News

Bureau of Labor Statistics Washington, D.C. 20212 

United States 

Department 

of Labor 

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. 
2

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. 

Chart 1. Output per hour of all persons, output per unit of capital, and multifactor productivity in 

the private business sector, 1987- 2007

50

70

90

110

130

150

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year

Index (1987=100)

Multifactor productivity

Output per unit of capital

Output per hour of all persons

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 capitallabor ratio (capital services per hour of all persons) increased by 2.3 percent, the highest rate of 

growth since 2003. 
3

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 productivity

2 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 . 
4

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. 
5

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. 
6

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. 
7

Chart 2. Contributors to growth in output per hour 

in the private business sector, selected periods, 

1987-2007

0.8 0.6 0.6

1.2

0.9

0.3

0.4

0.2

0.2

1.0

0.6 0.5

1.3

1.5

0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1987-07 1987-90 1990-95 1995-00 2000-07

 Percentage Points

Multifactor

Productivity

Contribution of

labor composition

Contribution of

capital intensity

 

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. 
8

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 . 
9

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. 
10

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 prepackaged, 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. 
11

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. 
12

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 .
13

Table 1. Private business sector: Indexes of productivity and related measures, 1987-20071

Indexes 2000=100 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of 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 
14

Table 2. Private nonfarm business sector: Indexes of productivity and related measures, 1987-20071

Indexes 2000=100 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of 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 
15

Table 3. Private business sector: Compound average annual rates of growth in productivity and related 

measures, 1988-20071 

Percent per year 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of 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 
16

Table 4. Private nonfarm business sector: Compound average annual rates of growth in productivity and 

related measures, 1988-20071 

Percent per year 

Productivity Inputs 

Year 

Output per 

hour of all 

persons 

Output 

per unit 

of capital 

Multifactor 

Productivity2 Output3

Labor

Input4

Capital 

Services5

Combined 

units of labor 

and capital6

Capital per 

hour of all 

persons 

 

1988 1.7 0.9 1.1 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 
17

Footnotes, Tables 1-4 

Source: Output data are from the Bureau of Economic Analysis (BEA), U.S. Department of Commerce, 

and are 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. Also see 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 hours at work of all persons including employees, proprietors, and unpaid family 

workers, classified by age, education, and gender. This superlative chain 

index is computed by combining changes in the hours of each age, education, 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. 
18

Table 5. Compound average annual rates of growth in real capital services by asset type, private 

business sector, 1987-2007 

Percent per year 

1987 

to 

2007 

1987 

to 

1990 

1990 

to 

1995 

1995 

to 

2000 

2000 

to 

2007 

2006 

to 

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 Processing 

Equipment &Software (IPES) 11.2 11.0 9.4 17.5 8.1 7.4 

 Computers & related 

equipment 22.7 19.1 16.1 41.3 16.8 17.3 

 Software 12.5 17.8 13.4 16.4 7.2 6.1 

 Communication equipment 7.2 6.2 5.4 10.6 6.4 5.6 

 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 capital 1.5 2.1 1.2 1.7 1.4 0.9 

 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. 
19

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 

to 

2007 

1987 

to 

1990 

1990 

to 

1995 

1995 

to 

2000 

2000 

to 

2007 

2006 

to 

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 Processing 

Equipment &Software (IPES) 11.2 11.0 9.4 17.5 8.1 7.4 

 Computers & related 

equipment 22.7 19.1 16.1 41.3 16.8 17.3 

 Software 12.5 17.8 13.4 16.4 7.2 6.1 

 Communication equipment 7.2 6.2 5.4 10.6 6.4 5.6 

 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 capital 1.5 2.1 1.2 1.7 1.4 0.9 

 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.