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For release 10:00 am (EDT) Wednesday, October 6, 2010 USDL-10-1391

Technical information: (202) 691-5606 • dprweb@bls.gov • www.bls.gov/mfp 

Media contact: (202) 691-5902 • PressOffice@bls.gov 

PRELIMINARY MULTIFACTOR PRODUCTIVITY TRENDS - 2009

Private nonfarm business sector multifactor productivity increased at a 0.7 percent annual rate in 2009, the U.S. 

Bureau of Labor Statistics reported today. (See chart 1, table A.) This was the largest gain in multifactor 

productivity since 2005. (See table 1.) Multifactor productivity measures the change in output per unit of 

combined inputs of labor and capital. Multifactor productivity 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 and labor. Multifactor productivity, therefore, differs from 

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. 

The multifactor productivity gain in 2009 reflected a 3.6 percent decrease in output and a 4.3 percent decrease in 

the combined inputs of capital and labor. Capital services grew by 1.2 percent, the slowest gain in the series 

which began in 1987. Labor input fell 6.9 percent, the largest decline for the series which began in 1987. 

Private business sector multifactor productivity grew 0.8 percent in 2009, the largest gain in multifactor 

productivity since 2005. The multifactor productivity gain in 2009 reflected a 3.5 percent decline in output and a 

4.2 percent decrease in the combined inputs of capital and labor. 

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

private nonfarm business sector, 2000-2009 

 

 Annual percent change

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Output per hour of all persons Multifactor productivity Output per unit of capital services
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Historical trends in private nonfarm business 

Multifactor productivity in private nonfarm business grew 1.0 percent annually between 1987 (the starting point 

of the series) and 2009. (See table A.) Output increased at a 2.9 percent annual rate over the period and combined 

units of labor input and capital services rose an average of 1.9 percent per year. Output per hour (labor 

productivity) grew 2.3 percent. For the 2007-2009 period, multifactor productivity in private nonfarm business 

slowed, averaging 0.4 percent per year, a sharp decline from the 1.4 percent growth rate in the 2000-2007 period. 

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 shows how, relative to output per hour, multifactor productivity and the contribution of 

capital intensity shifted upward in the latter half of the 1990s. These contributions continued to be relatively high 

over the 2000-2007 period. For 2007-2009, the contribution of capital intensity rose sharply compared to 

previous periods. 

Of the 2.3 percent growth rate in labor productivity for the 1987-2009 period, 1.0 percent can be attributed to 

increases in multifactor productivity, 1.0 percent to the contribution of capital intensity, and 0.3 percent to 

changes in labor composition. (See table B.) 

The methodology for measuring preliminary multifactor productivity for 2009 is a simplified version of the 

methodology that BLS uses when more detailed information is available. Data will be revised in mid-year 2011. 

 

Chart 2. Percentage point contributions to growth in output per hour in the private nonfarm business sector, 

1987-2009 

 Average annual percent change

Multifactor productivity plus the contributions of capital intensity and labor composition may not sum to output per 

hour due to independent rounding. 

1.0

0.6 0.6

1.2 1.0

2.2 0.3

0.4 0.5

0.2

0.2

0.2

1.0

0.5 0.5

1.3

1.4

0.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1987-2009 1987-1990 1990-1995 1995-2000 2000-2007 2007-2009

Contribution of capital intensity Contribution of labor composition Multifactor productivity
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Table A. Compound annual growth rates for productivity, output, and inputs in the private nonfarm 

business and private business sectors for selected periods, 1987-2009 

In percent 

1987-

2009

1987-

1990

1990-

1995

1995-

2000

2000-

2007

2007-

2009

2008-

2009

Private nonfarm business1

Productivity

 Multifactor Productivity2 1.0 0.5 0.5 1.3 1.4 0.4 0.7

 Output per hour of all persons 2.3 1.5 1.6 2.8 2.7 2.9 3.8

 Output per unit of capital services -1.0 -0.4 -0.5 -1.1 -0.6 -3.8 -4.7

Output 2.9 3.2 2.9 5.0 2.7 -1.9 -3.6

Inputs

 

 Combined inputs3 1.9 2.7 2.4 3.6 1.3 -2.3 -4.3

 Labor Input41.0 2.3 2.0 2.5 0.4 -4.3 -6.9

 Hours 0.6 1.7 1.3 2.2 0.0 -4.7 -7.1

 Labor composition50.4 0.6 0.7 0.3 0.3 0.4 0.3

 Capital services 3.9 3.7 3.4 6.2 3.4 2.0 1.2

Analytic ratio

 Capital services per hour of all 

 persons 3.3 1.9 2.0 3.9 3.4 7.0 9.0

Private business1

Productivity

 Multifactor Productivity2 1.0 0.6 0.4 1.5 1.5 0.4 0.8

 Output per hour of all persons 2.4 1.6 1.5 2.9 2.7 2.9 3.8

 Output per unit of capital services -0.8 -0.4 -0.3 -0.9 -0.5 -3.6 -4.5

Output 2.9 3.2 2.9 5.0 2.7 -1.8 -3.5

Inputs

 

 Combined inputs3 1.9 2.6 2.4 3.4 1.2 -2.2 -4.2

 Labor Input41.0 2.1 2.0 2.3 0.3 -4.2 -6.8

 Hours 0.5 1.6 1.3 2.0 0.0 -4.6 -7.0

 Labor composition50.5 0.6 0.7 0.3 0.3 0.4 0.2

 Capital services 3.8 3.6 3.2 6.0 3.3 1.9 1.1

Analytic ratio

 Capital services per hour of all 

 persons 3.2 2.0 1.8 3.9 3.3 6.8 8.8

1 Excludes government enterprises. 

2 Output per unit of combined labor input and capital services. 

3 The growth rate of each input is weighted by its share of nominal costs.

4 Index of hours at work; hours at work by age, education, and gender group are weighted by each group’s share of labor compensation. 

5 Ratio of labor input to hours. 
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Table B. Compound annual growth rates in output per hour of all persons and the contribution of 

capital intensity, labor composition, and multifactor productivity in the private nonfarm business and 

private business sectors for selected periods, 1987-2009 

In percent 

1987-

2009

1987-

1990

1990-

1995

1995-

2000

2000-

2007

2007-

2009

2008-

2009

Private nonfarm business1

Output per hour of all persons 2.3 1.5 1.6 2.8 2.7 2.9 3.8

 Contribution of capital 

 intensity21.0 0.6 0.6 1.2 1.0 2.2 2.8

 Contribution of labor 

 composition30.3 0.4 0.5 0.2 0.2 0.2 0.1

 Multifactor productivity4 1.0 0.5 0.5 1.3 1.4 0.4 0.7

Private business1

Output per hour of all persons 2.4 1.6 1.5 2.9 2.7 2.9 3.8

 Contribution of capital 

 intensity21.0 0.6 0.6 1.2 1.0 2.2 2.8

 Contribution of labor 

 composition30.3 0.4 0.5 0.2 0.2 0.3 0.1

 Multifactor productivity4

1.0 0.6 0.4 1.5 1.5 0.4 0.8

 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 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.

 4 Output per unit of combined labor input and capital services.

Multifactor productivity plus the contributions of capital intensity and labor composition may not sum to output per 

hour due to independent rounding. 
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Technical Notes 

The simplified methodology for preparing preliminary estimates of MFP is outlined in the June 

2005 Monthly Labor Review article, “Preliminary estimates of multifactor productivity growth” located 

at http://www.bls.gov/opub/mlr/2005/06/art3abs.htm. This methodology is applied to both the private 

nonfarm business and private business sectors and measures are calculated only for the most recent year. 

Data for all previous years are not different from the August 24, 2010 “Multifactor Productivity Trends” 

news release (USDL-10-1171). 

Capital Services: Capital services are the services derived from the stock of physical assets and 

software. Capital services measures constructed for the preliminary MFP measures are based on less 

detail only for the most recent year. The preliminary measures consist of eight asset types as opposed to 

the 76 asset types included in estimates for all previous years. The assets included in the preliminary 

estimates are computers, software, communications and other information processing equipment, other 

fixed business equipment, structures, inventories, rental residences, and land. Investments, depreciation, 

and capital income are estimated for each of these eight aggregates. Capital services are calculated by a 

chained superlative Tornqvist index combining stocks of the eight asset categories, weighted by capital 

income shares. 

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 each group’s share of labor compensation. The preliminary 

estimates of 2009 hours worked for the private nonfarm business and private business sectors are 

extrapolated from the hours worked reported in the nonfarm business and business sectors, respectively,

in the June 3, 2010 “Productivity and Costs” news release (USDL-10-0747). 

The labor composition index estimates the effect of shifts in the age, education, and gender 

composition of the work force on the efficiency of hours worked. The preliminary MFP labor 

composition measure estimates the number of hours worked by each type of worker based on Current 

Population Survey (CPS) data. The estimate of the 2009 labor composition index assumes relative 

wages across groups remain constant between 2008 and 2009. 

Additional information concerning data sources and methods of measuring labor composition 

can be found in Cindy Zoghi, 2007, “Measuring Labor Composition: A Comparison of Alternate 

Methodologies” http://www.bls.gov/bls/fesacp1121407.pdf. 

Combined Inputs: Labor input and capital services are combined using Tornqvist aggregation, 

employing weights that represent each component's share of total costs. The Tornqvist index uses 

changing weights; the share in each year is averaged with the preceding year's share. Total costs are 

defined as the value of output 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. 
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Output: Private business sector output is a chain-type, current-weighted index constructed after 

excluding from gross domestic product (GDP) the following outputs: general government, nonprofit 

institutions, private households (including owner-occupied housing), and government enterprises. This 

release presents data for the private business and private nonfarm business sectors. The private business 

sector accounted for approximately 76 percent of gross domestic product in 2005. 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. The output measures reflect the revised National Income and 

Product Accounts (NIPA) data released by the Bureau of Labor Statistics (BEA) on July 31, 2009 but do 

not reflect the revised data released by BEA on July 30, 2010. The preliminary estimates of 2009 

output for the private nonfarm business and private business sectors are extrapolated from the output 

reported in the nonfarm business and business sectors, respectively, in the June 3, 2010 “Productivity 

and Costs” news release (USDL-10-0747). 

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.
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Table 1. Private nonfarm business sector: productivity and related measures for the 1987-20091 period

Annual percent change from previous year 

Productivity Inputs

Year

Output 

per hour 

of all 

persons

Output 

per unit 

of 

capital

services

Multifactor 

Productivity2 Output3

Labor

Input4

Capital

Services5

Combined 

units of 

labor input 

and 

capital

services6

Capital 

services

per hour 

of all 

persons

1988 1.7 0.9 1.0 4.6 3.5 3.7 3.5 0.8

1989 0.8 -0.3 0.1 3.5 3.3 3.9 3.5 1.1

1990 1.9 -1.9 0.4 1.4 0.1 3.4 1.0 3.8

1991 1.7 -3.6 -0.9 -0.9 -1.1 2.9 0.0 5.5

1992 4.0 1.3 2.3 3.8 1.0 2.5 1.5 2.7

1993 0.7 0.4 0.3 3.6 3.3 3.2 3.3 0.3

1994 1.1 0.9 0.7 4.7 4.1 3.7 4.0 0.1

1995 0.5 -1.2 0.0 3.3 2.7 4.5 3.2 1.7

1996 2.6 -0.4 1.4 4.4 2.2 4.9 3.0 3.0

1997 1.5 -0.4 0.6 5.1 4.0 5.5 4.5 1.9

1998 3.0 -1.2 1.5 5.2 2.4 6.6 3.6 4.3

1999 3.3 -1.4 1.6 5.6 2.6 7.1 3.9 4.7

2000 3.4 -2.2 1.6 4.5 1.2 6.8 2.8 5.8

2001 3.1 -3.9 0.7 1.0 -1.6 5.1 0.3 7.3

2002 4.7 -1.5 2.4 1.9 -2.0 3.5 -0.5 6.2

2003 3.7 0.2 2.5 3.1 -0.4 2.9 0.6 3.5

2004 2.8 1.7 2.6 4.2 1.2 2.4 1.5 1.1

2005 1.7 0.1 1.0 3.4 1.9 3.3 2.4 1.5

2006 1.0 -0.2 0.4 3.2 2.5 3.4 2.8 1.2

2007 1.9 -0.9 0.5 2.4 1.2 3.3 1.9 2.8

2008 2.1 -2.8 0.1 -0.2 -1.7 2.8 -0.3 5.1

2009 3.8 -4.7 0.7 -3.6 -6.9 1.2 -4.3 9.0

See footnotes following table 4. Source: Bureau of Labor Statistics 
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Table 2. Private business sector: productivity and related measures for the 1987-2009

1 period

Annual percent change from previous year 

Productivity Inputs

Year

Output 

per hour 

of all 

persons

Output 

per unit 

of 

capital

services

Multifactor 

Productivity2 Output3

Labor

Input4

Capital

Services5

Combined 

units of 

labor input 

and 

capital

services6

Capital 

services 

per hour 

of all 

persons

1988 1.6 0.5 0.8 4.4 3.4 3.8 3.5 1.1

1989 1.0 -0.1 0.3 3.7 3.2 3.8 3.4 1.1

1990 2.2 -1.6 0.7 1.5 -0.1 3.1 0.9 3.8

1991 1.6 -3.4 -0.9 -0.8 -1.0 2.7 0.1 5.2

1992 4.2 1.6 2.5 4.0 1.0 2.3 1.4 2.5

1993 0.6 0.3 0.2 3.3 3.1 3.1 3.1 0.4

1994 0.9 1.2 0.7 4.9 4.5 3.6 4.2 -0.3

1995 0.1 -1.4 -0.3 2.9 2.7 4.4 3.2 1.6

1996 2.9 -0.1 1.7 4.6 2.0 4.6 2.8 3.0

1997 1.7 -0.1 0.8 5.2 3.9 5.3 4.4 1.9

1998 3.0 -1.2 1.5 5.1 2.3 6.4 3.5 4.3

1999 3.5 -1.2 1.8 5.6 2.4 6.9 3.7 4.7

2000 3.5 -1.9 1.7 4.6 1.2 6.6 2.8 5.5

2001 3.2 -3.8 0.8 0.9 -1.8 5.0 0.2 7.3

2002 4.6 -1.3 2.4 2.0 -1.9 3.4 -0.4 6.0

2003 3.9 0.4 2.6 3.1 -0.5 2.8 0.5 3.5

2004 2.9 1.6 2.6 4.2 1.1 2.5 1.5 1.3

2005 1.7 0.2 1.0 3.4 1.9 3.2 2.3 1.5

2006 1.0 0.0 0.5 3.1 2.3 3.1 2.6 1.0

2007 1.8 -0.8 0.5 2.3 1.1 3.1 1.8 2.6

2008 2.1 -2.6 0.1 0.0 -1.5 2.7 -0.1 4.9

2009 3.8 -4.5 0.8 -3.5 -6.8 1.1 -4.2 8.8

See footnotes following table 4. Source: Bureau of Labor Statistics 
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Table 3. Private nonfarm business sector: indexes of productivity and related measures, 1987-20091

Indexes 2005=100 

Productivity Inputs

Year

Output 

per hour 

of all 

persons

Output 

per unit 

of 

capital

services

Multifactor 

Productivity2 Output3

Labor

Input4

Capital

Services5

Combined 

units of 

labor input 

and 

capital

services6

Capital 

services 

per hour 

of all 

persons

1987 66.1 113.6 82.1 54.2 75.6 47.7 66.0 58.2

1988 67.2 114.6 83.0 56.7 78.3 49.4 68.3 58.6

1989 67.7 114.2 83.0 58.7 80.9 51.4 70.7 59.3

1990 69.0 112.1 83.3 59.5 80.9 53.1 71.4 61.5

1991 70.2 108.1 82.6 59.0 80.0 54.6 71.4 64.9

1992 73.0 109.5 84.5 61.3 80.8 56.0 72.5 66.7

1993 73.4 109.9 84.8 63.5 83.5 57.8 74.9 66.8

1994 74.2 110.9 85.4 66.5 87.0 59.9 77.9 66.9

1995 74.6 109.6 85.4 68.6 89.3 62.6 80.4 68.1

1996 76.5 109.1 86.5 71.7 91.3 65.7 82.8 70.1

1997 77.6 108.7 87.1 75.3 94.9 69.3 86.5 71.4

1998 80.0 107.3 88.4 79.3 97.2 73.9 89.7 74.5

1999 82.6 105.9 89.9 83.7 99.8 79.1 93.2 78.0

2000 85.4 103.5 91.3 87.5 101.0 84.5 95.8 82.5

2001 88.1 99.5 91.9 88.4 99.4 88.8 96.1 88.6

2002 92.2 98.0 94.2 90.1 97.4 91.9 95.7 94.1

2003 95.7 98.2 96.5 92.8 97.0 94.5 96.2 97.4

2004 98.4 99.9 99.0 96.7 98.1 96.8 97.7 98.5

2005 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2006 101.0 99.8 100.4 103.2 102.5 103.4 102.8 101.2

2007 102.9 98.9 100.9 105.6 103.7 106.8 104.7 104.0

2008 105.0 96.1 101.0 105.5 101.9 109.7 104.4 109.3

2009 109.0 91.6 101.7 101.6 94.9 111.0 100.0 119.1

See footnotes following table 4. Source: Bureau of Labor Statistics 
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Table 4. Private business sector: indexes of productivity and related measures, 1987-20091

Indexes 2005=100 

Productivity Inputs

Year

Output 

per hour 

of all 

persons

Output 

per unit 

of 

capital

services

Multifactor 

Productivity2 Output3

Labor

Input4

Capital

Services5

Combined 

units of 

labor input 

and 

capital

services6

Capital 

services 

per hour 

of all 

persons

1987 65.2 111.0 81.1 54.1 76.5 48.8 66.7 58.8

1988 66.3 111.6 81.8 56.5 79.0 50.6 69.0 59.4

1989 67.0 111.5 82.0 58.6 81.6 52.5 71.4 60.1

1990 68.4 109.7 82.6 59.5 81.5 54.2 72.0 62.3

1991 69.5 106.0 81.8 59.0 80.7 55.6 72.1 65.6

1992 72.5 107.8 83.9 61.4 81.5 56.9 73.1 67.2

1993 72.9 108.0 84.1 63.4 84.0 58.7 75.4 67.5

1994 73.6 109.4 84.7 66.5 87.8 60.8 78.6 67.3

1995 73.7 107.8 84.4 68.5 90.1 63.5 81.1 68.3

1996 75.8 107.8 85.9 71.6 91.9 66.4 83.4 70.3

1997 77.1 107.6 86.6 75.3 95.5 70.0 87.0 71.7

1998 79.5 106.4 87.9 79.2 97.7 74.4 90.1 74.7

1999 82.3 105.2 89.5 83.6 100.0 79.5 93.4 78.2

2000 85.2 103.1 91.0 87.4 101.2 84.8 96.0 82.6

2001 87.9 99.2 91.7 88.2 99.5 89.0 96.2 88.6

2002 91.9 97.8 93.9 90.0 97.5 92.0 95.8 94.0

2003 95.5 98.2 96.4 92.8 97.1 94.5 96.2 97.3

2004 98.3 99.8 99.0 96.7 98.1 96.9 97.7 98.5

2005 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2006 101.0 100.0 100.5 103.1 102.3 103.1 102.6 101.0

2007 102.9 99.3 101.0 105.5 103.5 106.2 104.4 103.6

2008 105.0 96.7 101.1 105.4 102.0 109.1 104.3 108.7

2009 109.0 92.3 101.9 101.7 95.0 110.3 99.9 118.2

See footnotes following table 4. Source: Bureau of Labor Statistics
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Footnotes, Tables 1-4 

Source: BLS develops productivity measures using output data published by the Bureau of Economic Analysis 

(BEA), compensation and hours data published by other Bureau of Labor Statistics (BLS) programs, and capital 

data supplied by BEA and U.S. Department of Agriculture. Also see Technical Notes 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 input and capital services. 

(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. Capital services are the services 

 derived from the stock of physical assets and software. The assets included are fixed business 

 equipment, structures, inventories, and land. 

(6) Labor input combined with capital services are weighted with labor's and capital's share of 

 current dollar costs to form a superlative chained index.