For release 10:00 a.m. (EST) Thursday, November 18, 2010 USDL-10-1603

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

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

MULTIFACTOR PRODUCTIVITY TRENDS IN MANUFACTURING - 2008

Manufacturing sector multifactor productivity decreased at a 0.7 percent annual rate in 2008, the U.S. Bureau of 

Labor Statistics reported today. (See chart 1.) This was the largest annual decline in multifactor productivity 

since 2001. (See table 1.) Multifactor productivity measures the change in output per unit of combined inputs. 

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, labor and, in the case of the manufacturing sector, intermediate inputs (energy, materials, purchased 

business services). 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. 

Durable manufacturing sector multifactor productivity grew 0.3 percent in 2008, after increasing 4.9 percent in 

2007. Nondurable manufacturing sector multifactor productivity fell 1.6 percent in 2008, following a 4.6 

percent increase in 2007. 

Chart 1. Multifactor productivity for the manufacturing, durable manufacturing, and nondurable 

manufacturing sectors, 2000-2008 

 Annual percent change

-2.0

0.0

2.0

4.0

6.0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Manufacturing Durable manufacturing Nondurable manufacturing

Multifactor productivity measures are now developed from data based on the 2002 North American 

Industry Classification System (NAICS). Previous measures were on a 1997 NAICS basis. 

Additionally, the index series have been rebased from 2000=100 to 2005=100. 
- 2 - 

Historical trends in manufacturing 

Multifactor productivity in manufacturing grew 1.6 percent annually between 1987 (the starting point of the 

series) and 2008. Sectoral output increased at a 2.2 percent annual rate over the period and combined inputs rose 

an average of 0.6 percent per year. Output per hour (labor productivity) grew 3.5 percent. For the 2000-2007 

period, multifactor productivity in manufacturing rose more rapidly than in previous periods, averaging 2.6 

percent per year, outpacing the 2.1 percent growth rate in the 1995-2000 period. (See table A.) 

Of the 3.5 percent growth rate in labor productivity in the 1987-2008 period, 1.6 percent can be attributed to 

increases in multifactor productivity, 0.6 percent to the contribution of capital intensity, 0.1 percent to energy 

intensity, 0.8 percent to materials intensity, and 0.4 percent to purchased business services intensity. Multifactor 

productivity, the contribution of intermediate inputs, and the contribution of capital intensity may not sum to 

output per hour due to independent rounding. (See table B.)

Fewer industries recorded multifactor productivity, output, and combined input increases in 2008 than in any 

other year since 2001. Of the 18 industries that comprise the manufacturing sector, fewer industries each year 

experienced growth in output and combined inputs from 2005 to 2008. (See chart 2.) 

Chart 2. Percent of manufacturing industries with increases in multifactor productivity, output, and 

combined inputs, 2005-2008 

Revised measures 

Previous and revised productivity measures and related data for 2006 and 2007 for the manufacturing, durable 

goods manufacturing, and nondurable goods manufacturing sectors are displayed in table C. In 2007, multifactor 

productivity growth was revised upward to 5.1 percent from 4.7 percent in the manufacturing sector. Multifactor 

productivity was also revised upward to 4.6 percent from 3.0 percent in the nondurable manufacturing sector but 

revised downward to 4.9 percent from 6.0 percent in the durable manufacturing sector. The revisions in both 

years were due to comprehensive revisions in source data in the revised National Income and Products (NIPA) 

data released by the Bureau of Economic Analysis (BEA) on July 31, 2009. 

0

10

20

30

40

50

60

70

80

90

100

Increasing multifactor productivity Increasing output Increasing combined inputs

2005 2006 2007 2008

The Bureau of Labor Statistics is conducting a customer survey to solicit suggestions from the public to 

enhance the quality and relevance of BLS productivity data and publications. The survey is available at 

http://www.bls.gov/mfp until December 15, 2010.
- 3 - 

Table A. Compound annual growth rates for productivity, sectoral output, and inputs in the 

manufacturing sector for selected periods, 1987 to 2008

In percent

1987-

2008

1987-

1990

1990-

1995

1995-

2000

2000-

2007

2007-

2008

Productivity

 Multifactor productivity11.6 0.2 1.2 2.1 2.6 -0.7

 Output per hour of all persons 3.5 1.8 3.4 4.8 3.9 -0.3

 Output per unit of capital services 0.0 -0.1 0.6 0.7 -0.1 -5.4

 

Sectoral Output 2.2 2.1 3.3 4.7 0.7 -4.4

Inputs

 Combined inputs20.6 1.9 2.1 2.5 -1.8 -3.7

 Hours3-1.2 0.4 -0.1 -0.1 -3.1 -4.0

 Capital services 2.2 2.3 2.7 4.0 0.8 1.1

 Energy 0.5 1.8 1.6 5.8 -3.8 -2.6

 Non-energy materials 1.4 1.7 3.6 5.5 -2.2 -5.3

 Purchased business services 1.1 5.2 3.2 0.6 -0.9 -5.4

1

Output per unit of combined hours, capital services, energy, materials, and purchased business services inputs.

2

The growth rate of each input is weighted by its share of current dollar costs.

3

Hours at work of all persons. 
- 4 - 

 1Growth rate in capital services per hour multiplied by capital's share of current dollar costs. 

2

Growth rate of information processing equipment and software per hour multiplied by its share of total current dollar 

 costs. 

3

Growth rate in intermediate inputs per hour multiplied by intermediate inputs share of current dollar costs. 

4

Growth rate in energy services per hour multiplied by energy’s share of current dollar costs. 

5

Growth rate in materials services per hour multiplied by materials’ share of current dollar costs. 

6

Growth rate in business services per hour multiplied by business services’ share of current dollar costs. 

7

 Output per unit of combined hours, capital services, energy, materials, and purchased business services inputs. 

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, 1987-2008

In percent

1987-

2008

1987-

1990

1990-

1995

1995-

2000

2000-

2007

2007-

2008

Manufacturing

Output per hour of all persons 3.5 1.8 3.4 4.8 3.9 -0.3

Contribution of capital intensity10.6 0.3 0.4 0.7 0.7 1.0

Contribution of information 

processing equipment and 

software2

0.2 0.2 0.2 0.4 0.2 0.3

Contribution of all other 

capital services

0.3 0.1 0.2 0.3 0.5 0.8

Contribution of intermediate inputs31.2 1.3 1.7 1.9 0.6 -0.6

 Contribution of energy 

 intensity40.1 0.0 0.0 0.2 0.0 0.1

 Contribution of materials 

 intensity50.8 0.4 1.1 1.6 0.2 -0.4

 Contribution of purchased 

 business services intensity60.4 0.8 0.6 0.1 0.4 -0.2

Multifactor productivity71.6 0.2 1.2 2.1 2.6 -0.7
- 5 - 

1

Output per unit of combined hours, capital services, energy, materials, and purchased business services inputs. 

2

The growth rate of each input is weighted by its share of current dollar costs. 

3

Hours at work of all persons. 

Table C. Previous and revised multifactor productivity and related measures for the 2006-2007

and 2005-2006 periods

Sector

Multifactor 

productivity1

Sectoral 

output

Inputs

Combined

inputs2 Hours3

Capital 

services Energy Materials

Purchased 

business 

services

Annual percent change, 2006-2007

Manufacturing

Previous 4.7 1.6 -3.0 -1.7 0.5 -2.7 -8.1 -0.3

Revised 5.1 2.4 -2.5 -1.7 1.2 6.0 -7.2 -0.8

Durable 

manufacturing

Previous 6.0 2.1 -3.7 -2.1 0.6 -3.8 -11.1 0.2

Revised 4.9 3.5 -1.3 -2.1 0.8 8.6 -4.8 2.2

Nondurable 

manufacturing

Previous 3.0 1.1 -1.8 -1.1 0.4 -2.0 -3.5 -0.9

Revised 4.6 1.3 -3.2 -1.0 1.4 4.3 -6.4 -4.7

Annual percent change, 2005-2006

Manufacturing

Previous 2.5 1.6 -0.9 0.7 0.5 -6.7 -2.5 -1.2

Revised 2.3 1.5 -0.7 0.7 0.9 -7.8 -1.7 -1.6

Durable 

manufacturing

Previous 4.2 3.1 -1.0 1.1 0.4 -7.5 -4.0 -0.9

Revised 3.2 3.1 -0.1 1.1 1.0 -5.0 -1.4 -0.4

Nondurable 

manufacturing

Previous 0.6 -0.1 -0.6 0.1 0.6 -6.3 -0.5 -1.5

Revised 1.1 -0.1 -1.2 0.0 0.8 -9.6 -1.2 -3.1
- 6 - 

TECHNICAL NOTES 

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

software. Capital services asset detail consists of 44 types of equipment, 28 types of structures, 3 

categories of inventory, and land. The aggregate capital services measures are obtained by Tornqvist 

aggregation of the capital stocks for each asset type within each of the eighteen manufacturing 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. Data on investments 

in physical assets and software are obtained from Bureau of Economic Analysis (BEA). Nonfarm 

industry detail for land is based on IRS book value data. 

Labor Hours: The construction of the hours measures follows the methods used in the private business 

sector described in USDL 10-1171, Multifactor Productivity Trends, 2008, 

http://www.bls.gov/news.release/pdf/prod3.pdf , except that hours in manufacturing are directly 

aggregated and do not include the effects of labor composition. Hours data for the manufacturing 

multifactor productivity measures include hours for all persons working in the manufacturing sector – 

wage and salary workers, the self-employed and unpaid family workers. The primary source of hours 

data is the BLS Current Employment Statistics (CES) survey. Hours paid of production workers are 

also obtained primarily from the CES survey. The hours of these employees are then converted to an atwork basis by using information from the Employment Cost Index (ECI) of the National Compensation 

Survey (NCS) and the BLS Hours at Work Survey. Hours at work for nonproduction workers are 

derived using data from the Current Population Survey (CPS), the CES, and the NCS. The hours at 

work of proprietors are derived from the CPS. 

Hours at work data are based on underlying hours data published in the June 3, 2010, 

Productivity and Costs news release. Therefore, the data reflect the benchmark revisions to the CES and 

other revisions to hours released on February 5, 2010. Data in this release do not reflect the 

comprehensive revision to the National Income and Product Accounts (NIPA) released by the Bureau of 

Economic Analysis of the U.S. Department of Commerce on July 30, 2010. 

Intermediate Inputs: In manufacturing, intermediate inputs are energy, materials, and purchased 

business services, and represent a large share of production costs. Research has shown that substitution 

among inputs, including intermediate inputs, affects productivity change. Therefore, it is important to 

account for intermediate inputs in productivity measures at the level of manufacturing. In contrast, the 

more aggregate productivity measures compare "value-added" output with two classes of inputs, capital 

and labor. Because of these differences in concepts and methodology, productivity change in 

manufacturing cannot be directly compared with changes in private business or private nonfarm 

business. 

Data on intermediate inputs are obtained from BEA based on BEA annual input-output tables. 

Tornqvist indexes of each of these three input classes are derived at the 3-digit NAICS level and then 

aggregated to total manufacturing. Materials inputs are adjusted to exclude transactions between 

establishments within the same sector. 
- 7 - 

Combined Inputs: The five input indexes (capital services, hours, energy, materials, and purchased 

business services) are combined using Tornqvist aggregation, employing weights that represent each 

component's share of total costs. Total costs are defined as the value of manufacturing sectoral output. 

Sectoral Output: The output concept used for multifactor productivity in manufacturing is “sectoral 

output”. Sectoral output equals gross output (sales, receipts, and other operating income, plus 

commodity taxes plus changes in inventories), excluding transactions between establishments within the 

same sector. In contrast, the output concept used for private business and nonfarm business is “real value 

added”. Real value added output in private business equals gross domestic product in the economy less 

general government, government enterprises, private households (including the rental value of owneroccupied real estate), and non-profit institutions. Real value added output excludes intermediate 

transactions between businesses. 

The output index for manufacturing is computed using a chained superlative index (Tornqvist) of 

three-digit NAICS industry outputs. Industry output is measured as sectoral output, the total value of 

goods and services leaving the industry. Wherever possible, the indexes of industry output are calculated 

with a Tornqvist formula. This formula aggregates the growth rates of the various industry outputs 

between two periods, using their relative shares in industry value of production averaged over the two 

periods as weights. Industry output measures for manufacturing industries are constructed using data 

from the economic censuses and annual surveys of the Bureau of the Census, U.S. Department of 

Commerce, together with information on price changes, primarily from BLS. 

Multifactor Productivity: The manufacturing multifactor productivity measures describe the 

relationship between output in real terms and the inputs involved in its production. Manufacturing 

multifactor productivity measures exclude intermediate inputs between manufacturing establishments 

from both output and inputs. Multifactor productivity does not measure the specific contributions of 

labor, capital, or any other factor of production. Rather, multifactor productivity is designed to measure 

the joint influences 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 are derived by dividing an output index by an index of the combined 

inputs of labor, capital services, energy, non-energy materials, and purchased business services. 

Other information: Comprehensive tables containing more detailed data than that which is published in 

this press release are available upon request at 202-691-5606 or at 

http://www.bls.gov/mfp/mprdload.htm . More detailed information on methods, limitations, and data 

sources of capital and labor are 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. Methods for measuring 

manufacturing multifactor productivity are discussed in "Measurement of productivity growth in U.S. 

manufacturing” in the July 1995 issue of the Monthly Labor Review. See 

http://www.bls.gov/mfp/mprgul95.pdf. 
- 8 - 

Table 1. Manufacturing sector: Productivity and related measures, 1988-2008

Annual percent change from previous year

Year

 

Productivity Inputs

Output per Output Purchased Combined 

hour of all per unit Multifactor Sectoral Capital business units of all

persons of capital Productivity1 Output Hours2Services Energy Materials services Inputs3

1988 2.1 3.4 1.8 5.2 3.0 1.7 4.3 1.4 8.9 3.3

1989 1.0 -0.6 -0.5 1.7 0.6 2.3 -0.5 2.2 5.7 2.2

1990 2.2 -3.0 -0.7 -0.3 -2.5 2.7 1.8 1.6 1.3 0.4

1991 2.6 -4.0 -0.4 -1.7 -4.2 2.4 -0.3 -0.4 -1.0 -1.4

1992 3.8 0.9 -0.7 3.3 -0.5 2.4 -1.0 8.7 7.5 4.0

1993 2.5 1.4 2.6 3.9 1.3 2.5 3.3 0.6 0.8 1.3

1994 3.5 3.2 2.7 5.9 2.3 2.7 3.5 4.0 3.8 3.2

1995 4.5 1.5 1.8 5.2 0.7 3.6 2.6 5.3 4.9 3.4

1996 3.6 -0.6 0.4 3.4 -0.2 4.0 -2.7 8.8 -0.5 3.0

1997 5.5 2.9 2.8 7.4 1.8 4.4 -2.1 8.0 4.1 4.4

1998 5.5 0.5 2.6 5.3 -0.3 4.7 3.3 6.4 -0.3 2.6

1999 4.9 0.4 1.2 4.2 -0.7 3.8 23.3 6.3 1.0 3.0

2000 4.4 0.1 3.6 3.1 -1.3 3.0 9.1 -1.9 -1.3 -0.5

2001 1.9 -6.2 -1.1 -4.8 -6.5 1.6 9.3 -6.3 -1.7 -3.7

2002 7.3 -1.3 3.2 -0.3 -7.1 1.0 -22.6 1.0 -3.2 -3.4

2003 6.3 0.6 3.6 1.1 -4.9 0.4 -10.7 -1.7 -0.6 -2.4

2004 2.3 2.0 3.7 1.7 -0.5 -0.3 -6.3 -0.8 -6.4 -1.9

2005 4.7 2.9 1.4 3.6 -1.1 0.7 10.1 1.5 8.9 2.1

2006 0.8 0.6 2.3 1.5 0.7 0.9 -7.8 -1.7 -1.6 -0.7

2007 4.2 1.2 5.1 2.4 -1.7 1.2 6.0 -7.2 -0.8 -2.5

2008 -0.3 -5.4 -0.7 -4.4 -4.0 1.1 -2.6 -5.3 -5.4 -3.7

1

Output per unit of combined hours, capital services, energy, materials, and purchased business services inputs. 

2

Hours at work of all persons. 

3

Combined units of hours, capital services, energy, materials, and purchased business services, superlative chained index. 

Source: Output data are from the Bureau of the Census, U.S. Department of Commerce, and modified by the Bureau of 

Labor Statistics, U.S. Department of Labor. Compensation and hours data are from the Bureau of Labor Statistics. Capital 

measures are based on data supplied by the Bureau of Economic Analysis, U.S. Department of Commerce. See also 

Technical Notes in this release. 
- 9 - 

Table 2. Manufacturing sector: Productivity and related measures, 1987-2008

Indexes 2005=100

Productivity Inputs

Output per Output Purchased Combined 

hour of all per unit Multifactor Sectoral Capital business units of all

Year persons of capital Productivity1 Output Hours2Services Energy Materials services Inputs3

1987 51.0 96.6 75.9 62.9 123.2 65.1 84.9 65.1 74.1 82.8

1988 52.1 99.9 77.3 66.1 126.9 66.2 88.6 66.0 80.7 85.6

1989 52.6 99.2 76.9 67.2 127.7 67.8 88.1 67.4 85.3 87.4

1990 53.8 96.2 76.4 67.0 124.5 69.6 89.7 68.6 86.3 87.7

1991 55.2 92.4 76.1 65.8 119.3 71.3 89.4 68.3 85.5 86.5

1992 57.3 93.2 75.6 68.0 118.7 73.0 88.5 74.2 91.9 90.0

1993 58.8 94.5 77.5 70.7 120.3 74.8 91.4 74.7 92.6 91.1

1994 60.8 97.5 79.6 74.8 123.1 76.8 94.6 77.7 96.2 94.0

1995 63.6 99.0 81.1 78.8 123.9 79.6 97.1 81.8 100.9 97.2

1996 65.9 98.4 81.4 81.4 123.6 82.8 94.4 89.0 100.4 100.1

1997 69.5 101.2 83.6 87.4 125.8 86.4 92.4 96.1 104.5 104.6

1998 73.3 101.7 85.8 92.1 125.5 90.5 95.4 102.3 104.1 107.3

1999 77.0 102.1 86.8 95.9 124.7 93.9 117.7 108.7 105.1 110.5

2000 80.4 102.3 89.9 98.9 123.1 96.7 128.4 106.7 103.7 110.0

2001 81.9 95.9 89.0 94.2 115.0 98.3 140.3 100.0 102.0 105.9

2002 87.9 94.6 91.8 93.9 106.9 99.2 108.6 101.0 98.7 102.3

2003 93.4 95.3 95.1 94.9 101.6 99.6 97.0 99.3 98.1 99.8

2004 95.5 97.2 98.6 96.6 101.1 99.3 90.8 98.5 91.8 97.9

2005 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

2006 100.8 100.6 102.3 101.5 100.7 100.9 92.2 98.3 98.4 99.3

2007 105.0 101.9 107.4 104.0 99.0 102.1 97.7 91.3 97.6 96.8

2008 104.7 96.4 106.7 99.4 95.0 103.2 95.2 86.4 92.3 93.2

1

Output per unit of combined hours, capital services, energy, materials, and purchased business services inputs. 

2

Hours at work of all persons. 

3

Combined units of hours, capital services, energy, materials, and purchased business services, superlative chained index. 

Source: Output data are from the Bureau of the Census, U.S. Department of Commerce, and modified by the Bureau of 

Labor Statistics, U.S. Department of Labor. Compensation and hours data are from the Bureau of Labor Statistics. Capital 

measures are based on data supplied by the Bureau of Economic Analysis, U.S. Department of Commerce. See also 

Technical Notes in this release. 
- 10 - 

Table 3. Multifactor productivity measures for manufacturing industries in selected periods, 1987-2008 

Compound annual growth rates 

1987-

2008

1987-

1990

1990-

1995 

1995-

2000 

2000-

2007

2007-

2008

Manufacturing 1.6 0.2 1.2 2.1 2.6 -0.7

Nondurable manufacturing 0.5 -0.5 0.6 0.1 1.6 -1.6

Food, beverage, and tobacco products 0.1 -1.5 1.5 -1.3 1.1 -2.0

Textile mills and textile product mills 0.9 1.2 0.7 1.3 1.4 -5.8

Apparel, leather, and allied products -0.4 -0.2 2.5 0.2 -2.5 -2.2

Paper products 0.5 -0.3 -0.1 0.8 1.2 -0.3

Printing and related support activities 0.5 0.8 -0.3 -0.4 1.4 1.9

Petroleum and coal products 0.7 0.3 0.5 0.8 0.6 4.4

Chemical products 0.5 -1.0 -0.8 0.2 3.4 -7.1

Plastics and rubber products 0.6 0.6 0.6 1.3 0.6 -3.9

Durable manufacturing 2.4 0.8 1.6 3.5 3.3 0.3

Wood products -0.1 0.9 -1.2 -0.3 1.1 -4.6

Nonmetallic mineral products 0.3 0.2 1.0 0.2 0.3 -2.1

Primary metals 0.6 1.0 0.2 0.3 0.6 2.1

Fabricated metal products 0.6 -0.1 1.0 0.0 0.7 2.1

Machinery -0.2 1.0 -1.7 -1.3 1.3 -0.9

Computer and electronic products 10.6 5.6 9.6 15.7 10.6 6.7

Electrical equipment, appliances, and components -0.5 -2.3 -2.4 -2.1 2.1 5.8

Transportation equipment 0.4 -1.7 -0.3 0.8 2.3 -5.0

Furniture and related products 0.3 -0.8 0.7 0.6 0.7 -2.0

Miscellaneous manufacturing 1.8 2.3 0.2 2.6 2.1 2.4

Note: Multifactor productivity measures by industry do not sum up to aggregate manufacturing measures because industry measures exclude 

transactions only within the specific industry while the aggregate manufacturing measures also exclude transactions between all 

manufacturing industries.