Economic News Release

Multifactor Productivity Trends News Release


Internet address:	http://www.bls.gov/mfp	USDL 08-0410
Historical, technical		For Release 10:00 AM EDT
information:	(202) 691-5606	Thursday, March 27, 2008
Media contact:	(202) 691-5902	
		

MULTIFACTOR PRODUCTIVITY TRENDS, 2006

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 0.5 percent in the private business
sector and 0.4 percent in the private nonfarm business sector for 2006, the 
Bureau of Labor Statistics (BLS) and the U.S. Department of Labor reported 
today.

					2005-06	
Private business sector	                  0.5	
Private nonfarm business sector	          0.4	


The estimates of multifactor productivity in the private business and in the
private nonfarm business sectors for 2006 both show the slowest annual rates
of growth since 2001.  The 2005-06 annual changes are summarized in table A, 
and further detail and historical measures are shown in tables 1 through 6.  
The 0.5 percent change in multifactor productivity growth for the private 
business sector is less than half of the preliminary 1.1 percent change 
reported on May 24, 2007 based on preliminary information.  This was largely
due to a sharp downward revision to output.

Multifactor productivity is designed to measure the joint influences of 
economic growth on technological change, efficiency improvements, returns
to scale, reallocation of resources, and other factors, 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 omitted.


 
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 1987-2006 period 
for the private business sector.  Over the last 19 years, capital services 
have grown more rapidly than hours in private business, and the skills of 
workers -- as measured by their education and 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 0.5 percent in 2006 (see table A).  The 
multifactor productivity gain in 2006 reflected a 3.2 percent increase in 
output and a 2.6 percent increase in the combined inputs of capital and 
labor (see table 3).

Continuing the relatively slow growth of the last five years, growth in capital
services rose 2.7 percent.  However, labor input rose 2.6 percent, the 
largest annual increase since 1999.  Hours rose 2.1 percent.  The capital-labor
ratio (capital services per hour of all persons) increased by 0.6 percent, 
the lowest rate of growth since 1994. 
Equipment capital services grew 4.7 percent in 2006, much more rapidly than 
other broad categories of capital assets (see table 5).  Within equipment, 
services of computers and related equipment grew 16.8 percent, software 5.7 
percent, communication equipment 5.1 percent, other information processing 
equipment 4.9 percent, and all other equipment 2.7 percent.  The rates of 
increase continue to be markedly lower than the huge increases in information 
processing equipment and software observed in the 1995-2000 period.   The lone
exception is other information processing equipment. 

 Services of structures grew 0.9 percent in 2006, continuing their relatively 
 low rate of growth for the last four years.  Inventories grew at an annual 
 rate of 2.3 percent in 2006, down from 3.1 percent in 2005.


Table A.  Productivity and related data, percent changes 2005-06


	                                        Private        Private Nonfarm 
                                                Business1      Business1
                                                                
Productivity		
   Multifactor Productivity2	                   0.5	           0.4
    Output per hour of all persons	           1.1	           1.0
    Output per unit of capital services	           0.5	           0.4
	
Output	                                           3.2	           3.2
		
Inputs		
    Labor input3	                           2.6	           2.7
        Hours	                                   2.1	           2.2
        Labor Composition4	                   0.5	           0.5
    Capital services	                           2.7	           2.8
    Combined units of labor and capital inputs5	   2.6	           2.8

Analytic ratio:		
    Capital services per hour of all persons	   0.6	           0.6

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 2.6 
percent.  This increase in labor input was due to an increase in hours at work
of 2.1 percent and a contribution from labor composition of 0.5 percent 
(see table A).   Changes in labor composition, as measured by shifts in the 
educational attainment and work experience of the work force, showed the 
largest rate of growth since 2002.  See “Changes in the Composition of Labor 
for the BLS Multifactor Productivity Measures, 2006”, available at 
http://www.bls.gov/mfp/mprlabor.pdf .  

Labor productivity (output per hour worked) increased 1.1 percent, the fourth 
consecutive year in which the growth rate of labor productivity decelerated.  
Capital productivity (output per unit of capital services) grew 0.5 percent,
the fourth consecutive annual increase.


Private nonfarm business sector

Multifactor productivity in the private nonfarm business sector rose 0.4 
percent in 2006 (see table A), the slowest rate of growth since 2001.  
Output increased 3.2 percent, and the combined inputs of capital and labor 
increased 2.8 percent.  

Labor input grew faster in 2006 than the previous year, 2.7 percent, compared
to 1.8 percent in 2005.  Capital services grew 2.8 percent, compared to 2.6 
percent in 2005.  Within capital services, equipment was the fastest growing
component (see table 6).  The increase in equipment in 2006 was largely due 
to capital services of information processing equipment and software rising 
by 7.1 percent.  As in previous years, the fastest growth in equipment was in
computers and related equipment, which grew 16.8 percent.

Labor productivity grew 1.0 percent and capital productivity rose 0.4 percent.
Capital services per hour increased at the rate of 0.6 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 educational attainment and experience of the work 
force.  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 1990’s.  These contributions have 
continued to be relatively high for the 2000-2006 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 1987-2006 period, output per hour worked grew at an annual rate of
2.3 percent in private business (see table B).  Of the 2.3 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 0.4 percent to changes in labor composition.  Output per hour worked 
accelerated from a 1.5 percent growth rate in the 1990-95 period to 2.7 percent
in the 1995-2000 period. For the 2000-06 period, output per hour grew around
the same rate as the previous period, 2.8 percent.

Over the 1987-1990 and 1990-1995 periods, all productivity measures showed 
similar rates of growth.  Multifactor productivity increased at an average 
annual rate of 0.6 percent in the 1987-1990 period while rising 0.5 percent
in the 1990-1995 period.  Labor productivity grew at an average annual rate
of 1.6 percent during the 1987-1990 period while rising 1.5 percent in the 
1990-1995 period.  In both periods, increasing capital intensity contributed
0.6 percent of which 0.5 percent came from information processing equipment.
The contribution of labor composition was the same in the two time periods,
0.4 percent.

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 almost doubled from the 1990-95 period, 
rising an average of 1.1 percent.  The growth in each of the two components
of the contribution of capital intensity, information processing equipment 
and other capital services, doubled from the previous period.  In both time
periods, the contribution of information processing equipment was a little 
over 80 percent of the total contribution of capital services.  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 0.1 percentage point from the 
previous period, to 0.3 percent.

In the 2000-2006 period, multifactor productivity growth increased an 
additional 0.2 percentage points from the 1995-2000 period, to 1.5 percent.
Labor productivity rose an average of 2.8 percent per year.  The 
contribution of capital intensity dropped 0.2 percentage points from the
previous period to 0.9 percent.  The contribution of information processing 
equipment dropped to 0.6 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 to 0.4 
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, 1987 to 2006

(percent per year)

	                  1987-06  1987-90  1990-95  1995-00  2000-06  2005-06
Private business1						
						
Output per hour 
of all persons	            2.3	     1.6      1.5      2.7	2.8	 1.1
						
Contribution of 
capital intensity2	    0.8	     0.6      0.6      1.1	0.9	 0.2
						
  Contribution of
  informationprocessing 
  equipment and software3   0.6	     0.5      0.5      0.9	0.6	 0.3
						
  Contribution of all
  other capital services    0.2	     0.2      0.1      0.2	0.3	-0.2
						
Contribution of 
labor composition4	    0.4	     0.4      0.4      0.3	0.4	 0.3
						
Multifactor productivity5   1.0	     0.6      0.5      1.3	1.5	 0.5

Private nonfarm business1						
						
Output per hour 
of all persons	            2.2	     1.5      1.6      2.5	2.7	 1.0
						
Contribution of 
capital intensity2	    0.8	     0.6      0.6      1.1	0.9	 0.2
						
  Contribution of 
  information processing 
  equipment and software3   0.6	     0.5      0.5      0.9	0.6	 0.3
						
  Contribution of all
  other capital services    0.2	     0.1      0.1      0.2	0.3	-0.1
						
Contribution of 
labor composition4	    0.4	     0.4      0.4      0.3	0.4	 0.3
						
Multifactor productivity5   1.0	     0.5      0.5      1.1	1.5	 0.4
						
  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 1987-2006 period, 
or about 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. 


Notes

Private business and private nonfarm business output series through 2006 
reflect the annual revisions to the National Income and Product Accounts 
(NIPA), announced by the Bureau of Economic Analysis (BEA) in August 2007.

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 proprietors and unpaid 
family workers, compensation, and measures of labor composition, which are 
collected on a 2002 NAICS basis, are converted to a 1997 NAICS basis for 
this report.  

BLS built 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 
from 1987-1997, 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 2004 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 2005 and 
2006 were extrapolated using detailed IRS data for 2004. 

The Bureau of Labor Statistics has used Current Population Survey (CPS) data
to measure the hours of nonfarm proprietors and unpaid family workers and 
all persons working in the farm sector using the hours worked by people 
whose main job falls into these categories. Since the Productivity and Costs
news release of June 2005, hours for primary and secondary jobs held by 
persons working more than one job were processed separately and assigned to 
the appropriate class of worker for each job, rather than assigning all 
hours to the primary job.  Hours worked in a second job as a nonfarm employee
by a proprietor (or other selected category of worker for whom our source is
the CPS) were deducted to avoid double-counting.  Conversely, hours worked as
a proprietor in a secondary job by a person who is primarily an employee were 
included.  This multiple-jobholder adjustment yielded an improved measure of
hours at work by sector and industry and the employment series approximated 
a count of jobs rather than persons. 
Labor composition measures have been updated through 2006.  A brief 
description, “Changes in the Composition of Labor for the BLS Multifactor 
Productivity Measures, 2006” 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/home.htm#overview .   Additional data not contained
in the release can be obtained in print or at http://www.bls.gov/mfp.  Included
in the additional data available in the home page is a zip file containing
selected multifactor productivity data that links 1948-1987 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 education, work experience, and gender with 
weights determined by their shares of labor compensation.  Hours paid of 
employees are largely obtained from 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 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, 2008 news release.  Therefore it reflects the benchmark revisions to 
the CES survey and other revisions to hours released on February 1, 2008.  
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 2006, 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 
1987-2006 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 the stock of research and development are available upon request.


Table 1. Private business sector: Productivity and related measures, 1987-2006

Indexes 2000=100.0

       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    107.1   89.8    62.4    75.5    58.3    69.5    72.2
1988    78.5    107.7   90.5    65.2    78.1    60.5    72.0    72.9
1989    79.3    107.5   90.8    67.6    80.6    62.9    74.4    73.7

1990    81.0    105.9   91.3    68.6    80.5    64.8    75.1    76.5
1991    82.4    102.3   90.7    68.1    79.4    66.6    75.1    80.6
1992    85.9    104.2   93.1    70.9    80.2    68.1    76.2    82.5
1993    86.4    104.3   93.3    73.2    82.6    70.2    78.4    82.8
1994    87.2    105.8   94.0    76.8    86.3    72.7    81.7    82.5

1995    87.4    104.6   93.7    79.2    88.8    75.7    84.4    83.6
1996    90.0    104.7   95.3    82.8    90.7    79.1    86.9    85.9
1997    91.7    104.9   96.2    87.2    94.2    83.2    90.6    87.4
1998    94.3    103.5   97.5    91.5    96.4    88.4    93.9    91.1
1999    97.2    102.3   98.7    96.2    99.0    94.1    97.5    95.0

2000   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2001   102.8     96.0  100.1   100.5    98.6   104.6   100.3   107.0
2002   107.1     94.8  101.8   102.0    97.2   107.6   100.2   112.9
2003   111.2     95.6  104.4   105.2    97.0   110.0   100.7   116.3
2004   114.5     97.5  107.0   109.7    98.4   112.5   102.5   117.4

2005   116.8     98.6  108.8   113.8   100.2   115.4   104.6   118.4
2006   118.0     99.1  109.4   117.4   102.8   118.5   107.4   119.1

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




Table 2. Private nonfarm business sector: Productivity and related measures, 1987-2006

Indexes 2000=100.0

       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    108.9   90.8    62.4    74.7    57.3    68.8    71.6
1988    79.3    109.9   91.6    65.3    77.5    59.4    71.3    72.2
1989    79.9    109.4   91.7    67.6    80.0    61.8    73.8    73.0

1990    81.4    107.5   92.0    68.6    80.1    63.8    74.6    75.7
1991    82.9    103.6   91.4    68.1    78.9    65.7    74.5    80.0
1992    86.3    105.2   93.5    70.8    79.8    67.3    75.7    82.0
1993    86.7    105.5   93.8    73.2    82.3    69.4    78.1    82.2
1994    87.7    106.7   94.5    76.7    85.7    71.9    81.2    82.2

1995    88.2    105.6   94.5    79.3    88.2    75.0    83.9    83.5
1996    90.5    105.5   95.9    82.8    90.2    78.5    86.4    85.8
1997    92.0    105.3   96.5    87.2    93.9    82.7    90.3    87.3
1998    94.5    103.9   97.8    91.5    96.2    88.1    93.6    91.0
1999    97.3    102.5   98.8    96.3    99.0    93.9    97.4    94.9

2000   100.0    100.0  100.0   100.0   100.0   100.0   100.0   100.0
2001   102.7     96.0  100.1   100.5    98.7   104.7   100.5   107.0
2002   107.1     94.7  101.8   102.1    97.2   107.8   100.2   113.1
2003   111.0     95.4  104.3   105.2    97.1   110.3   100.8   116.4
2004   114.2     97.3  106.8   109.6    98.6   112.7   102.6   117.4

2005   116.4     98.3  108.6   113.7   100.4   115.6   104.7   118.4
2006   117.6     98.7  109.0   117.4   103.1   118.9   107.6   119.1

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, 1988-2006

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     0.6     0.7     4.4     3.6     3.8     3.6     1.0
1989    1.0    -0.2     0.3     3.7     3.1     3.9     3.4     1.2

1990    2.2    -1.5     0.6     1.5    -0.1     3.1     0.9     3.8
1991    1.7    -3.4    -0.7    -0.7    -1.3     2.8     0.0     5.3
1992    4.3     1.8     2.6     4.1     1.0     2.2     1.4     2.4
1993    0.5     0.1     0.2     3.2     2.9     3.1     3.0     0.4
1994    1.0     1.4     0.8     5.0     4.5     3.5     4.2    -0.4

1995    0.2    -1.1    -0.3     3.0     2.9     4.2     3.3     1.4
1996    2.9     0.1     1.7     4.6     2.1     4.5     2.9     2.8
1997    1.9     0.2     0.9     5.3     4.0     5.2     4.4     1.7
1998    2.8    -1.3     1.3     4.9     2.3     6.3     3.5     4.2
1999    3.1    -1.2     1.3     5.2     2.7     6.5     3.8     4.3

2000    2.9    -2.2     1.3     3.9     1.0     6.3     2.6     5.2
2001    2.8    -4.0     0.1     0.5    -1.4     4.6     0.3     7.0
2002    4.2    -1.3     1.7     1.5    -1.4     2.9    -0.1     5.5
2003    3.9     0.9     2.6     3.1    -0.3     2.3     0.5     3.0
2004    2.9     1.9     2.5     4.3     1.5     2.3     1.7     1.0

2005    2.0     1.2     1.6     3.7     1.8     2.5     2.1     0.8
2006    1.1     0.5     0.5     3.2     2.6     2.7     2.6     0.6

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, 1988-2006

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     0.9     4.6     3.7     3.7     3.7     0.8
1989    0.7    -0.4     0.1     3.5     3.2     4.0     3.4     1.2

1990    1.9    -1.8     0.4     1.5     0.1     3.3     1.1     3.8
1991    1.8    -3.6    -0.7    -0.8    -1.4     2.9    -0.1     5.6
1992    4.1     1.5     2.4     3.9     1.1     2.4     1.5     2.6
1993    0.5     0.2     0.3     3.5     3.2     3.2     3.2     0.3
1994    1.1     1.2     0.8     4.8     4.1     3.6     4.0     0.0

1995    0.6    -1.0     0.0     3.3     2.9     4.3     3.4     1.5
1996    2.6    -0.2     1.4     4.5     2.3     4.7     3.0     2.8
1997    1.6    -0.1     0.7     5.2     4.1     5.3     4.5     1.7
1998    2.8    -1.3     1.3     5.0     2.4     6.5     3.7     4.2
1999    2.9    -1.3     1.1     5.2     2.9     6.6     4.1     4.3

2000    2.8    -2.5     1.2     3.8     1.0     6.5     2.6     5.4
2001    2.7    -4.0     0.1     0.5    -1.3     4.7     0.5     7.0
2002    4.2    -1.4     1.7     1.5    -1.5     3.0    -0.2     5.7
2003    3.7     0.8     2.5     3.1    -0.2     2.3     0.6     3.0
2004    2.8     2.0     2.4     4.2     1.6     2.2     1.8     0.8

2005    2.0     1.1     1.6     3.7     1.8     2.6     2.1     0.9
2006    1.0     0.4     0.4     3.2     2.7     2.8     2.8     0.6

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. Real capital input by asset type, private business, 1987-2006

Average annual growth rates (percent)


                        1987-   1987-   1990-   1995-   2000-   2005-
                        2006    1990    1995    2000    2006    2006

All Assets               3.8     3.6     3.2     5.7     2.9     2.7

  Equipment              5.9     4.6     4.8     9.4     4.7     4.7

    All Information     11.2    10.8     9.4    17.1     8.3     7.1
    equipment & software

      Computers &       23.1    18.8    16.4    40.9    17.3    16.8
      related equipment

      Software          12.9    17.7    13.3    16.5     7.3     5.7

      Communications     7.4     6.3     5.4    10.8     6.7     5.1
      equipment

      Other IPES         3.5     3.4     3.8     3.2     3.5     4.9

    All other equipment  2.4     1.2     1.8     4.2     1.9     2.7

  Structures             1.8     2.8     1.9     2.0     1.1     0.9

  Residential rental     1.5     2.0     1.1     1.7     1.5     1.3
  capital

  Inventories            2.6     2.6     2.2     4.3     1.5     2.3

  Land                   1.4     2.9     1.4     1.7     0.5    -0.4

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. Real capital input by asset type, private nonfarm business, 1987-2006

Average annual growth rates (percent)


                        1987-   1987-   1990-   1995-   2000-   2005-
                        2006    1990    1995    2000    2006    2006

All Assets               3.9     3.6     3.3     5.9     2.9     2.8

  Equipment              6.1     4.9     5.0     9.5     4.8     4.7

    All Information     11.2    10.8     9.3    17.1     8.3     7.1
    equipment & software

      Computers &       23.1    18.8    16.3    40.9    17.3    16.8
      related equipment

      Software          12.9    17.7    13.2    16.6     7.3     5.7

      Communications     7.4     6.3     5.4    10.8     6.7     5.1
      equipment

      Other IPES         3.5     3.4     3.8     3.2     3.5     4.9

    All other equipment  2.5     1.5     2.0     4.2     1.9     2.7

  Structures             1.9     2.9     2.0     2.1     1.1     1.0

  Residential rental     1.5     2.0     1.1     1.7     1.5     1.3
  capital

  Inventories            2.7     3.0     2.3     4.5     1.6     2.4

  Land                   1.4     1.8     1.5     2.1     0.6     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.



Last Modified Date: March 27, 2008
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