Economic News Release

Multifactor Productivity Trends In Manufacturing, 2011

For release 10:00 a.m. 	(EDT) Wednesday,  June 19, 2013	USDL-13-1177
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MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2011


Manufacturing sector multifactor productivity increased at a 0.8 percent 
annual rate in 2011, the U.S. Bureau of Labor Statistics reported today. 
This increase was considerably smaller than the 4.5 percent gain in 2010, 
the largest gain in the series which began in 1987. The multifactor 
productivity gain in 2011 reflected a 3.1 percent increase in output
and a 2.3 percent increase in combined inputs. (See table A.) 

Multifactor productivity measures the change in output per unit of combined 
inputs. Multifactor productivity in manufacturing is designed to measure the
joint influences on economic growth of technological change, efficiency
improvements, returns to scale, reallocation of resources, and other factors,
allowing for the effects of capital, labor and intermediate inputs (energy, 
materials, purchased business services). Multifactor productivity measures 
differ from labor productivity (output per hour worked) measures that are
published quarterly by BLS because multifactor productivity measures include
information on capital services and intermediate inputs. Also, data needed 
to construct multifactor productivity are not available on a quarterly basis.

Durable manufacturing sector multifactor productivity increased 1.9 percent
in 2011, following a 6.8 percent increase in 2010. Nondurable manufacturing
sector multifactor productivity declined 0.3 percent in 2011, following a 
2.1 percent increase in 2010. (See table C, table 3.)
     
Historical trends in manufacturing

Multifactor productivity in manufacturing grew 1.3 percent annually from
1987 to 2011 with sectoral output increasing at an annual rate of 1.7 
percent, faster than the 0.3 percent annual increase in combined inputs.
During the same period, output per hour (labor productivity) increased 3.3
percent annually. (See table A.) Of the 3.3 percent growth rate in labor
productivity, multifactor productivity added 1.3 percent, capital intensity
contributed 0.6 percent, materials intensity added 0.9 percent, and 
purchased business services intensity added a 0.4 percent increase. The 
contribution of energy intensity was unchanged. (See table B.)

For the 2007-2011 period, multifactor productivity rose at a 0.6 percent
annual rate compared to a larger 2.0 percent annual growth rate in the 
2000-2007 period. (See table A.) Sectoral output declined 2.3 percent 
and combined inputs declined 2.9 percent over the 2007-2011 period.

In 2011, fewer NAICS three-digit manufacturing industries exhibited an 
increase in multifactor productivity growth and sectoral output growth
compared to the previous year. The number of industries exhibiting an 
increase in combined inputs remained steady at 13, the same number as 
in 2010. Eleven out of 18 manufacturing industries exhibited an 
increase in multifactor productivity. Thirteen industries showed 
increasing output. (See chart 2.) Seven industries experienced a 
decline in multifactor productivity growth. Of these seven industries,
two were durable manufacturing industries: primary metals and
miscellaneous manufacturing. The remaining five industries were in the 
nondurable manufacturing sector: food, beverage, and tobacco products;
textile mills and textile product mills; apparel, leather, and allied
products; petroleum and coal products; and plastics and rubber products.
(See table 3.)


Revised measures

Previous and revised productivity measures and related data for 2009 
and 2010 for the manufacturing, durable manufacturing, and nondurable
manufacturing sectors are displayed in table C. In 2010, multifactor
productivity growth in the manufacturing sector was 4.5 percent, a
downward revision from the previously reported 7.5 percent. Multifactor
productivity in the durable manufacturing sector was 6.8 percent, down 
from the previously reported 12.7 percent. In the nondurable 
manufacturing sector, multifactor productivity was 2.1 percent, a 
slight downward revision. The downward revision of multifactor 
productivity in all three sectors was largely the result of an upward
revision in the growth of combined inputs in all three sectors. In
2009, multifactor productivity in all three sectors was revised slightly
upward. The revisions in both years were due to the annual revision of 
the National Income and Product Accounts (NIPA) released on November 13,
2012.

 
Table A.  Compound annual growth rates for productivity, sectoral output, and
inputs in the manufacturing sector for selected periods, 1987-2011

In percent
                        1987- 1987- 1990- 1995- 2000- 2007- 2010-
                        2011  1990  1995  2000  2007  2011  2011
Productivity
   Multifactor
   productivity1         1.3   0.3   1.2   1.8   2.0   0.6   0.8
   Output per hour
   of all persons        3.3   1.8   3.4   4.8   3.9   1.6   0.8
   Output per unit
   of capital services  -0.1  -0.1   0.7   0.8   0.3  -2.8   3.0

Sectoral Output          1.7   2.1   3.3   4.6   0.7  -2.3   3.1

Inputs

   Combined inputs2      0.3   1.9   2.1   2.8  -1.3  -2.9   2.3
      Labor hours3      -1.6   0.4  -0.1  -0.1  -3.1  -3.9   2.3
      Capital services   1.8   2.3   2.6   3.8   0.4   0.5   0.1
      Energy            -0.3   1.9   1.7   5.9  -3.9  -5.3   2.0
      Materials          1.4   1.6   3.7   5.9  -1.1  -2.3   6.3
      Purchased business
      services           0.7   5.3   3.2   1.3   0.2  -5.6  -3.1

1Output per combined units of hours, capital services, energy, materials,
and purchased business services.
2The growth rate of each input is weighted by its share of current dollar
costs.
3Hours at work of all persons.

Table B.  Compound annual growth rates in output per hour of all persons and 
contributions of capital intensity, intermediate inputs intensity, and
multifactor productivity in the manufacturing sector for selected periods,
1987-2011

In percent
                            1987- 1987- 1990- 1995- 2000- 2007- 2010-
                            2011  1990  1995  2000  2007  2011  2011
Manufacturing

Output per hour
of all persons               3.3   1.8   3.4   4.8   3.9   1.6   0.8

Contribution of
capital intensity1           0.6   0.3   0.4   0.7   0.6   0.8  -0.4

      Contribution of
      information
      processing
      equipment
      and software2          0.2   0.2   0.2   0.3   0.1   0.2   0.0

      Contribution
      of all
      other capital
      services               0.4   0.2   0.2   0.3   0.5   0.7  -0.4

Contribution of
intermediate inputs3         1.3   1.2   1.8   2.2   1.2   0.2   0.5

      Contribution
      of energy
      intensity4             0.0   0.0   0.0   0.2   0.0   0.0   0.0

      Contribution
      of materials
      intensity5             0.9   0.4   1.1   1.8   0.6   0.5   1.4

      Contribution
      of purchased
      business
      services
      intensity6             0.4   0.8   0.6   0.3   0.6  -0.3  -0.9

Multifactor
productivity7                1.3   0.3   1.2   1.8   2.0   0.6   0.8

1Capital services per hour multiplied by capital's share of current dollar
costs.
2Information processing equipment and software per hour multiplied by its
share of total current dollar costs.
3Intermediate inputs per hour multiplied by intermediate inputs share of
current dollar costs.
4Energy per hour multiplied by energy’s share of current dollar costs.
5Materials per hour multiplied by materials’ share of current dollar costs.
6Purchased business services per hour multiplied by purchased business'
services' share of current dollar costs.
7Output per combined units of hours, capital services, energy, materials,
and purchased business services.

Table C.  Previous and revised productivity and related measures for the
2009-2010 and 2008-2009 periods
                                                  Inputs
                                                                       Purc-
                       Multi-   Sec-  Com-         Capi-               hased 
                       factor   toral bined        tal                 busi- 
                       produc-  out-  in-          ser-         Mate-  ness
Sector                 tivity1  put   puts2 Hours3 vices Energy rials  services
Annual percent change,
2009-2010
Manufacturing
Previous                  7.5   6.4   -1.1   -0.1  -0.3    2.9   -3.7    0.4
Revised                   4.5   6.3    1.7    0.0  -0.5    1.6    5.0    1.3
Durable manufacturing
Previous                 12.7  10.5   -1.9   -0.1  -1.8    6.1   -4.3   -3.4
Revised                   6.8  10.0    3.0   -0.1  -1.6   12.8   14.2   -1.3
Nondurable manufacturing
Previous                  2.7   3.2    0.4    0.0   0.6    1.0   -1.1    5.7
Revised                   2.1   3.3    1.1    0.1   0.1   -5.1    1.4    4.9

Annual percent change,
2008-2009
Manufacturing
Previous                 -2.8 -12.9  -10.4  -13.0   0.1  -24.1  -13.1   -9.1
Revised                  -2.2 -12.9  -10.9  -13.0   0.1  -22.8  -14.2  -10.6
Durable manufacturing
Previous                 -4.7 -20.3  -16.3  -15.4  -0.1  -28.0  -26.8  -13.4
Revised                  -4.1 -20.3  -16.9  -15.5  -0.2  -28.9  -27.1  -15.1
Nondurable manufacturing
Previous                 -0.9  -6.4   -5.6   -8.6   0.2  -21.4   -6.6   -2.4
Revised                  -0.3  -6.4   -6.2   -8.7   0.3  -18.8   -7.8   -3.4

1Output per combined units of hours, capital services, energy, materials, and
purchased business services.
2The growth rate of each input is weighted by its share of current dollar costs
3Hours at work of all persons.

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Last Modified Date: June 19, 2013
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