0     3.0
1997    1.6    -0.3     0.7     5.2     4.0     5.5     4.5     1.9
1998    2.8    -1.5     1.3     5.0     2.4     6.6     3.7     4.4
1999    2.9    -1.6     1.3     5.2     2.6     6.9     3.9     4.5

2000    2.8    -2.5     1.1     3.8     1.2     6.5     2.7     5.5
2001    2.7    -4.0     0.4     0.5    -1.6     4.7     0.2     7.0
2002    4.2    -1.5     2.1     1.5    -2.0     3.1    -0.6     5.8
2003    3.7     0.7     2.6     3.1    -0.4     2.4     0.4     3.0
2004    2.8     1.9     2.6     4.2     1.2     2.3     1.5     1.0

2005    1.7     0.8     1.3     3.5     2.0     2.7     2.2     0.9
2006    0.9     0.2     0.5     3.2     2.6     2.9     2.7     0.7
2007    1.4    -0.9     0.2     2.0     1.2     2.9     1.8     2.4

See footnotes following table 4.
Source: Bureau of Labor Statistics



                        Footnotes, Tables 1-4

Source:  Output data are from the Bureau of Economic Analysis (BEA), 
U.S. Department of Commerce, and modified by the Bureau of Labor 
Statistics (BLS), U.S. Department of Labor.  Compensation and hours data are 
from BLS.  Capital measures are based on data supplied by BEA and the U.S. 
Department of Agriculture.  See also Summary of Methods in this release.

(1) The private business sector includes all of gross domestic product except 
    the output of general government, government enterprises, non-profit 
    institutions, the rental value of owner-occupied real estate, and the 
    output of paid employees of private households. The private nonfarm 
    business sector also excludes farms but includes agricultural services.

(2) Output per unit of combined labor and capital inputs.

(3) Gross domestic product originating in the sector, 
    superlative chained index.

(4) Index of the hours at work of all persons including employees, 
    proprietors, and unpaid family workers classified by education, work 
    experience, and gender.  This superlative chain index is computed by 
    combining changes in the hours of each education, experience, 
    and gender group weighted by each group's share of labor compensation. 

(5) A measure of the flow of capital services used in the sector.

(6) Labor input combined with capital input, using labor's and capital's 
    shares of costs as weights to form a superlative chained index. 


Table 5. Compound average annual rates of growth in real capital services
by asset type, private business sector, 1987-2007

Percent per year


                        1987    1987    1990    1995    2000    2006 
                         to      to      to      to      to      to
                        2007    1990    1995    2000    2007    2007

All Assets               3.8     3.6     3.2     5.9     2.9     2.7

  Equipment              5.9     4.7     4.8     9.6     4.7     4.6

    All Information     11.2    11.0     9.4    17.5     8.1     7.4
    equipment & software
    (IPES)

      Computers &       22.7    19.1    16.1    41.3    16.8    17.3
      related equipment

      Software          12.5    17.8    13.4    16.4     7.2     6.1

      Communications     7.2     6.2     5.4    10.6     6.4     5.6
      equipment

      Other IPES         3.4     3.0     3.5     3.2     3.5     4.4

    All other equipment  2.4     1.2     1.9     4.4     1.9     2.4

  Structures             1.8     2.7     1.9     2.1     1.2     1.3

  Residential rental     1.5     2.1     1.2     1.7     1.4     0.9
  capital

  Inventories            2.6     2.7     2.3     4.3     1.5     0.8

  Land                   1.6     3.2     1.3     1.6     1.1     0.5

Source: Bureau of Labor Statistics

Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.



Table 6. Compound average annual rates of growth in real capital services
by asset type, private nonfarm business sector, 1987-2007

Percent per year


                        1987    1987    1990    1995    2000    2006
                         to      to      to      to      to      to
                        2007    1990    1995    2000    2007    2007

All Assets               4.0     3.7     3.3     6.1     3.0     2.9

  Equipment              6.0     4.9     5.0     9.7     4.7     4.6

    All Information     11.2    11.0     9.4    17.5     8.1     7.4
    equipment & software
    (IPES)

      Computers &       22.7    19.1    16.1    41.3    16.8    17.3
      related equipment

      Software          12.5    17.8    13.4    16.4     7.2     6.1

      Communications     7.2     6.2     5.4    10.6     6.4     5.6
      equipment

      Other IPES         3.3     3.0     3.5     3.2     3.4     4.3

    All other equipment  2.5     1.4     2.0     4.4     1.9     2.4

  Structures             1.9     2.8     2.0     2.1     1.3     1.4

  Residential rental     1.5     2.1     1.2     1.7     1.4     0.9
  capital

  Inventories            2.7     3.1     2.3     4.5     1.6     0.9

  Land                   1.7     2.0     1.4     2.0     1.5     1.7

Source: Bureau of Labor Statistics

Note: For a brief discussion of methods used in preparing these data,
see Summary of Methods in this release.


Last Modified Date: March 25, 2009
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